Search businesses traditionally enjoy a busy start to the new financial year, and this year has been no different for the Investment Management team at Selby Jennings. Investor appetite changes and investment strategies endure cyclical preferences meaning that year on year we move across the capital structure and through public and private markets.
This update for the credit investing space comes in the context of some significant macro considerations – Brexit, Frexit, Trump, ECB bond buying, and Janet Yellen signalling the way on global monetary policy.
The successful proliferation of private credit and secured lending funds seems yet to peak. Funds big and small are launching their 2nd or 3rd funds or still venturing out with their first. The biggest and best names in the game are oversubscribed and even the smaller players are able to fully deploy capital quickly which suggests some real confidence in the model and the fact that bank lending shows no signs of returning in strength to Europe’s lower/mid-market space.
The in-demand skillsets for private credit mandates are actually quite narrow – these vehicles have recently hired largely from leveraged finance programmes, also their competitors or alternatively from restructuring houses. Debt advisory is also still a viable talent pool but candidates typically tend to lose out at interview stages to more skilful candidates from the former groups.
Additionally, hiring in distressed is back in fashion! European distressed debt has been a largely uneventful space for the last 6 months with few new names to cover and understandably hiring in this space has slowed. Selby Jennings has seen a welcomed return to some high profile hiring mandates focused on European coverage.
Distressed funds will still tend to hire the best candidates from restructuring boutiques for their junior analysts but the majority of movers have actually come from other successful distressed funds – the ability to look at a credit in the right way, including considerations around risk and positioning, over simply proposing a fundamental/modelling skill set seems to make all the difference.
Increased hiring activity at this time of year is typically catalysed by two factors; departures post bonus, and approved headcount budget for the new financial year.
Focusing specifically on the leveraged finance space, historically seen as prime hunting ground for many funds, there has been an encouraging amount of movement and appetite for the skill set remains high, particularly amongst direct lending and private debt vehicles this year.
Looking outside of leveraged finance one typically finds most junior hires come from a restructuring or M&A background and this year has proved no different.
Houlihan Lokey has long been the place to go for junior talent and once again their ranks have been targeted by desks looking to add a strong fundamental skillset. There are now just a couple left in the team and you wouldn’t be surprised if they’re feeling left behind!
M&A analysts are perhaps more traditionally associated with hiring activity on the equities side, whether public or private, but you can still find examples of smart candidates moving into debt products.
The best talent is always snapped up quickly, there is no change year on year, but do not run the risk of leaving it too late to start meeting candidates or it might take a little longer than you had imagined as some funds will likely discover.
That said, candidates might still take solace in the fact that if they haven’t moved just yet, there are still a few open doors:
This piece details average compensation across various levels just for the leveraged finance space in London this year with a breakdown across base salary + bonus and also looking at Tier 1 vs Tier 2 institutions. Unsurprisingly there’s a great degree of variation across the street and attempting to draw out some trends often doesn’t really lead anywhere.