Traditional Private Equity vs. Sovereign Wealth Funds
I'm currently a senior associate at a MM PE fund that is looking to lateral, largely due to the industry focus and value investment strategy of my current firm. Its a great job market so I'm see a lot of different opportunities and wanted to get peoples' thoughts on lateraling to traditional PE vs. a sovereign wealth fund in their direct investments arm.
Though both are investment roles in private companies, I've come to understand how different a role would be at a traditional PE vs. SWF. It seems like a SWF has significantly better WLB / flexibility (given higher level diligence from co-investing rather than leading) and actually better comp (base + bonus) but with no upside (no carry / equity).
Anyone have any thoughts on comparing these roles at a mid-level role (senior associate / VP)? Would also love to understand perception and potential exit opps at a SWF role vs. traditional PE.
A few things you might want to consider
Can you expand on your point on promotion path especially if you’re not a national?
Using GIC as an example, if you are a Singaporean National then your promotion path is faster than if you are not Singaporean.
Have heard this about multiple SWFs so not picking on GIC specifically.
Bump, any other thoughts?
One point to expound on for WLB at a SWF. The reason may not be that there is more co investing vs direct. There are many other factors, including that time is in your hands to control (not all situations), internal processes can take longer, and you may often hire a bank, etc. Am at a SWF and in the 3-4 deals I’ve closed or will close in the coming months, only 1 was co invest and we led everything. The others have been direct and we hired and coordinated all the advisor work, including bankers. Having bankers on board has made a huge impact on WLB because you can offload most of the time consuming work to them while still being 100% involved in the thesis formation and final deliverables. Just a couple thoughts as I think the view that all SWF are only passive co investors is false (where I am).
Really insightful!
As someone who made the switch, I can paint the picture this way. I'll try to be candid.
2020/21: I was a first year associate doing buyouts at a firm on border between UMM/MF.
2021/22: Second year associate doing growth equity at a SWF (100% direct).
If you ask me it's definitely been worth it, and will never go back to traditional PE again. The only places in PE which would let me get away with the lifestyle I want would be no-name places with no infrastructure, and tiny funds, doing deals nobody cares about. SWFs are a great balance between high-profile transactions, buyside mentality, lifestyle/perks, and decent brand recognition.
Also growth has been way more satisfying for me than buyouts.
YMMV depending on SWF.
100% agreed. So far it's been totally worth it for me. Still super interesting work, solid deals, get to work with advisors/other funds/investments across the globe.
And now I actually have time for so much outside of work. I've resurrected my old hobbies and considering new ones, all the while being way more active in my personal investing (which was hugely lacking before). On that last point, I think people overstate total comp and understate investing. Someone who invests actively but makes less than a banker (many of which hold cash because no time) may very well end up better in the long run.
Overall very happy with the move, although there definitely have been trade offs that not many are willing to make.
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