Pigeonholing yourself in Energy PE
Hello,
I've had a big interest as of late to get into Energy PE after I complete an MSF at UT this upcoming year. Upon completion of the MSF, if I had an offer from an energy and non-energy PE, which would be wiser to take?
My long-term career goals are to stay in PE. So, I didn't want to pigeonhole myself by doing energy PE and then not having relevant skills to general PE afterwards.
Please let me know if anyone can help with this!
Bump
https://www.wallstreetoasis.com/forums/how-real-is-the-pigeonhole
Thread is a few years old, but not much has changed since. Many existing energy funds trying to pivot to more industrial, infra, or green energy funds, but few will make the transition successfully. I also expect the Houston PE scene focused on energy to be quite a bit smaller than it is today, and definitely during it's peak (2010 - 2016). A lot of zombie funds that are generally in wind down mode.
Very helpful thank you. You seem to be in the know. Would you recommend getting an MSF (already admitted to the program) or just try to find a job in the finance industry? Like I said I really want to get into Private Equity. I'm undergrad Economics major. I have a pretty good connection that could most likely land me in PE at a smaller firm out of the gate.
I ask this because there are a number of oil trading jobs that I can apply for, but if my end goal is PE, my only options are IB, PE, or consulting, correct?
Always hard to answers these questions with so little background / context.
Tag says you're an intern in IB? Assume that's not converting FT? That would be the most logical route (IB > PE) and wouldn't require MSF. MSF may help with recruiting a good FT role out of school if you don't already have something lined up. Would research job placement from program.
That connection better be very good if you expect it will land you in PE right out of undergrad / MSF. Most smaller firms are pretty lean and don't want to train people on the job. As such, most of their hires will come from banking or some other M&A background.
Not converting full-time. Right that makes sense. Being completely honest, I would most likely be able to get the same job when I graduate with or without the MSF degree due to connections. Going off that, would you still recommend getting an MSF?
I feel like one of its main purposes is for a "rebrand" that helps get your foot in the door. But if your foot is already in the door, why do the program?
If you're going to end up in the same role with or without the MSF, I wouldn't bother pursuing. Personally, don't really view MSFs as "rebrand". Tends to be reserved for MBAs from top tier schools. I'd just download WSO or similar PE prep / IB prep course. Will be more relevant than education from MSF
You won’t get into a decent energy fund with no IB or industry experience and only an MSF from UT.
Agreed lol idk why people aren't talking more about this. You will not break into a reputable PE shop post-MSF/post-MBA without any IB/PE experience prior. Post-MSF/post-MBA hires are for VP/Senior Associate roles, not entry-level Associate
For the love of god avoid energy IB unless it is the only thing on earth that interests you. There are like 4 good shops (good = have not incinerated billions of capital, not good = 20% IRRs). The returns on the latest funds of the premier names (First Reserve, Encap, NGP, Riverstone, Arclight, EIG) have been mediocre at best and they will struggle to raise capital going forward.
what about Jefferies?
What if Energy IB is your only option? My school only sends a select few to IB, and most of them are for Energy IB.
I really respect your views HTown+ and would be interested in hearing what you would do if you were an intern/analyst at a shop that's been historically great but has also been picking up a lot of RX mandates over the past year.
If you’re talking about TPH, their rx is run out of PWP NY so while the increased rx has been good for the firm, it hasn’t made analysts much more well-rounded.
source: friends are analysts there
Quick question for you -
1) Why do you think some of these names you mentioned (Quantum, Carnelian) are performing better?
2) Where are you looking to get returns to-date?
Thanks!
FWIW I’ve worked with Carnelian a couple times. Very sharp guys. Definitely seemed like they work pretty hard. Not surprised at all to hear that others think they’ll outperform going forward. If you were looking to go into energy PE it’s a solid shop.
1) A combination of luck, fund strategy and skill. All PE is luck but in a cyclical business like O&G timing the cycle right is even more important. Carnelian sold portco's pre-crash and then sat on their dry powder instead of immediately deploying it so they never caught the falling knife. Funds like EIG invest higher in the capital structure so they have recourse if shit goes sideways. I think all the big energy pe funds are run by smart people, but the Quantum and Carnelian guys really stand out imo.
2) Are you asking where I got the returns data? If so, Pitchbook.
Willing to share who those funds might be ("good" shops)? Thanks! HTown+
Carnelian, Kimmeridge and Quantum I would say are the best positioned. I think Arclight and EIG have been solid but definitely underperformed.
Anyone have a good resource to look at recent fund returns for Arclight and EIG? Would be curious
Check the CalPERS returns page for Arclight
I mean, I love oil and gas as much as anyone, but do you think it will be a large chunk of the economy in 20+ years?
Unless nuclear / new source of energy takes off immensely, I believe so. Like natural gas especially is used to essentially create Tesla’s (where do you think the electricity comes from for the charging stations, also pretty sure they still use rubber tires...)
What I’m trying to get at is on the surface everyone is trying to be “green” but in reality there are 7 billion + humans on this earth and “green” can’t sustain them all... sure on the outside we try to make ourselves feel better with Tesla’s, solar panels, and degrade able straws but every single green product gets traced back to oil and gas / coal / nuclear, and a small set of renewable power
Yes. People have no idea how entrenched hydrocarbons are in our lifestyles. You couldn’t go a day without them if you tried.
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