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Comments (102)

Jul 22, 2021 - 12:19pm

Bump. Also interested. Focused on Special Sits / Credit Opportunities / Mezz groups. I'd imagine it could be in line with MM PE or a slight discount to the PE guys?

Array
Jul 30, 2021 - 9:59am

To clarify, only all-senior funds (sprinkled with same safe 2L) have back leverage. Very few leverage providers will give an advance rate on anything junior to 2L and even the advance rate given on 2L is 20-40% max, in my experience. Have recently gone through the convos with a handful of them during a fundraise. 

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Jul 22, 2021 - 4:19pm

How do you think hours compare to PE for special-sits / junior debt investing teams?

Array
  • Investment Analyst in HF - Other
Jul 22, 2021 - 6:13pm

From comparing my cash comp with a friend at MF PE it's actually fairly similar. I hear it diverges when they get carry, but I have much better hours. So there's some puts and takes, I think in PE you max out cash comp probably similar to credit if I had to guess.

  • Associate 1 in PE - Other
Jul 22, 2021 - 8:19pm

Have heard the same on comp (excl. carry) being the same across major strategies at MFs. Credit is a key pillar of many MFs' strategy by now - just look at Blackstone Credit as an example.

The carry component and differential vs equity colleagues is not always trivial to assess. Generally speaking, carry in PE will be higher assuming same fund size / fee earning AUM, given PC has management fee of 1.0-1.5% with 10-15% profit share (depending on fund strategy) vs 2/20 for PE, and assuming PC will yield ~10% while PE will yield ~15% both over 5y investment period. 

Differential will decrease once factoring in that there is often fewer investment professionals per $ under management in credit, i.e. VP at MF Credit will possibly get more % of carry vs PE VP. 

Others please chime in.

  • Investment Analyst in HF - Other
Jul 22, 2021 - 8:24pm

It's not trivial to assess the difference in total $s, but I think its important to understand how long it takes to get carry and how you actually realize it. You get it vested over a 5-7 year fund, often it vests on a straight line, so you need to stay there for at least 4-5 years for it to be worth anything and maybe the fund takes 7-10 to actually payout the realizations from start to finish. All the while, you are working 70-80+ hour work weeks (while the credit guys may be pulling in 50-60) and getting your weekends/life blown up. There's also many strategies within credit that may not have carry like the public side, or at APO credit they are *mostly* public side and do some private side deals, likely not getting carry that means much.

So yeah carry is not insignificant, but its tied heavily to your longevity there and takes a ton of time to be realized. I would bet that the amount of people that fully see the carry out is likely less than you think.

End of day my takeaway is - cash comp very similar, carry higher in PE but comes with harder lifestyle/hours and requires longevity to actually see it realized and receive it.

  • Analyst 2 in IB - Cov
Jul 22, 2021 - 7:19pm

FWIW, Carlyle Credit probably has lower comp than other MFs.

  • Investment Analyst in RE - Comm
Jul 22, 2021 - 9:58pm

Many have referenced better lifestyle / fewer hours in high-yield credit vs equity, which is interesting to me. Structurally, is there a reason for this? I'd imagine this would be very firm/culture-dependent, no? Unless there's a structural reason that I'm not thinking of.

  • Assist. VP in PE - Other
Aug 2, 2021 - 11:05am

Yeah. PC shops can generate 15% IRRs (2x levered) with 1L security and low portfolio management costs. So long as you avoid binary risk in your deals (ie. taking a donut), you can generate a pretty nice returns and have a better lifestyle. I'm not really interested in working until 1AM anymore... 

  • Investment Analyst in RE - Comm
Aug 2, 2021 - 7:16pm

Currently on the debt side at a debt fund and looking to transition to the equity side (which fits better with my personal style of investing). Generally speaking, are the hours going to be worse? I've heard that due to there being fewer equity deals, equity professionals on average work on fewer deals at any given time, which somewhat counterbalances the more "hands on" nature of equity.

  • Analyst 2 in IB - Cov
Jul 24, 2021 - 12:36pm

Not sure I'd lump in Guggenheim with the other two…..

