Hiya - from continental Europe, I've been working c.10y in London: 4y IBD FIG and 6y private credit. In buyside, I first did PE-like work (M&A, Board rep, etc) following a portco restructuring, and then currently doing special sits investments (illiquid). Always worked at LDN office of US firms.
Happy to answer questions about private credit (direct lending / special sits), CLO or L/S credit HF careers, hiring processes, comps.
This is a common question and the main reason why I always suggest to start with IB. Credit mindset is very different from equity and so is the personality of the investors in the two.
Yes it’s possible in the early stage of career (first 1-3 years I’d say) but hard after associate for the reason above: I think I would be a mediocre equity investor at best.
Cash salary is basically the same and often higher in credit, but carry points are richer in PE (and clearly worth more given (1) skew to capital gain vs interest income (better for tax reasons) and (2) higher returns for the equity).
Yes to Big4. Private credit / direct lending is the new way to call a loan officer as banks are retreating and non-balance sheet lenders are taking their place. The work is not too dissimilar (no offence to people, just the reality as I’ve done it) and big4 can have their chance assuming they know an LBO model and how to analyse a business (which most of Big4 juniors don’t).
WLB really depends on the firm but I’d say normally 9am-8pm and as needed towards closing a deal. Also I noticed that in buyside credit mid-level (VP/DIR) work more than juniors as they have to negotiate the facility and explain the deal to IC which are the hardest parts.
Carry normally at VP level but some firm including one I’ve been at gave only to DIR+. Quantum highly person dependent, there’s rarely a formula.
There are 3 impacts: (1) positive on returns, as the actual deal IRR will be higher vs underwritten IRR at IC, (2) positive on carry since performance fees threshold is fixed and returns are higher, and (3) negative on company’s cash flows and their ability to refinance, though defaults at the moment remain low (especially since most docs have no covenants).
As rates will continue to stay high (just a fact, look at inflation persistence), defaults will creep up but I expect private lenders to just amend and extend or provide more capital. There was so much equity buffer behind senior lenders in the last few years that PC funds will have their value covered.
A bit late to this Q&A, hoping you can answer.
1) I work for a WF/JPM/BOA type of bank in a corporate banking role (CB is housed under IB) that is the top lender in my industry vertical. My team works with solely private companies. From a skillset perspective, is CB applicable to PC? Do I have a shot at recruiting for PC? The general consensus on WSO is that PC will only recruit from IB backgrounds
2) What's your favorite and least favorite aspect about PC? Is it worth pursuing in the long run?
Apologies I missed this for a couple days.
1) Yes you can def recruit. Probably not for MF PC but there are many places where your background will be very welcome (think about Churchill AM type places for example). Competition will still be against IB guys but hopefully you have better acumen since you basically already do the job;
2) Least favourite part is that it's a commoditised industry with limited barriers to entry (probably scale only) which make the job quite repetitive (re: vanilla PC). Most favourite: it's a very scalable business still growing significantly on the back of banks' retreating (long term trend) and public markets flaking (temporary but helpful).
I think it’s worth pursuing.
This is very familiar territory :)
I’d say pick up modelling first and foremost. You must be able to turn an LBO and understand capital structure in no time.
Then, in order:
(1) Understand how to underwrite a credit, how to create a downside scenario and what are the solutions for the lender in that case, (2) Take the time to read through the credit agreements IN FULL. I know so few people who did this as mostly just look at issues lists. No, go through the whole agreement for 2-3 of them and ask questions (what is sunset, ROFO vs ROFR, MFN…?) If they don’t give you the time, PM me with questions. (3) Go through the folders to find the deals which went through a restructuring and read those memo. (4) Dial in to all the investment committees even if it’s not your deal. Listen to the questions and note which answers are good vs not good.