Q&A: VP MF Special sits

Question

Have gotten a lot of good advice from this site over the years, thought I could give back while I have some free time.

My background:

Restructuring IB -> special sits/distressed hedge fund (2bn aum) -> special sits group at megafund (100bn+ aum)

My group today focuses mostly on structured minority equity, growth buyouts, opportunistic private and public credit. Not distressed loan to own, turnaround PE, though that may change.

edit: alright I’ve got to run so closing this Q&A for now, enjoyed answering your questions and hopefully this was helpful for you all. Cheers!

TripleARated · Accepted Answer

Thanks for doing this. I did a year in IB at a very small no name boutique shop before switching to a LMM/MM lender in T2 city where I am now doing non-sponsored and sponsored lending on storied/hairier credits (closed 2-3 deals so far). I have been in the lateral market for a year now gaining no traction at all from HH (due to lack of branding?) and interviews through personal networking not going anywhere. I want to stay in Private Credit but want to move up to a bigger platform with scale and more opportunity.

MrPopo · Answer

Good questions:
1. Short answer is yes. Long answer is that a lot of the industries/businesses that weren't open to a "special sits" investor are now open to us (e.g., VC-funded tech, certain asset-heavy businesses that had access to cheap capital), so we are seeing a lot of opportunities, since the businesses that we would have seen in 2021 are still coming to us in 2022-23.

MrPopo · Answer

1. There are several differences between my prior seat and my current seat that impact this answer, including fund size, strategy focus, sector focus, my title/rank within the group, etc. But in a nutshell, I would describe the HF as entrepreneurial, as I was part of an extremely lean team, actively involved in idea generation, small ICs where it was 2 partners calling the shots, and you live and die by the P&L. My current seat is more structured, we are involved in banker-led processes, our ICs are extremely thorough with 5+ members and 100+ page decks, and there is no mark to market.

MrPopo · Answer

1. At the junior level, you could switch to pretty much anything. I have seen analysts/associates go on to do MF PE, L/S equity HF, distressed HF, you name it. At my level, I would probably have to take a step down market to do PE, as my background is more from the credit side. I think I could still easily move to other large cap distressed credit/special sits funds. As you get more senior, you obviously silo more, so it gets harder to move.

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Q&A: VP MF Special sits

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Q&A: VP MF Special sits

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