MM Direct Lending to Credit HF or MF Credit
Hello
I am curious on possible exit opportunities after 2 years of associate experience at a middle market direct lender like Antares Capital? I did a quick LinkedIn search and see people leaving for MM IB or MM/LMM PE after their 2 years. If I want to stay in credit, is it possible to jump to a credit HF that invest across the cap stack or to lateral to a MF credit arm (Ares/KKR)? Is this transition not realistic given it is still a switch within credit..
Thanks
Interested
Tough at somewhere like Antares that only invests in senior debt, you would need a step in between to a place like an Onex Falcon, Maranon, Pennant Park, Audax Junior Debt, Bain Capital Credit, etc. that invests across the capital structure so you have knowledge on structuring and working with higher-yielding products. At a credit HF or special sits shop, structuring in a transaction to box in downside risk, while extracting yield is oftentimes just as important as the underlying business model. Antares deal with plain vanilla sponsor finance, and as such, there is not much creativity and it is fairly cookie-cutter and homogenous.
To summarize, you'll need an intermediate step in between Antares and a credit HF or MF credit arm.
what's the difficulty of jumping from a junior debt analyst role at the shops you mentioned to MF PE?
Very difficult, likely won't be possible without doing a few years of IB first. Although MF PC is possible.
why is banking a necessary intermediary step for someone at a firm like Bain Capital Credit or Sixth Street which does a lot of distressed/special sits investing?
You just mentioned a junior debt analyst role at one of the aforementioned shops (Onex Falcon, Maranon, Pennant Park, Audax Junior Debt, Bain Capital Credit, etc.) which is very different than a special sits / opportunistic credit role at Sixth Street or Bain's DSS (Distressed & Special Sits) group. Junior debt investing and special sits investing are two very different animals. That's not to say special sits investing does not include a junior debt mandate, but not comparable.
thanks for the clarification!
any thoughts on the difficulty of jumping from Oak Hill Advisors or Bain Capital Credit to MF PE? Both staff analysts as industry specialists who get liquid high yield, private credit, mezzanine/pref equity, and stressed/distressed experience.
Do you have any commentary on comp on those funds i.e. Onex Falcon, Maranon, PennantPark etc. any chance? How easy would it be to jump from there to a special sits role from ASO to Sr. ASO?
Think of comp for the likes of PennantPark, Onex Falcon, etc. in the ~$250k +/- all-in 1st year ASO range.
Jumping from a junior debt fund like Onex Falcon, Audax Junior debt, Maranon, etc. is certainly plausible, but it is difficult. Look on LinkedIn, there are certainly people from those shops that have done it in the past, but not a very common / straightforward exit opp. Special sits investing is more intellectually stimulating than traditional PE buyouts given the nature of the types of transactions you are executing on are fairly diversified across asset classes, structures, collateral complexity, etc. and not homogenous corporate businesses. PE is certainly the most popular exit opp and probably the path of lease resistance, but it is inherently simpler than special sits investing.
In corporate private credit, you're not underwriting resi or commercial NPLs, NAV loans, specialty finance (buying and lending against asset-backed securities like receivables), PIPEs, funky secondary opportunities, royalties, litigation financing, asset purchases, high octane venture lending, etc. you're most likely just doing subordinated debt at an ~11/2 (cash/pik) contractual yield and some nominal equity co-invest in an LBO. The mandate is very different and special sits investing is a lot more difficult (certainly more intellectually stimulating though) than traditional sponsor lending. So to answer your question, tough to make the jump from a junior debt shop to a reputable special situations firm, you'll likely need to start as an experienced associated relative to a senior associate level (assuming you are a senior associate currently).
Appreciate commentary above but respectfully disagree. Can't tell you how many IBD & Rx kids DM me w/ a direct lending interview/case study who admit they know 0 about debt...but still the fact is - kids in these roles are routinely getting interviews. HPS for one - at least 2-3 non-credit IBD/Rx guys (more IBD guys reaching out than Rx).
Maybe the comment above was an assumption in past years but 2021+ I've seen a blow-up of job openings in the lev fin/direct lending space (counted 16-18 Analyst/ASO roles open on 2 different random months). Firms are struggling to fill seats, thus, the openness to IBD/Rx guys
I candidly have no clue what you are saying because your whole paragraph seems irrelevant. What do IBD and RX kids have to do with someone from Antares that is interested in recruiting for a credit HF? I can tell you for a fact having worked in the space for years, that you do not see kids from Antares / Twinbrook / Madison exiting to a credit HF. Perhaps if senior enough you could go from Antares at a Principal / MD level to Carlyle at a Principal / MD level, but not commonplace.
Agreed. No kids from Antares would exit to a HPS / Bain
I did some LinkedIn search. One went to Apollo Credit, one went to growth equity, some MM/BB IB, and some MM PE. Don’t see any HF from Antares alums. I work at a similar shop and I get decent inbounds for HF and credit HF. Never really thought about going to HF but I guess it’s at lease doable?
Yes.. agree with an exit to Apollo but thats an outlier. I do see exits to PE and GE but I am interested in staying in credit and just moving up market..
Any specific reason why you never really thought about going to a credit HF or MF Credit? Maybe your shop pays market and Antares doesn’t.. ? My sole reason to move is because of the comp at junior level and senior level. If I know I want to do credit, why work for lower pay. Am I missing anything?
In the same boat. How is moving to Apollo is an outlier? Isn’t the skill set the same, would think the move upstream from MM DL to MF DL is doable.
Don’t think it’s an outlier either. Skill set is definitely transferable and I get a lot of inbounds for MF credit (Bx, ares, Bain). The interesting thing to me is the timing. The time of departure at Antares is July, which I believe is when they laid people off way too early into Covid. Pretty amazing if the person pulled off Apollo after getting laid off at Antares.
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What are they paying base/bonus at Associate level? Whats your source of comp info?
Looks like someone else left for Apollo credit and got a title bump. Considering the small size of credit team at Antares I wouldn’t call it an outlier.
The salary quoted above is a little high (that’s more like an ASO3) while the bonus is correct
So is base for Associate 1 around ~$120-130?
Yep 120 sounds right
I agree with the above comment on it being tough to jump to a credit HF from a senior lending role - it's a different skillset. Not saying it's impossible, but most likely switches are to other direct lending shops, banking, or PE (though rarer). I've seen moves to a HF from direct lending before, but that was to long/short equities and that person had prior PE and banking experience.
Outside of credit HF, is the move upstream from MM DL to MF DL fairly straightforward or is that also not common?
I haven't personally seen it happen but that's anecdotal I'm not sure why it wouldn't be doable. I'd assume the move would be more difficult than lateralling to another MM direct lender.
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