London - Private Debt / Credit scene

Hi folks,

Just wanted to start a Megathread to discuss the UK-EU scene for Private Debt and Credit funds. Would be keen to hear from you all any insights on reputation, salary, progression etc on the top 10-15 funds, as well as your background.

I am as well working in a PD London based fund with c.15bn AuM so would be great to get in touch with other peers and discuss industry trends.

I will start with a short, non exhaustive list of funds I would like to get to know something more about:

Ares

Arcmont

Hayfin

Park Square

Pemberton

HPS

Alcentra

Barings

Sixth Street

Tikehau

Carlyle

HIG Whitehorse

BX

Apollo

Permira Credit

Does anyone have any experience with these funds and want to share something? Insights on any planned salary bump following what happened with IB? Top players on the scene? Returns? 

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Comments (27)

Most Helpful
Sep 25, 2021 - 3:45pm

Note that most Private debt shops moslty have a country coverage approach with in a number of cases regional offices - so you need to look beyond london if you are not a Brit! Most shops are also not as saturated as PE as they are raising a ton of AuMs (and deals quite frankly become more and more competitive as I am sure you know -  it used to be a 1x1 discussion with the sponsor, now PE firms reach out to 5 Private credit shops and make you churn through grids) so progression has been good over the last 5 years at most shops as all have been growing relatively fast.

I know a few / worked with a few of these - I'd also add GS to that list they do a fair amount of deals in 2L/Mezz/PIKs/Pref kind of things.

Ares - largest shop probably with GSO, does so massive deals but heard that juniors work similar to banking - i.e. you are just a small piece in a large well oiled machine. They do some cool stuff however and have done some multi Bn deals alone which is appealing as there is less competition (maybe HPS/GSO but that's about it).

Arcmont - good firm giving carry / equity at the junior level due to their structure, very focused on junior experience (you get to present at IC) and are expanding into higher returns stuff (Capital Solutions, Equity co invest etc). Has been growing quite fast and is (almost) constantly hiring for a role subject to languages.

Hayfin - good guys, are not scared of playing in opportunistic deals / special situations (not necessarily distressed).

Park Square - used to be a top notch firm but has lost a number of seniors.

Permberton - mostly does small deals and has been expanding aggressively - I don't rate them very much unless you are keen on LMM/MM deals

HPS - another very large shop similar to Ares, main issue is that their IC is 100% out of NYC - so you may be working a lot on a deal and get told that the NYC guys have a different view and it will not go through... Not great. Know someone that was there and he had a good experience with his only issue the IC point. They do some cool stuff as well and can play in real size

Alcentra - has lost a number of seniors recently (4 partners I think) and heard that they are stuggling to raise their latest fund (to be confirmed) but was one of the large European direct lending shops. My view is that they have struggled to adjust to the volume intensity required with the entry of the big PE funds throwing out capital left and right. Beyond that heard that they were paying quite well and you had a decent experience as a junior.

Barings - your typical credit fundamental shop - loves hard asset boring businesses and will do a ton of work around docs (they love covies - not to say that others don't but they are quite painful on that).

Sixth Street - used to focus on double digits deals minimum so a small opportunity set that other pure play direct lending shops, heard you work hard but you get paid nicely. Has been aggressively expanding lately from what I know

Tikehau - I have a friend there, will revert with more info soon, but basically seems to do a lot of very small deals and relatively french focused and slowly expanding in the UK/Germany.

Carlyle - have not seen them do much direct lending, the last deal I saw them do that would somewhat fit that category was a refi for a company that could not refi in the public Loan market. Not really sure about them - know someone who spent c. 1 year there before leaving but not sure exactly why they left so quickly.

HIG -  does small deals, not sure really beyond that - I have interacted with Bayside mostly but I don't think that these guys are the direct lending ones.

