Investor Relations, PE

Hello All,

I was recently offered a role as an investor relations analyst at a mid size private equity shop in LA. I am currently a FoHF operations analyst. Seeking some advice as whether making the move will be worth it. What kind of career does an investor relations personnel typically follow? I've been hearing that the room for growth is limited for many of those who choose this path.. But does it lead to more opportunities than operations at a fund of hedge funds?

Any help would be appreciated! Need to make a decision on the offer in 12 hours.

Comments (15)

 
Jun 24, 2014 - 10:11pm

I deal with these people (IR) all the time. It all depends. Having seen what I have seen, lots of paths are pretty limiting. Doing PE investing leads you to PE investing, maybe banking (if you want to go back to sell side) or HF/mutual fund roles, FOF, placement agent etc. One could theoretically work in IR as well (I've seen this in a few instances but mostly on an internal basis, ie. deal professional is sick or tired of doing deals/lifestyle and switches to IR), or go to a corporate and do corporate M&A, finance or maybe even a CFO position. But that's it. From doing deals, you are not going to do procurement for some company or supply chain management, you're known as a finance person (may change if you get an MBA...)

FoF Ops roles. Maybe you could land in ops at a bank or HF (I'm not so sure about the latter though I am sure it happens). You could certainly come to a firm like mine (a consultant) to do Ops DD of HFs, which is certainly a path to something like COO of a HF, prime brokerage, and maybe marketing (though less so). It's more back office. So I am sure there would also be compliance roles and roles at an Administrator like State Street, JPM or custodian bank that might work (I'm sort of guessing here).

On the IR side, if you are good, you are gold since so many firms have trouble raising money. It's not as prestigious but very important (ie. funds need to have money to make money). You can from IR, move to a bank (like cap introductions/ prime brokerage), another firm to raise money, maybe business development at a corporate, maybe COO of a hedge fund in a more senior role. It's a bit more limiting but the lifestyle and hours usually much better.

On IR...Remember that David Rubenstein of Carlyle is not an investor. He's a co-Founder and IR guy. Although he is on investment committees and asks questions, his role has always been to raise money, and that was the deal when he co-founded Carlyle with Conway and D'aniello (the former is the investor, the latter more a "deal" guy in the way they look at things).

I used to do Asia-Pacific PE (kind of like FoF). Now I do something else but happy to try and answer questions on that stuff.
  • 1
 
Jun 25, 2014 - 4:44pm

IR is great work if you can get it. However, the landscape is changing drastically and the old traditional broker/dealer path is dying a slow death further aggravated by the Jobs Act.

Also - IR may not be considered as "prestigious" on WSO but... if you don't understand the deals and you can't explain the investment memorandum then you will certainly not be successful at fundraising.

It really depends on the firm and structure of the department. Some places will be extremely limiting and others will propel you forward, depending on how involved you get with the other areas of the business (e.g. acquisitions and AM - you need to know what's going on inside and out of the organization along with general macro trends - just to state the obvious). Also, it depends on who your investor is. Will they have you work with retail investors or are they backed by institutions? Those types of activities differ just as much as working in IR for a private company versus public companies.

At the end of the day it's what you decide to do with the role. I can't say I have seen anyone come in with an ops background. Usually it's ex-bankers that want what a slightly better work/life balance. As for exit opps, I have been in my role for a year and have offers on a regular basis with all kinds of positions that would be very lucrative. A good friend of mine in a similar role at another shop has the same experience. So, really, it is what you make of it. People recognize passion and dedication and will view you accordingly. Good luck.

 
Jun 25, 2014 - 10:44pm

guerillagrrl may have better insights than I do since she actually does IR (from the sound of it) and I would definitely agree on having to know about what's going on in your firm and macro conditions as well as the type of investors. I would, however, beg to differ on technical knowledge. Most people you deal with (investors) don't expect too much of it - I know I don't, and many investors that I know don't (and they don't have much deal knowledge themselves in most cases or did that stuff long ago). They expect you to be able to talk about something for a few minutes and cover a number of touch points and if there are some real details involved you make note of it, go and ask deal people/investment staff or rope them in for a call/meeting (I've seen this happen impromptu a fair bit) and that person goes over it. In the end, investors are usually too busy to ask really detailed questions. They have to cover a ton of funds/products in their target asset class, not just one.

I have seen all kinds of people do IR (then again I am in Asia but people fly in and out all the time), and its much more people driven and social than technical (ie. excel modelling 20 hours a day, though its a lot of powerpoint and filling out DDQs etc). Few have been ex-bankers. Lots are people who have been in IR straight off the bat or placement agents, some are ex FoF'ers, Ops, some are ex consultants, lawyers, TV presenters, athletes, you name it. It's a big relationship game (now I'm talking about the institutional side). Ie. if you have strong networks with institutions or families (ie. people who trust you and will give you money) you are gold and will earn your keep and make a lot of money while living a pretty nice life (good restaurants, travel, meeting all kinds of high profile people etc).

Good Luck

I used to do Asia-Pacific PE (kind of like FoF). Now I do something else but happy to try and answer questions on that stuff.
 
