AMA: Ex-BB analyst across US and Asia in Oil&Gas/Power

B4nker4lyfe's picture
Rank: Baboon | 102

Hi there, I was previously employed by a BB for 2 years. I was in the US for a year before moving to Hong Kong for my second year. I focused on the Oil & Gas and Power industry. I recently moved to a special sits fund.

Education:
Target school, got multiple offers in senior year.
Double degree - Economics and Engineering

Internships
Boutique advisory/RX

Ask me anything, happy to help.

Comments (18)

Dec 17, 2015

Hi,

I was wondering if you can help out with the following questions.

  1. How much of your time is spent on capital markets vs M&A during your time in HK compared to your time in the U.S.
  2. Do you mind sharing why you had decided to move to HK from the U.S?
  3. Where did your colleagues in the HK office go after their analyst stint (buyside, stay on banking etc)?
  4. Whats your personal outlook on the oil industry?
  5. Do you mind sharing on why you chose to go to your current job?
  6. Lastly, do you mind sharing on your thoughts of the BB office in HK vs Singapore.

Thanks.

    • 1
Best Response
Dec 17, 2015

Thanks @Woozy - all great questions

  1. My focus was Oil and Gas in the US and when I came to Asia I started learning Power and Utilities as well. I feel that I despite being in an industry group in the US, I used to do more capital markets - id say 60% cap mkts and 40% M&A. In HK it was the other way round
  2. I didn't get my H1B Visa to stay and work in the US and I could only work for 1 yr under my student Visa. So my BB was nice enough to transfer me top another office. I had an option between LON and HK but chose the latter - early exposure to emerging markets, closer to home (India) and a chance to diversify into Power besides Oil and Gas
  3. This is a great question for people looking to move to the buyside in HK.
  • Firstly, the PE recruitment market here is neither as deep nor as wide - you have the usual suspects like KKR, BX, TPG and the other megafunds but then you also have smaller shops that are exclusively China or regional focused. But even the megafunds are more focused on China
  • There is no structured recruitment process compared to the US - so you need to be more entrepreneurial and proactive in looking at these opps and sending in resumes/setting up calls
  • Most places here do little origination and more presentation work - back to their offices in the US/Europe
  • Most places have a language requirement (Mandarin)
  • PE/HF generally pays lower than banking here (SURPRISE SURPRISE!) - this is because Banking base comp includes a housing allowance because rent is ridiculously expensive. PE and HF dont pay that allowance so automatically your take home base pay is lower

So to answer your question - many people actually end up staying in Banking just because it is really hard to land a buyside offer here. Those that do leave - id say about 40-50% PE, 30% HF and the rest go to industry

  1. I'm still bearish on oil and gas. I will try to highlight this in another post focused exclusively on O&G but key points are below

Supply side
- OPEC has basically become free for all with Saudi and Iran fighting for mkt share. While Saudi can still single handedly swing the market - they got burned too many times in the past
- While rigs are declining in the US, production per rig has actually increased. So the overall production number is not falling as quickly as expected
- Storage (oil and products) are full/ near full utilization globally

Demand side
- Overall global demand is still tepid
- El Nino effects on US winter - lesser demand for heating oil and gas

I feel oil and gas has entered a similar cycle to mining - where producers cut costs, produce more in the near term but eventually all the high cost producers will be pushed out.
Previous capex cuts will have an impact by end of this year though there will be a stronger crunch felt by 2018-2019 when supply starts to fall in light of weak investment currently

So in short I feel oil has room to fall further maybe 25-30 range (Brent). It needs to stay there for a more stable recovery
I expect to see a lot more consolidation in the services space near term.

  1. I wanted diversify my outlook - banking is only one side of things and while I was recruiting I wasn't dead set on either PE or HF. The fund I chose had some great attributes
  • I would be able to diversify into other industries but yet still remain in touch with Oil and Gas
  • They had a separate pool of funds focusing purely on energy names
  • No language requirement - we invest in developed markets
  • Pay was better than banking
  • Team was a great fit

So as you can see I was very "lucky" in finding this firm. From their perspective they were looking for a oil and gas focused analyst with international exposure and great modeling skills - I fit the bill

  1. This is a question that I can write on and on about. I feel that in banking, culture is the No.1 thing - when you are working 100+ hours every week you want to be working with people that you like, you can talk to, shoot the shit etc. Below I am only talking about my experience - there are groups with worse culture in the US and ones with better in HK but this is just my experience

In the US we had a great group - we used to go out together on the weekends (at least the Analysts and Associates), throw the football around in the office, talk shit and crack jokes. In the darkest of times it was these things that made you feel like going back to work the next day and kept you fresh. Even the VPs and Ds would join us from time to time. While we crushed a ,lot of work, it was a great atmosphere and I didn't even realize how my first year flew by so quickly

HK by contrast was almost like a prison. No one spoke with each other, the hours were worse than the US. If you think banking in the US doesn't have any balance, HK is worse. At first I used to think that It was just because I'm not Chinese but then I noticed that even they didn't speak much amongst themselves. The VPs and Ds were more removed from the team.

Also in HK< you had to fill out forms for everything KYC, Compliance - these checks that were basically one liner emails to people in the US. Basically the way you spent your time in HK was on all these internal things - besides doing execution/coverage

In terms of the actual work done for clients Hk was more tedious and meticulous. US clients are generally more sophisticated compared to the Asian ones - so there would be more to show, interesting ways of modeling out scenarios etc

Culture: US >>> HK
Time spent: US>HK
Work quality: US~HK

Hope this helps

    • 3
Dec 17, 2015

Hey,

Thanks a lot for the extensive reply. Just a quick follow up question, what are the main reasons for people leaving for PE/HF given the lower base? In addition, I was wondering if you know whether the gap in pay will close up over time. Lastly, I was wondering if you can provide a rough estimate of the number of M&A analyst can close in his stint of 2 to 3 years in the HK office.

