LevFin bankers aren’t getting a pay rise, sadly
If you have a callous disregard for the reputation and wallet of leveraged finance bankers, you might be punching the air right now.
One Search, the executive search firm specializing in energy and infrastructure finance, hosted a podcast discussing compensation in the global infrastructure finance space.
Other than a slight decline in associate bonuses, which could probably be attributed to increasing salaries, compensation was flat for other bankers compared to 2022. High inflation and poor deal flow across the board are not a secret, and it’s impacting compensation.
Most of those taking pay cuts were those working for bulge bracket banks, whilst boutiques and specialized credit funds had the ability to operate better in the market. A big part of that is determined by leanness – and nimbleness.
“The best place to be is somewhere nimble,” says McCarthy, CEO of One Search. “If you are lending and advising, for example, and working across numerous subsectors, you can pivot and stay busy.” Compensation will reflect the workload, too, he says.
This year, the best places to be, McCarthy says, are credit funds. “More specifically high yield infrastructure credit.” The pulling back of banks from the market is creating opportunities that credit funds are “sweeping up”.
Outside of credit funds, however, the gentleman’s choice is still the small, nimble team. Hari Chandra and Phil Hyman’s teams, at Cantor Fitzgerald and DC Advisory respectively, are good examples. Of course, both are boutique banks. Meanwhile, “on the buyside,” McCarthy says, “the real battle for senior talent is centering around upside on compensation; carry and, in some cases, GP [general partner] equity.”
Compensation wars might pull financers here and there, but there’s one place they’re coming from, no matter where they’re going. Leveraged finance bankers “are using this period to try and get to the buyside, or just move out of BB culture into something more enjoyable/sustainable,” McCarthy says. “Nobody gets much fulfillment - outside of financially - from working for a bulge bracket bank, whatever they say.”
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