BX - Volume shop - I have seen them use their Private Credit funds to invest in primary leveraged loans that met their IRR target, basically similar to Ares, you are just one piece of a large engine. Basically they are not making money through performance but through AuMs - they even realise performance fees on an anual basis to appear more stable to equity investors and get a better valuation.

Apollo - relatively new strategy headed by one of the partners from Alcentra that left. I was shown a role there recently but declined to participate in the process. Basically has unlimited capital to deploy in the strategy through their insurance captives (has pros and cons that come with that). 

Permira Credit - know someone working there, seems like an OK shop but has not expanded as much as other credit firms into the strategy but seems like they are looking to expand quite a bit now.

New shops that are building out a private credit strategy:

Apax - they are trying ot do some 2L/Mezz/PIK/Pref (10%+ basically) in businesses that are aligned with their PE strategy, seems like a cool gig and the guys are quite smart. c. 1bn AuM for credit last time I heard and they are growing at a healthy pace (don't want to move to lower returns more competitive deals)

Albacore - has done and will continue to do private credit deals although they are also moving into CLOs. Believe everyone is a generalist (i.e. can do public and private) and Bill (lovely guy) is the main PM. Known to be a smart shop that was historically not scared to go where others would not. 

EDIT - added some intel on the shops mentionned below:

ICG - Similar to Ares, one of the larger shops out there, has different pockets of capital for all return / types of tranches, not too sure how that works from a junior perspective (i.e. which deals you do)

Oaktree - Don't think they really do Direct Lending per say, most of their funds have higher returns targets, but they can do Mezz starting probably at 10% through their Opportunities funds ($10bn latest global fund I believe). Returns in general have been struggling lately from what I hear, just too much capital chasing a limited number of deals.

Fortress - they do have a Private Debt sleve ($2-3bn fund size, 8-12% kind of returns with a 20-25% allocation to Europe I believe) but it's a very small team that does not purely do Private Debt, they also have a HF vehicle to play in liquid special sits and a private PE style vehicle to play in private / longer term special sits - I think that these two vehicles are at 15% returns minimum kind of target (as you often see, maybe a bit less on the HF one).

KKR - good brand name but honestly have not seen them do much, not sure about returns and the experience you'd get as a junior.

Blackrock - growing platform, has a regional coverage, don't know more than that other than that they probably have unlimited capital

Partners Group - I heard mixed things about Partners Group - the reason is that they have rotational analysts, so as an Associate and above you are constantly forced to train new guys which can get painful and tiring. 

Oak Hill - just another special sits HF trying to put their capital to work, have not seen them do much on the Direct Lending side. 

Bain Cap - moslty does smaller deals, good name but not super well respected if you ask me for Direct Lending. Their Special Sits team seems to do some cool stuff in Retail / Hotels / NPLs however, but apparently grind super hard.

CVC - Fired their Special Sits team and are re-focusing on the vanilla Private Credit stuff and CLOs / liquid HY stuff. I know someone who moved there very recently, will catch up to get more intel. I know they can get quite creative to achieve their minimum returns and lower cost of capital (i.e. partnering with a cheap bank and do a first in first out / last in last out kind of deal).

Macquarie - they do some private credit in London, moslty seen them do GBP deals for whatever reason and also few deals in the nordics. Not sure what pay looks like.

Brookfield - did not know that they played in Private Credit, not sure how that will be done going forward now that they own Oaktree

Lone Star - never heard of them do private credit, maybe they do in building marterials in line with their PE focus

Ardian - similar to Tikehau, very french, apparently has a bit of nepotism going on

Bridgepoint Credit (ex EQT) - don't know much about them but indeed would look at their financials now that they have IPO'd.

Cerberus - more sepcial sits in general, but have not seen them do much in Europe lately.

Centerbridge - more special sits than direct lending, have done a cool deal for Cineworld in terms of rescue financing. 

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Sep 25, 2021 - 9:24pm

Thanks for this mate, just to add a couple of industry insights I heard recently - can confirm Alcentra has been struggling due to poor portfolio performance, and the same seems to be for Permira. Barings is looking very active at the moment, while I have to agree that Park Square has always been considered top notch, but seems like they are not growing in terms of AuM.