Thanks and gave SB+.

Feb 22, 2016

Great call on O&G prices.

Dec 17, 2015

Thanks for taking the time to answer questions, will add this to the frontpage now

WSO's COO (Chief Operating Orangutan) | My Linkedin

Dec 17, 2015

Thanks for doing this. I am a recent grad starting with a group doing a mix of fixed income and PE solely focused on O&G.

How did you 'pick' up the industry dynamics? I see you studied engineering which may or may not have helped you grasp the technical stuff. I studied accounting in school and I've been finding that sometimes I get too bogged down in the science. Naturally I'm sure much of the knowledge will be gained from actually doing the work, but I've been reading primers pretty heavily lately. I start in a couple of weeks.

What worked for you -- in terms of getting started, learning your way around the businesses, and having a grasp on things? I have no real exposure to the industry and was incredibly fortunate/lucky that I landed this role.

Dec 17, 2015

Another great question for a new starter

Yes, reading research and primers will get you there definitely - but this approach leads to a better understanding of the terms and industry dynamics overall

To get a better view of the flow and pulse of the market, you need to read tons of news everyday on the subject

I think just working on deals, whether they be cap mkts or M&A definitely puts things into perpesctive

I don't think my engineering background helped that much TBH, it gave me a slight analytical edge but again nothing as far as industry is concerned

    • 1
Dec 17, 2015

@BB_Navigator" I have a unique background then most in that I currently work in the O&G industry and have a Finance background (currently in a Business Development role) however I graduated from a non-target in a major O&G city.

Any advice on what I can do to break into IB? I'm two years removed from school and have had some marginal success in reaching out to people in the industry but the overall theme seems to be that I should go and get my MBA which I think is too early for me.

Any tips or advice would be greatly appreciated.

Dec 17, 2015

Its great you have a background in O&G industry. I have always maintained that you get more industry technical knowledge by working 2 yrs in the industry vs 2 yrs in banking

As for making the jump to banking, I would say Post-MBA is your best shot. These Analyst/Associate programs tend to be very structured and banks also tend to stick to them as much as possible

Let me give you a scenario. Say you managed to land an offer in the near term there would be a few considerations

  1. What level would you be (2nd yr analyst/associate?)
  2. Would you be able to handle the heavy workload - I am not sure how much workload you current job has
  3. Would you be able to pick up the "processes" in day-day banking quickly enough

Banks also look at these things and tend to go for the safer option of 1) Either Hiring straight out of undergrad (where they can mold the student/candidate) or 2) Out of B School (so they have comfort that you have a work experience and ethic, can handle stress etc)

If they do want to hire, they generally prefer to bring in lateral hires - again there is a degree of comfort associated here that the guy they are hiring has gone through some previous training

So I'd suggest wait it out, go to B School and then market yourself as a Oil and Gas finance professional - hopefully by then we are out of this glut and there is actually more demand for O&G bankers. You will have an upper leg here having already worked in the industry!

Hope that helps

    • 2
Dec 17, 2015

@BB_Navigator"
Thanks for doing this!

1) What is the general reputation/ranking/deal flow of BB's in HK? Is it the same as NY?
2) How does buyside recruiting work in HK? I've heard that it is much less structured, so how would one go about making that jump, and when does the process start?
3) What percentage of people move to buyside, and are most of the buyside opportunities in mainland or HK?
4) Would you say there's a big different in GS vs MS vs JPM (all IBD of course) in terms of exit opps to the buyside? From browsing the websites of megafunds in HK/BJ/SH (i.e. KKR, Carlyle etc.), it seems that GS and MS have by far the biggest presence, is this correct?

Thanks again!

Dec 17, 2015
  1. So there is a new pecking order in HK as I discovered when I came here. GS>JPM=MS>DB=CS>Others as far as BBs are concerned. But there are also many Chinese firms that have a big share of the cap mkts pie. Deal flow is slower compared to NY so there is a lot of pitching., However, deals also take longer to execute so when you are on a particular deal (cap mkts or M&A) you can be expect to be engaged for 6mths at least
  2. There is no structure. There is no timing - Its how and when firms are looking to hire and when the recruiter reaches out to you. There is some seasonality though - majority of the firms hire between Apr and Sep
  3. Refer to my reply above. I'd say its mixed between mainland and HK
  4. GS has a definite upper edge and I think MS after that. For the megafunds being in those banks can help a lot - but again it also depends on the individual and how aggressive he is with marketing

Hope that helps!

    • 2
Dec 18, 2015

Where do you recommend we find primers regrading the oil an gas industry? If you are allowed to share any, would you mind doing so? Thanks

Dec 18, 2015

Unfortunately I can't share any

But ask your bank's research center/information center - they should have a few. There was a DB primer put out a few years ago that was very comprehensive and useful

Another way to go about it is to read initiation reports on oil and gas companies - that way it gives you an idea of the industry within the right context

Hope this helps

Dec 18, 2015

Is it be feasible to rotate to HK for let's say a year as part of a BB analyst program with no mandarin skills?

Dec 18, 2015

Depends on your bank and your area within IBD. You should check w ur MD/Ds and then HR eventually - its important to get a buy-in from your team so that the process goes smoothly

TBH if my MDs wouldn't have pushed for me in HK, it wouldn't have been possible - mainly because of the language requirement

Feb 22, 2016

Thanks for doing this, it's really helpful and useful.

Just want to ask - how did you recruit for the HF while you were still an analyst?

Feb 29, 2016
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