Golub Capital type direct lending fund

Hey everyone,

Have searched through and seen a few conversations on this topic but couldn't find exactly what I was looking for. I'm an Associate at a BB and recently got an offer from a direct lending fund (think similar to Golub Capital in $5-10bn AUM range). They're now starting to explore other strategies across capital structure as well but mainly on debt side - so there is opportunity to grow.

Can someone provide a view on how comp, career in DL and exit ops compare to just staying in IBD (shorter and longer term). It looks like comp might be substantially lower (especially when comparing to boutique IBD) but interested in any informed thoughts. Would appreciate it.


Comments (19)

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Mar 19, 2019 - 12:59am

I work at a credit MF (think GSO, HPS, Ares) as a 2nd year ASO. I did 2 years as an analyst at a BB in Financial Sponsors , 12 months at a long/short equity fund and been at my current credit fund for the last 18 months.

**Comp **- compensation has been in line with peers in IBD for our firm. Base ~$US120k and Bonus ~$US90-110k for my peer group. Though, I know my IBD friends got an ASO sign-on bonus. I expect my 2nd year ASO bonus to be >100% of my base from now, though my base has not increased from last year.

**Career **- I wake up every morning with a smile and excited to go to work. Every week we see a new investment opportunity/IM and you learn so much about different businesses and industries. You learn how to conceptually understand risk and return, downside protection, upside, operational issues, competition, deleveraging, the list goes on. If you truly love investing with a passion for doing transactions/deals then this job is for you. You get to do a handful of deals every year (compared to my PE or IBD friends that do much less) which gives you great experience and exposure. You also get to think about term sheets, and how to use this to protect the investment from the downside (e.g. covenants, negative undertakings etc.) This negotiation side of credit investing is really interesting and structuring allows you to be creative. Sure, some people prefer to be involved in the whole deal life cycle including acquisition, operational improvements and then exit, but takes years and from what my friends tell me, they got over it pretty quick. For us, once we make an investment we need to monitor it closely monthly, keep a close relationship with both the management and sponsor and raise any questions or issues if we see any problems. Honestly, this is such a great job.

Industry / exit opps - private credit continues to grow which is fantastic. Having momentum is truly an extra upside. Eventually this will fizzle, but it is great to be part of a group that continues to raise more and more money and invest more and more. In terms of exit opportunities, if you work for a large credit fund with a good reputation and get transaction and investing exposure, you will have opportunities to continue working in credit, whether it be Direct Lending, Mezzanine / Pref Equity or in some instances, distressed debt. Other opportunities will include special situations and Private Equity. I would say a few of my friends from credit have made the move to PE and said their unique experience brings a different skillset to the fund which is valued. However, most of them choose to stay in credit.

Other opportunities - just on your point around exploring other credit opportunities, I think this is something that is important to consider. As credit continues to generate significant fund inflow as investors look for higher yielding, more stable returning assets, large funds will introduce new initiatives and investment products to become more diverse and a multi-asset investment manager. This gives you opportunities to move internally and broaden your scope

**All in all **- I think, as it has been for me, private credit is a great place to go to currently in your career. If you don't like it, you can just move. I have seen some people move from the buyside back to the sellside, so there is no wall stopping you! I didn't like working for a hedge fund, so I moved!

Mar 19, 2019 - 6:49pm

Also work at a credit "mega fund", as a senior associate. I agree mostly with what was said above. As background I joined after 1/2 years as an IB associate on the sell-side.

Comp - My all in comp last year was $300K+. I expect (based on others in the group that are a year ahead of me) to be closer to $400K all-in this year. I'd warn that comp is highly dependent on what type of shop you're working at. If it's a smaller fund then I'd expect lower comp.

Hours - When I first started the hours were a little rougher (e.g., closer to 70 - 80 per week), but that was likely because I was still learning the ropes and slower at what I had to do. Once I got the hang of it and we added some heads on the junior side, it's normalized to 50 - 60 hours a week, with very rare instances of weekend work. As always, this is highly dependent on what deals you're working on. Sometimes sponsors don't do a great job of giving you a heads up and it ends up being a 1/2 week sprint to get through investment committee approvals in time for a fully baked commitment by the sponsor's bid deadline.

Memos - Our memos are very detailed, as we tend to take a "private equity" light approach towards diligence. So detailed thoughts around investment merits and risks as well as corresponding detailed analysis / exhibits to back up those thoughts. We like to rely on the sponsor's third-party work (e.g., QoEs, market study, etc.) however we'll conduct our own diligence calls with third-party experts as well. We also conduct our own analysis as opposed to relying on what the sponsor provides as they're also motivated to provide a rosy picture to get more leverage. Ultimately I'd say our IC memos end up being around 40 - 50 pages (Powerpoint) in length with potential follow on work if committee identifies further areas to dig into during the discussion.

Mar 19, 2019 - 7:33pm

Sure - I work in APAC by the way, so would be slightly different to NY, but the thematic is roughly the same with my peers in NY

I come in around 8:15am in the morning and would leave on average around 9-10pm. Noting this is an average, and includes an hour of gym time somewhere during the day. During deals and due diligence, this number could easily be pushed to midnight, though I have never really stayed up after midnight except for conference calls, IC calls or other reasons (again, I work in APAC and so NY is a day behind). When we are not doing deals and only indicatively looking at opportunities, this could easily shift down to leaving 7-9pm. I know my peers in NY probably leave earlier (I am the only ASO in my team). I work most weekends, usually Sunday. I think the weekend work life is better in NY

For our memos - we have various types depending on the stage of the deal. If we see an opportunity and think it is worth pursuing and communicating with NY, we will do a 5-10 page word document memo outlining the opportunity, business overview (including what it does, competition, value proposition, reason to exist, stability across the cycle etc.), historical financials and observations, forecast financials and CF / deleveraging profile, proposed capital structure and terms. Our IC memo will just be a 80-100 page version of this (in ppt) with stress tests and providing much further analysis and DD conclusions.

Jan 18, 2020 - 8:11pm

As a more informed individual, where do you see the industry in 5-10 years?

Go, Go, Excel

  • 1
Mar 29, 2019 - 9:38am

unfuckthis How would a private credit investor in 1st Lien and 2nd Lien leverage finance transactions compare to the cohort that is interviewing for these types of roles? Specifically someone who works for a CLO? My understanding is that they would stack up well as most Analysts at CLOs are seeing a high volume of leveraged finance transactions and already doing the memos, modeling, diligence calls (primarily w/ the Bank, sometimes a PE firm and mgmt.) and taking a credit investment perspective to bring to their IC. Thanks ahead of time for the color.

Apr 5, 2019 - 9:56am
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