Jul 25, 2021 - 2:37pm

I mean if you look on the search bar, you'll see data points for most firms. Think mid 200s all in first year comp is pretty typical for larger private credit funds. At certain firms, comp can stretch first year to something like 300 - 350. Expect at those places to have about a 50k increase in comp yearly through time you hit director / principal level.

Most Helpful
Jul 30, 2021 - 9:53am

If anybody wants to DM me, I am pulling a spreadsheet together for private credit comp across MF and MM funds. Also including investment professionals and AUM.

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Jul 29, 2021 - 7:17pm

Thanks for sharing. Without giving too much detail about your fund or background, do you mind sharing what type of profiles you normally see come aboard into the fund? Is it normally candidates from lev fin background or corporate banking ?

  • Investment Analyst in PE - Other
Jul 29, 2021 - 5:34pm

PIMCO are starting to build up a junior program for their alternative credit team ($33B I believe). Have heard they're hiring interns out of undergrad with a clear path to PM. At a place like PIMCO, AN1 should be ballpark $150k and ASO1 at $250K... 

  • Investment Analyst in PE - Other
Jul 30, 2021 - 11:29am

No.. PIMCO is Pacific Investment Management Company which manages over $2.2T in fixed-income assets.

Jul 29, 2021 - 11:59pm

Fairly sure Ares and Antares VPs are $165-$185 salary with bonus about the same.

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Jul 30, 2021 - 8:02am

Have a really hard time believing this

Edit: Looks like I am in the wrong and MF Credit shops are paying out the ass!

Life is more than dollars
  • Analyst 2 in IB - CB
Aug 2, 2021 - 10:24pm

How feasible do you think it would be to jump from corporate banking at a BB to a credit fund like Ares or Antares like shop? Currently 2nd year analyst and think maybe another year or two would be time for a good transition.

Aug 3, 2021 - 7:28pm

Wouldn't listen to the other guy at all. Corporate banking is fine as long as you know your stuff. Private credit investing is just building the credit memo for a bank on steroids. If you're smart / personable and have some deal experience you'll be fine. Know multiple people from corporate banking who have gone to top credit funds

Aug 10, 2021 - 12:11pm

The biggest questions really I've encountered are 1) can you model as well as an M&A banker, 2) can you think critically about your deals - some bank credit processes are too "paint by numbers", 3) are you able to keep up when things get busy (in other words, you're not coming in expecting to bounce at 5 or 6 every day and never work a weekend). If you can convince people of those then CB background is fine, it's just harder to market off of it than IB.

  • VP in CB
Aug 3, 2021 - 12:40am

Do any of these firms have coinvest both within the buyout funds under the same firm or within the credit funds? If so what does it look like? 

  • VP in CB
Aug 3, 2021 - 3:31am

Thanks. How are these programs typically structured? Do you commit to a fixed amount (and what is this capped at?) or is it done on a per deal basis? Participation in credit funds or also PE? Are you charged as an LP or no fees?

Aug 4, 2021 - 5:46pm

I think there is a little confusion on terminology in this thread

Can someone provide a little clarity on the types of roles we are discussing? The OP is talking about "credit funds" connected to large MF PE (Blackstone, KKR, etc). I am assuming they are thinking of some kind of opportunistic credit fund where the focus is on distressed credit and special situation lending (origination). I'd assume these roles are compensated well and might be in-line with or close to PE comp

I am guessing there are also some more direct lending type roles where you are originating more vanilla senior secured loans. I'd assume these would be paid lower than the opportunistic type roles

Aug 8, 2021 - 8:05am

Does anyone have any hard or anecdotal evidence of the buyside PE & Credit shops increase pay in lockstep with the banks? Would think there would be a matching increase pretty quickly in order to keep kids converting from sellside to buyside. 

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Aug 11, 2021 - 9:12am

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Life is more than dollars
Aug 11, 2021 - 10:19am

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  • VP in PE - Other
Aug 11, 2021 - 8:39pm

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