Associate at a CLO Fund moving to Direct Lending

First-time poster here. I an Associate at a small CLO fund (~$2bln in AUM) and my job responsibilities include screening new credit investment opportunities in the primary and secondary broadly syndicated leverage loan markets (non-investment grade), as well as managing my current portfolio of credits.** My question is would a move to a direct-lending position at a private debt fund (i.e. Ares, Golub) be a feasible / strong career move? What are exit opportunities for someone in my position?** Thanks in advance.

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Comments (10)

Apr 10, 2018

Posting to remind myself to check if anyone answers this.

I sit near direct lending guys and have yet to ask them what they actually do at a credit fund I just joined.

Apr 16, 2018

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Apr 19, 2018

Would be a good move for someone in your position, particularly if it is to a larger name shop like you mentioned above (could be feasible). There is much more heavy lifting involved with direct-lending as it requires a much deeper dive into each name that is invested in as there of course is not a liquid market to exit the risk, unlike in the leveraged loan market. Typically if you are participating in a direct lending deal, you have a chance to have more one-on-one face time with the management team as well as with the PE Sponsor than if you are a small CLO manager. I have buddies that have worked in direct lending and have leveraged that role to move to PE or over to a HF, direct lending is a great long-term opportunity.

As a research associate at a CLO shop, you likely have exit opportunities in the rest of the leveraged loan market (60% of LL market is CLOs) like Apollo or other PE shops that also manage LL investments (but not for PE side of business), or moving to a HY manager with LL & bond exposure.

Apr 19, 2018

Thanks for the response. A follow up to my initial question - Would I be in a better position compared to an Associate in Leveraged Finance for a direct lending role? Being on the buyside has its perks, but I would think that an Associate in LF would have more origination experience.

Apr 19, 2018

I think it really depends on how in depth your firm's process is when reviewing deals. If they do have a strong process and you are developing strong analysis skills within the leveraged loan market then you should have no problem competing with LF Associates. At the end of the day, you are investing in the same type of product, just different risk parameters.

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Best Response
Apr 28, 2018

To OP:

You are already more than qualified to get a direct lending job if you want one. Or, at least you are qualified to get a first round pretty easily.

Not sure what your process there is like, but we do a lot of diligence on new syndicated loans. Nearly on par with what we do on club deals & [di]stressed. If you are simply thinking about doing direct lending as a stepping stone, then I'd caution you that there is no need.

Unless your current job/shop is terrible: just sit where you are, learn how to invest, read some books, manage a PA, look at as many deals as possible, and maybe get a CFA. You do those things and you will be able get any of the jobs that debthawk mentioned above without even touching direct lending.

Wouldnt worry about competing with lev fin analysts/associates. I have yet to meet one that knows anything about investing.

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May 3, 2018

Thanks Cries. I'm just trying to gauge the prestige / potential exit opportunities (in the case I want to leave) of staying at my current credit shop vs. going to a direct lender.

Apr 30, 2018
getmetotheeastcoast:

I currently have an offer from Antares Capital, and while it isn't as prestigious as Golub or Antares...

I assume you mean "isn't as prestigious as Golub or Ares"? If so, what makes you put Antares a rung below the other two?

Apr 30, 2018

Antares is pretty good, certainly on par with golub and ares. It sounds like a step in the right direction (but idk what group/function it is).

Just be careful you dont get pigeonholed in origination (aka cold calling MM business owners to ask if they want loans). Some direct lenders use their associates and VPs specifically for shit like that.

I personally think it would be great for you to experience MM direct lending as well, especially if you end up having to workout some loans.

Good luck with the decision!

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Feb 10, 2019
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