Traditional PE pivot to Infrastructure / energy
- Hi everyone - hope all are having a great Friday. I am an UMM PE associate and I have become interested in renewable energy development -- a space that is acquisitive, involves a lot of modeling (which I enjoy), and is making a positive impact to the world. I found a F500 clean energy development company based in Virginia that I would eventually like to work for.
- However, my PE (and previous BB IB experience) has been centered on traditional corporations in the Industrials and TMT space. By all means, I am happy in my current PE role and want to spend another 2-3 years at the firm.
- How would folks recommend evolving my career towards the clean energy space? How difficult would it be to get a role in a infrastructure PE firm coming from a traditional PE background?
- Trying to avoid B school, and would eventually want to "exit" to said F500 company, but want to do so at a senior level role so think it may make sense to gain some more tailored experience at a infra / energy PE firm before making the transition to corporate
- As always, thank you for your insights!
I am currently in development at a IPP. My background spans 3.5 years of BB IB and 1 year of LMM PE.
The modeling is definitely complex (its the VBAs / Macro that make them complex IMO, I had never dealt with them before joining this space, and every renewables model you pick up has a VBA embedded) and a heavy part of the job. I am honestly getting a bit fed up of the modeling. Becomes even more complex when you start layering in tax equity and all that "shit" stuff.
To answer your question, I believe you have a very good shot if you want to transition. I had zero idea about renewables when I joined my role. But I crushed my interviews (look up Ed Bodmer btw).
Massive thanks, sir! The part you said about modeling is music to my ears -- I LOVE modelling, and the more complex, the better.
Did you get an MBA // do you think it'll be necessary to make the transition?
Also thanks for the resource!
I do have a M7 MBA. But I don't believe it's necessary at all to transition.
I got my MBA 5 years ago and I transitioned in 2022 to renewables. I don't think anyone really cares whether you have a MBA, but it's a good signaling effect, as you can imagine.
My approach regarding interviews was cold email / cold call, and then have 2/3 good reasons as to why you want to transition into renewables / what excites you about it. I also had a few "investment memos" that I'd prepared for PE interviews in the past, and even though it would have been obvious to anyone looking at my resume that I could model, I would send those memos along with my CV to give my email recipient a sense of my modeling/presentation skills.
Ultimately, for me, it had come down to either joining my current role or a generalist special situations / control-oriented private credit firm (with a US$2-3BN in AuM), but I chose the former, because I too wanted to transition into infra PE eventually, and I thought getting some sector experience in renewables for a couple of years would have been useful. I honestly believe if you can do renewables modeling, you can do airport / toll roads / logistics / transportation anything.
Also - curious to know what level of seniority you joined at? Thanks!
I joined as Associate (it was a bit of downgrade tbh because I had zero renewables experience) almost a year ago, got unofficially promoted to senior associate a couple of months ago, and my supervisor/boss tells me that they'll promote me to Manager as soon as a spot opens up. I dont know if they will, but I am taking them at face value.
(1) As a Dominion Energy corp dev person I am so interested in knowing the specific Virginia company you are referring to because I can only think of two that fit what you described. Don’t say it if you don’t want to but you just peaked my interest with the way you referred to the company.
(2) In terms of making the transition, a few things. First, it will be far easier to make it at the associate level, not the VP level, unless you are willing to go to business school.
Second, you will almost guaranteed to need to show some type of industry knowledge. You won’t be expected to be an expert or to be able to go super granular but you will need to demonstrate a basic understanding of the industry. You will likely need to know basic power market dynamics, basic PPA concepts, that type of stuff. I doubt they’d press you too hard on regulated concepts like rate base and the (at a high-level) relationship between the regulatory filings and the financial statements at a developer but if you are going to look at more infra fund types it would likely be beneficial for you to understand the basics.
Third, being a lateral from a more general PE is good experience. That will be beneficial. You will need to explain why the change but it is a relatively easy one to explain
Thank you! A few follow up questions / answers
Thank you!
(1) A&D is definitely a massive player in northern Virginia. I interned at Spirit AeroSystems in corp dev where I worked on the corporate strategy (which was basically to acquire our way out of relying on the 737 for 50% of our revenue and this was during the Max shutdown). It is a shame COVID happened or we may have actually executed on that strategy. I say this as a preface to demonstrate that I have spent way too much time thinking about M&A within the A&D space.
Broadly speaking, at the majors, there isn’t massive deal flow. That is absolutely right. You are talking more like 1-3 signed deals per year on avg. That’s not nothing but that isn’t exactly great for a deal focused career. But if you look down market, if you look at the suppliers, you do see a bit more transactions. Not an order of magnitude difference but more.
This is a long way of saying I think you have the right idea in terms of A&D.
(2) The associate-VP considerations was meant for PE firms, not at corporates. Sorry I didn’t make that clear. It is very much doable to come in from senior banking role to a director/VP spot.
(3) I came in at the analyst/associate level (there is no distinction at Dominion) with salary + bonus at ~$100k. The benefits are very good (ie - how much of healthcare they cover, the largest 401(k) contributions I have ever heard of, etc). And Richmond is a below average COL city. It is not like living on $100k in NYC or Chicago or LA.
I went from traditional PE to energy infra PE at the associate level - definitely doable, though as others have mentioned, harder as you move up in experience and your current PE experience will likely be discounted. You will get grilled on infra knowledge / skillset so be as prepped as you can.
Don't want to sound too negative, but make sure this is something you really are interested in (not just that you want to make a positive impact on the world) - infra PE is an entirely different animal, esp. renewables. Highly tedious modelling (and not necessarily more intellectually stimulating) with immense amount of returns compression over the past 5-10 years that have compounded this (everyone trying to eek out a few bps of incremental return to justify deploying the excess of dry powder). The people I know that stick with it, really love the ins and outs of power/energy (power/pricing curves, complex financial structures, etc.). Sounds like you enjoy your current seat, which is a rarity in the industry, so think twice before jumping.
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