Why do people always say that Structured/Project Finance can lead to Hedge Fund? What sort of skills and experience that are relevant to HF?
Thanks
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Very interested as well
Can someone shed some lights please?
I'm curious to hear the reasons as well....
MEE TOO
well since everyone else is interested i am too now
bump
Short answer is "no." StrucFin isn't a particularly hot group anymore. Pay is below many other IBD specialties. Exit ops as far as I can tell are relatively non-existant. I backslid into a conversation about this with a StrucFin VP, he said that the analysts that leave tend to go to business school, to a structured products sales/trading/syndicate desk, or to a different IBD group (M&A, CFA, DCM, etc.) Associates and VPs that get out tend to go to the corporate finance department of companies that tend to rely on structured financing.
Sorry folks. Best bet is to lat out as quickly as you can and then try to build on exit ops through wherever you wind up. I don't know any StrucFin bankers that have made the jump to PE/HF/VC; traders are in higher demand, especially as investor appetite for securitized products increases.
I don't know anything about project finance.
I'd say that project finance (assuming you're busy and you do deals) would give you a good base of understanding credit agreements and the like. The debt background may be helpful for HFs. I think more PF people lateral to energy/infrastructure PE shops though.
Oh, I'm now actually assisting my team (I'm an intern) on credit agreements of some live deals. So, why does HF need people with debt background? Why not people from DCM or Leveraged Finance?
DCM is investment grade, the lack of credit modeling and analysis means that's funds aren't that interested in it.
Lev Fin though is demanded.
I agree with cubechimp - I actually asked one of my HF friends about this and he said it would be almost impossible for a structured (or project) finance guy to join a hedge fund. Most of the funds tend to be fundamentals-focused, so they're shit hot for guys who've done hardcore M&A or similar financial modelling and analysis heavy roles. Yes of course, the knowledge of credit agreements and financing structures would be useful, but its not enough to get in, even at a debt-centric hedge fund.
DCM exit options are equally limited. Every DCM guy I know is looking to exit, but can't exit into any meaningful buyside role. Instead, they are looking into the treasury teams of corporates.
As a structured finance guy who joined a hedge fund, I can confirm that it is very difficult to do. I was in a credit group for a few years, then moved to a structured finance group for two years, then moved to a hedge fund. I think the only reason I was able to move was because the hedge fund had a lot of credit investments so my credit background came in handy, and I had completed all three levels of the CFA before applying. Even with the CFA background, I still found the learning curve for long/short equity investing to be very steep compared with my peers who had come from a traditional IB background. If you have an option to start out in an industry group over a structured finance group, do yourself a big favor and go with industry/M&A/leveraged finance/etc.
Then what's good for Structured/Project Finance??
Energy / infrastructure PE.
After school I worked in quite a few infrastructure projects, ranging from oil&gas, toll road, water supply to real estates development. These all take place in an emerging market though. Previously I thought there's a lot of room for exit opportunities, but the provided information above made me rethink, as it seems like there's no many places I can make use of credit agreement, financing structure and tax planning experience.
Does it mean that I'm pretty much screwed? Or I can go back to business school and do a make over? There's an uprising in political risk going on so I don't think I would like to count on infrastructure projects in such instability market anymore :(
Please help!!
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