Jun 25, 2014 - 11:41pm

The necessary for fundraising is also kind of a curse. Once the fund is done raising money, you can can be out of a job. LA is a small market, which can make jumping ship a little difficult. But it really depends on the role I guess - you are always going to need to have IR at a fund to deal with/pleasure clients.

 
Jun 26, 2014 - 12:23am

Gotham, I respectfully disagree. In HFs, fundraising is a full time job since funds are open. Ditto long-only etc. In PE, once the fund is closed someone has to write the quarterlies, annual reports, keep in touch with LPs, try to source new ones, liase with potential placement agents, do other firm related stuff, answer all kinds of questions, change/provide data (ie. LP number one wants data parsed one way, the other wants it parsed another way), prepare materials (pitches, sometimes write PPMs, DDQs etc -can be outsourced) etc etc. Hint - this is not what most investment professionals do, sometimes analysts/associates help out with a few things... Before you know it, its time to raise/pre-market again...

I used to do Asia-Pacific PE (kind of like FoF). Now I do something else but happy to try and answer questions on that stuff.
 
Jun 26, 2014 - 12:59pm

You are spot on for the most part.
IR does not have to sit and model for hours at a time. That's wasted sales opportunities! lol.
But if you are running the offering then you need to know the fund model, the strategy, the investment model, the firms background and so forth. You can get away with simply introducing the principal/CFO if an investor starts asking detailed questions (which really depends on the investor) but you are much more effective if you can work through most of the technicals with them. I definitely would not generalize the investors in such a way as you did because that experience varies greatly by investor and investment vehicle you are fundraising through. I know quite a few ex-bankers that turned to IR post-MBA - not sure about the backgrounds of everyone you threw out.... and again, placement agents work very differently than someone in a full-time IR position at a mid-sized PE shop.

Mid-size PE fund work will likely entail pitches, DDQs, quarterly reports, distribution mgmt and communications, development, and current LP relationship mgmt.

 
Jun 26, 2014 - 10:27pm

Yes I agree 100% on knowing the fund, history, strategy, investment model etc and how placement agents definitely work differently compared to IR (though I've seen the switch happen both ways).... My reference to "technical knowledge" was that of specific details of deals. For example if X fund closed a deal, most people that I deal with (as well as most investors I deal with, pensions, endowments, swfs, FoFs) would expect the IR person to know the general gyst of the deal. The thesis, how it was sourced, how much equity put in, structure (straight up? prefs? CB structure?) if a minority deal, some of the negotiating terms (ie. 5 year put, upside sharing if over 3x return), if an LBO, then how much debt, the general cost of it, banks involved, tenor. But that's generally it - ie could talk about and around the deal for a few minutes.

Yes some investors may have more detailed questions and that's when an investment person is rolled in... Most that I know would not know about specific covenants, use of swaps to mitigate interest rate risk etc etc. They would expect a "let me get back to you on that" or "let me get/ask x investment person who led the deal" etc. Why? Just like in many jobs, the IR person has to have a broad base of knowledge, rather than just the deals that they worked on.

The profiles of folks that I have seen has been mostly in Asia. Not a ton of bankers (M&A, sponsors etc,) have gone to IR as of now. I personally know people in the US/Europe with similar profiles, but I can imagine that there would be more ex-banking types in those roles.

In short, the major caveat is that I'm based in Asia. These markets are much less technical (more growth, less debt, less "sophistication", more relationship based) so the profiles for IR here may vary differently.

I used to do Asia-Pacific PE (kind of like FoF). Now I do something else but happy to try and answer questions on that stuff.
 
Jun 26, 2014 - 10:28pm

Investor Relations / Fundraising in PE - any WSO members work in this area? (Originally Posted: 11/15/2014)

Long time lurker. Curious to hear if anyone on this forum works in a fundraising/investor relations role at a PE shop. I'm really set on getting into this. I did a traditional PE internship and realized I hated it...so much modeling, really not exciting for me. Judge me however you like. IR is really appealing to me after interviewing by chance for a IR position which I didn't get.

I'm a really big people person, very social, natural extrovert....IR seems like something I would love, not to mention I think the travel would be great. Also, I feel that quality talent is not over-saturated this area of PE and as a result there is much more upward advancement potential. Also, a lot of time away from the desk/computer, more time speaking on the phone with investors, traveling to investors, introducing investors to investment teams....this all really appeals to me. Finally, I get the sense that since the job responsibilities are not transaction based, there tends to be far fewer time sensitive tasks, which enables a much more flexible schedule and far better work/life balance. Surprisingly, salaries appear to be on par or competitive with analytical/investment type roles.

I've done quite a bit of homework via internet and a few folks in the field now...but I was curious to hear thoughts/experiences/opinions from people who work in PE IR or work closely with individuals in this niche area of PE.

 
Jun 26, 2014 - 10:33pm

Investor Relations at PE firm? (Originally Posted: 02/09/2018)

Hello,

I am interviewing for a position as an investor relations analyst at a large private equity fund like KKR, TPG, Carlyle, etc. How is the prestige or responsibilities for this kind of role along with salary expectations?

I originally wanted a position as a private equity analyst, but I was thinking to get into the firm into IR may be easier. Let me know your thoughts!

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