I would also add ICG to Ares, HPS, Arcmont and Hayfin type of players, with also Ardian growing quickly. In my experience I have also seen new entrants like Pemberton scaling up and compete on bigger deals (200-400m tickets), with bigger deals still for banks.

Would be curious to hear from you or anyone else any insights on salary, bonus, progressione etc.

Sep 26, 2021 - 2:34am

Agree on ICG/Ardian both solud shops but very institutional, it's basically the same as being at GSO without the name brand. Yup permberton is also doing some larger deals now, but nothing of the size of the biggest guys. 

I'll be broad but basically comp is as follows at the junior level: 

Analyst across all years (i.e. 1-3) 45k-75k base / 60%-100% bonus

Associate (just for associate 1, much more variance thereafter): 80k-90k Base / 60-100% bonus - number of funds (employee owned/not listed) will offer some carry / equity from this level. They often think about it as the total amount - if you annualize it over 7 years it often comes around the ~50k per year mark; but will obviously get paid moslty at the end of the 7 year period. 

  • Analyst 2 in IB - Gen
Nov 5, 2021 - 9:16am

Mixed shop from what I hear, whilst they deploy a ton of capital due to their LP angle with most funds, the team and talent there is somewhat average. Can play across the capital but hearing that DD may not be as in-depth as at other funds. 

  • Consultant in Consulting
Sep 25, 2021 - 9:41pm

Interested in the subject, a couple of additional names that should have an European presence (do not have info on them)

Goldman Sachs (raised mammoth funds last year, should be one of the top shops)

ICG

Oaktree

Fortress

KKR

Blackrock

Partners Group

Oak Hill

Bain Cap

CVC (last I remembered they fired a bunch of people one year ago)

Macquarie (not sure if PC is in London)

Brookfield (not sure if PC is in London)

Lone Star (not sure if PC is in London)

Ardian

Bridgepoint Credit (ex EQT), would be cool to dig into their financials since they IPOd

Cerberus (more special sitsy perhaps?)

Centerbridge (more special sitsy perhaps?)

Also while AUM is undeniably growing, I feel expected growth rates are in line with the wider private capital space (see EQT annual report 2020 s.20, original source Preqin). Fastest growing segment is still PE, although within the report's definition there is growth and VC which might be driving growth more than traditional PE. Ultimately the fates of private equity and private credit are closely linked.

Sep 26, 2021 - 7:32am

Edited my post above for a number of your names. Agree on your point, there is just too much money around and thus it's easy to raise vehicles but it's tough to deploy capital at good risk/returns profiles. Private debt will follow PE although Private debt funds now also venture outside PE deals to back family owned businesses for a recap etc. 

Sep 26, 2021 - 12:38pm

Great thread. Interested to hear more about names with renewables and infrastructure groups.

  • Research Analyst in HF - Other
Oct 2, 2021 - 11:16am

Pure CLO pay will be less than DL/Private Credit pay which will be less than Special Sits Private Credit pay for the most part. If you do Public credit investing more generally which includes CLO then the pay is much more variable. For example at Anchorage, which is 75% CLO at this point, but still pedigreed as a distressed hedge fund, you'll outearn the cushiest special sits Private credit junior jobs.

A ton of these credit shops being mentioned are giant multi-Strat behemoths that also have CLO arms. So pretty much almost any of the big names ($30-40bn+ total AUM) have clo businesses as well like HPS, Carlyle, Apollo, Hayfin, Sixth Street, BX, etc.

CIFC is a big CLO player that doesn't really do Private credit so not listed up to now.

  • Analyst 2 in IB - Cov
Nov 5, 2021 - 9:01am

Thank you for sharing this! Great insights, Pan European Monkey. 

Any views on the new funds? 

  • Analyst 2 in IB - Gen
Nov 25, 2021 - 2:38pm

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