Debt fund to corporate banking

I have been with a small subdebt fund for about a year. In short, the pay at the fund is pretty bad relative to the pay in my local market (and hours required). There is an opportunity for me to move into Corporate Banking at a regional, which would give me an almost 20% bump. I know funds are sexy and the experience probably looks good but I’m starting to question the exit opps at the fund. What are everyone’s thoughts?

What’s the corporate banking role and is it with a good bank?

Debt funds can be neat if they’re good funds and are making a decent return. If it’s some crappy fund that no-ones heard off and making tiny P&L which you wont get to see any of then it might be a good idea to make the switch.

If you’re deep in the buy-side as a HY debt trader then surely there must be other exit ops, like some prop desk or a HY credit analyst, or switch to sell if you know some of the sell side guys.

I’ve worked in Corp banking before and it’s all Old Boyz and bureaucracy which i couldn’t deal with. I would rather work for a small firm then a big bank.

That said, 20% is reasonable bump up if you don’t like your current job.

Based on my understanding, the role with the bank would be similar to an Associate / Account Manager role; however, instead of managing a portfolio with a Director, I would be underwriting credits for whatever team / group that requires an extra pair of hands. The bank is a regional.

In my current role, I do not do any trading at all. We provide mezzanine debt to private companies. My role is to underwrite the credits and monitor the accounts. Going in I accepted that the role paid peanuts but thought that I could leverage this experience into something more rewarding but now I’m not sure if it does.

How big is the fund?

$100 million AUM

Yea…you should GTFO.

To be more specific, they have deployed $100 million. They have access to more. The bottleneck is finding quality deals. BTW Ramos, I am thinking of doing the CAIA. Did you find it help with your career given your CFA? I am interested in upping my Alternative chops but am wondering if its worth doing the CAIA or just reading a used text book on the subject.

Didn’t help career. I do like the CAIA people though, they are nice. It will be as exclusive as CFA in 15-20 years probably so best to do it now before the failure rate is as high as CFA.

Thanks Ramos. I’m leaning towards it - just trying to find the time.

If it’s only 100m, then it’s prob turning on 4-5m in income if its a mez lender. Which is F-all. 100m is tiny btw.

Can’t you jump into another mez lender, angel investors…or move to equity?..

If you got nothing else lined up, then move to corporate banking. But dont expect to be able to move back into something more challenging in the future. Once you’re corp, you will always be corp.

Thanks for the input Pokhim. I think you’re right. Even though better pay for better hours sounds enticing in the short-term, I think it’ll raise eyebrows if I try to make a switch later. I’ll stick it out until something more challenging comes along - equity, venture, or something along those lines. It’s just a really small market where I live so opportunities are limited. Might have to move in a year or two if nothing comes up.

Ha. I work in Corporate Banking so maybe I’ll give you some impressions.

Be careful what you wish for. One of the best parts of Corporate Banking is the credit analysis part which already represents most of your day (at your debt fund), plus you don’t have to deal with all the cross-selling sh1t.

In my case I work in FO so there is actually little bureaucracy, but at the same time I have to deal with endless meetings about results and how to sell sh1t products.

I also work in a new branch, which means that I need to originate my own deals, i.e. hours and hours of cold-calling.

The good side of corporate banking though is that (at least in Germany and I believe Europe in general) you would be surprised how well the bankers know the firms they cover and their fundamentals ; this comes IMO with the experience of dealing directly with the firms. I get to negotiate and structure deals directly with CFO’s. Bad quarterly results ? The CFO or treasurer is a phone call away. Try to to that as an equity investor unless you own a significant block.

Also, I understand your position. Even for me, who works for a pretty potent, top-rated banking group, opportunities for good deals are scarce. I can imagine that in the current environment it must be pretty hard for a 100M mezz fund.

In any case, be very careful what you do, though. Working at a debt fund is more prestigious and probably more interesting than working in corporate banking and I am trying to get out of corporate banking while I still can.

Oh and lastly, Corporate Banking is an umbrella term. I think I have it pretty good doing what I do because I am in the right segment (revenues of my clients are on average, say, 300 Mio.€, so they are big enough to be professional, yet small enough to care about me) and in the right spot (front office, so I don’t deal with a lot of admin shit and I have an analyst writing everything, I just have to review it and make amendments) and in the right country (in Germany, corporate banking is a pretty honorable profession and 70 % of corporate credits come from banks, vs. I think 20 % in the USA). I also buy private placements when they are being syndicated, in some cases, which is pretty cool.

You could end up stuck somewhere punching numbers in a shitty rating system for an overdraft facility and never talk with a client.

Thanks for the insight Viceroy. I’m gonna stick it out for now but will make a switch as soon as a better opportunity comes along - probably not corporate banking though. Might have to move to a bigger corporate center.

I think that this is the right decision.