Hope everyone is staying safe. I have 2 months left of my BB IB analyst program and set to start at a reputable MM PE ($1 - 5bn fund) this summer. Can't help but use the down time to map out the next few years, and I started thinking about private credit and direct lending as a potential long-term path for me. I worked in a coverage group at a mid-tier bulge, but have done a significant amount of LevFin work where I was directly responsible for all of the modeling/diligence and got a great overview of credit products. The asset class seems really interesting to me from the perspective of a long-term investing career, and is potentially an area I would like to specialize in after doing 2-3 years in PE. With that background, trying to understand the landscape with the following questions:
- Does it make sense from a career progression perspective to spend 2-3 years in traditional PE then go to a private credit shop for a senior associate/VP role?
- How competitive of a candidate would I be for a mid-level private credit role with a BB IB -> solid MM PE background?
- Specifically interested in mezz/junior debt -- what resources are available to understand the investment philosophy around the asset class? (i.e. I know Moyer is usually gold standard for studying up for distressed roles, is there something similar/broader for private credit?)
- Would want to aim for one of the more scaled shops like an HPS/GSO -- believe their size/rep lets them participate in a wider variety of deals. Is recruiting for these shops as competitive as MF buyout?
- Is B-School a sensible step to getting into one of these shops or does it make more sense to lateral in from PE?
Any feedback you can provide would be much appreciated. Please let me know if any of my questions are unclear - thanks folks.
I ask b/c I’m as we speak creating an online course in this arena, followed by an advanced course. but in the meantime, i can lead you in the right direction and/or send you study/exercise materials to aid in your goal - if it’s related to gaining a skillset. happy to discuss. my other 2 cents is GSO would be tough - a ton of other credit funds / institutional guys out there. B school - unnecessary. don’t see the value. I’d hear from other ppl tho on that
On your first post: all of that sounds like relevant info I would like to know as I progress my thinking. As I mentioned, I was in a coverage group so less familiar with the product specifics around the credit agreements, terms, etc. as those areas were usually covered by our LevFin team.
Would definitely be interested in the course you described. Will shoot you a direct message over the next few days.
awesome! yeah I have a plethora of good stuff I can send you to get you started.
I'd be interested in any materials that you can send as well
I'm I'm in the space myself, so happy to tackle these:
Yes, it does make sense, we have had several people join who previously were in PE; in fact many partners at prominent credit shops were all from PE. PE gives you a good handle on running processes and taking an extensive dive into DD which is helpful; just need to be cognizant of taking a credit view of investments as well.
You would be competitive, just going to need to explain why you want to make the move and experiences you have with credit, ex. running the financing process for a new deal or add-on opportunity.
A Pragmatist's Guide to Leveraged Finance - highly recommend
Yes recruiting for these types of shops is as competitive as MF buyout
You can do either tbh, no need to get your MBA if you don't want to. The transition can be done without one and most credit shops don't require MBA's nowadays
Hopefully this is all helpful
Super helpful, thanks for the response. A few follow-ups on this (happy to take this private):
On points #1,4,5 - what is the recruiting process like? Similar to PE recruiting with on/off-cycle or something more ad-hoc?
What resources can you point me to to learn the space better? i.e. understanding who the key players are, what each of them do well, etc.
I have 1 more direct lending presentation I didn’t send yesterday that gives more insight to your Q, including bite size $ ticket, and other stuff I can’t remember rn. I’ll send tomorrow
1 / 4. Recruiting process will be very similar to PE; go through headhunters and like PE, you'll have rounds of phone screens, in-person interviews, modeling test, case study, etc. Also largely depends on the fund as some will go on-cycle and some will go off-cycle. Best bet is just reaching out to HH when the time comes
Once you start your PE job, you'll get to learn the private credit space well from doing deals and running financing processes.
See below for a link to a good thread and a 2018 ranking of top players, a bit dated, but it will give you a good overview.
https://www.wallstreetoasis.com/forums/most-active-credit-shops-in-the-…
https://docs.preqin.com/reports/Preqin-Special-Report-The-Private-Debt-…
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