Odd Request - List of PE / Growth / VC Firms That Do Not Deploy Debt
Hey All,
Am actively recruiting for some buy-side roles, but due to religious purposes, I can't work for a company that puts debt on other companies. Not looking for an explanation on why my beliefs are wrong or whatnot, I just want to reach out and see if any of you all know of any firms that only deploy equity and not debt. I know it is likely that most VC firms will follow suit with this, but I do know there are some venture debt deals out there as well.
If any of you know anecdotally through conversations / calls of any buyside firms that only do equity deals, it would be greatly appreciated. As far as I know, this information isn't really available online. I don't really care about prestige or anything; I just want any names in the US.
Thanks all!
Following - would also be interested in this
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Baupost, which has a privates arm, does not use leverage (https://www.institutionalinvestor.com/article/b18bk6g1ftk8n6/baupost-gr…), except in real estate
Thanks for this! Will check them out
This has to be a joke, Baupost is a top HF who do distressed debt.
Good point but I read this prompt as saying companies that put debt on other companies LBO style, not just buy debt. Happy to be corrected if this doesn’t suit what he’s looking for
maybe look for some long term capital funds. cant think of anything off the top of my head, but I have definitely heard of some funds (mostly in the LMM) that dont plan on exit and hold businesses to milk cash flows.
Thanks! This is helpful, I'm assuming folks like Constellation fit here
You'll clearly need to avoid anything LBO. Growth Equity may be okay but will you have a problem with liquidation preferences? Early stage venture is where you want to go. Tbh, I think you're in the wrong industry if that is the bar you are setting for your level of tolerance.
Agree with this.
Plus if OP’s already in IB. Either you’re already at a bank that puts debt or at the least advises to put debt.
Where is the line, I am genuinely curious.
OP Here - Appreciate both the responses. I'm at a regional MM boutique so we don't give out debt. Although I agree I'm involved in transactions that often times have debt in them (as in the buyer states they are putting XYZ amount of debt on the company), that is purely done on the buyers end, as in we don't necessarily advise buyers on how much debt to use per se. Could be jumping through loops here but the main point is I've always found the investing side to be more interesting and am trying to weave my way through recruiting to find the right spot.
The early-stage venture space is your only real shot or AM, but AM usually has a credit arm that deploys debt. Any PE/IB is off the table, every single PE/GE fund uses debt and most HFs do as well through leveraging and prime brokers. M&A transactions usually include debt and no firm does only cash or stock deals, so IB at a BB/EB is also realistically off the table. Was also a Muslim going through the process and ended up going into IB, but it's up to you to determine how strictly you want to follow the guidelines.
I'd agree with the above that early-stage investments would be more likely to meet your criteria. If you want to look at buyouts, there could (but very hard to find) be a chance with family offices who just want a certain % return clip on assets.
Other suggestion to improve your odds is to look at roles in regions where it may be more common to do these types of deals. For example, I'd imagine firms do more pure-equity buyouts in the middle east compared to the US.
Thanks for the replies both of you - I think early stage venture is likely the way to go - it also happens to align with my interests well. Am also looking into the middle east so appreciate the heads up there.
Should just go to a Dubai fund that follows Islamic finance principles.
Permanent Equity. Based of of Columbus, MO though so may not be the dream landing spot
Will take a look thanks!!
Another thing to be conscious of is growth funds that will use loan notes in their structuring alongside equity as opposed to pure equity. I'm curious to understand your stance on this?
Thanks for pointing that out - I'm not too sure on that point, will have to do more research
I work in VC and will be tough even here. Especially at early-stages convertible notes are a big thing and, even though it doesn't come from us directly, we are involved in putting in all sorts of venture debt instrument to the company post investment.
Probably some public equities role would work for you the best...
Thanks for the reply here man - is this common amongst all early-stage VCs? I can also PM you separately
Feel free to but yes, it is very common...
All HFs use leverage in some way, if he’s this strict shorting is probably off the table too
You are like a person that is afraid of blood but wants to become a heart surgeon. Good luck.
Trying my best!
Just go work at a Sharia Bank, bet one Middle East SWFs has a team that abides by your beliefs.
Wish you luck on this.
Are you ok with pref equity given there are similar components to debt like cap structure seniority and (PIK) interest? If you're only open to common equity it would be really tough to do anything on the private side, let alone buyout. Either way, sounds like public equities are your best bet anyways. LO in particular might be a good strategy if you're also against short selling. Good luck with the search.
Thanks man! Yes shorting is a no-go as well, I will look into some LOs!
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