REPE vs Infra PE, which one has brighter career prospects?
Just curious… which career do you think have better career prospects and pay potential..?
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REPE, much easier to go off and do your own thing after you get some YOE
As someone in Real Assets, the most straightforward answer is:
- if you want to do a standard IB to PE route and continue working at an established fund, infra is more versatile (from core to energy transition to service oriented) and is experiencing great tailwinds w/ a lot of openings for someone starting their career (most vintage funds are still quite young, even w/ the most seasoned amongst GIP/Brookfield/MIRA being much earlier vs generalist flagship PE strategies). Depending on what you work on in infra, you can lateral to Industrials or other fields as well fairly easily
- if you want to eventually source your own deals and "be your own boss", REPE sets you up for that amazingly. There is so much stupid money in RE that good investors can always find dislocations despite the positives that come w/ being part of a bigger brand (GL trying to source your own infra opps for example w/ just $1-2MM net worth). Otherwise the opps in upward mobility at already established funds are more limited vs the clear giant in the space that is BX RE. And a very niche sector just like FIG is in terms of modeling, etc
They’re both niche so the one with better career prospects will be the one you like doing more long term.
Pay will be based on the shop. Tiny no name RE shops will pay less than infra at a megafund. Generally, RE returns are higher but there are a LOT of low paying real estate shops so be careful where you go.
Generally disagree w/ your assessment of return delta.
RE returns are higher than core or core+ (7-9%) for sure, but the world has shifted / is shifting away from that being the face of infra. For example, most of the capital raised last year (iSquared, Brookfield, Stonepeak each w/ $10-15bn fundraises) are aiming for much higher return thresholds. Most large infra shops are aiming to clip a blended 12-18% nowadays, esp w/ a lot of energy/power shops merging into being one group as well. For example, carbon capture and energy storage would be considered "infra" but most will look to underwrite 20%+ on that. RE / infra returns are a lot closer than I think most people think they are
IRR for GIP I is 15-20% net (DPI already ~2x), GIP II is marked to 20%+ net (DPI is ~1x) and GIP III is marked to ~15% net or so. And they're very disciplined in terms of what their infra mandate extends to (generally don't touch more nascent tech). GIP Fund IV was $22bn fundraised in 2019, so these aren't small checks either... bigger than almost every MF flagship PE fund
Not the guy you are replying to, but from what I understand (from friends who work in RE) the returns in Opportunistic RE funds are insanely high once you start taking on development risk. 40% IRRs on some of the better deals. That being said, I understand that it is tough to deploy a huge amount of capital into these Opportunistic deals so there aren't that many huge funds in the space.
Pretty sure gip iii net returns are half that
Thanks for your insights! May I ask that how would you rank RE, infra, and LMM/MM Buyout for a junior who hopes to be more or less entrepreneurial one day? Much appreciate!
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