The curious interview questions asked by a $14bn private equity fund

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Private equity interview

If you interview for a job with a private equity fund, you're likely to fail. - PE funds are notoriously fussy about who they hire. They also hire very few people. However, Canadian private equity funds have been doing some big recruitment in London, and one of them has divulged the qualities it looks for and the interview questions it uses to to screen the best candidates.

Speaking at today's LSE Alternative Investments Conference, Simon Marc, managing director and head of private equity at PSP Investments, the $14bn private equity arm of Canada's public sector pension investment board, said the fund has expanded to employ 60 people in London since starting out in a one room office three years ago. Marc himself joined PSP from Permira in late 2015, but plenty of PSP's London recruits were junior investment bankers in a previous existence.

They include Rebecca Versteeg, a private equity associate who joined PSP from JPMorgan in November 2016. They also include Marco Massimo Strizzi, who spent four years at JPMorgan before joining in 2017. When she interviewed at PSP, Versteeg said she was hit by one particularly challenging question: "How would you think about investing in a coffee shop?" It was tough, said Versteeg: "You need to think about how a coffee shop achieves its margins."

Getting into PSP is about more than calculating the mark-up on a latte and the proximity of the nearest Starbucks though. Marc said he also looks for people who know what they're getting themselves into. "We need people who are curious," he said. To this extent, Marc said PSP hires people who have done their due diligence - who understand what the fund is doing and why they want to work there. Failing to do any research into these points will mark you out for failure from the start.

Both Marc and another senior private equity professional, speaking off the record at the same conference, said people who work in private equity funds need to be opinionated, and not afraid to express their opinions. "It's a sports team, but it's also a contact sport," Marc said.

Strizzi said funds also need to hire people who get along. - "Don't forget that you will spend more time with your co-workers than with your friends and family for a long time."

What kinds of people work in private equity?

Another senior private equity professional, speaking at the LSE conference, said private equity professionals have unusual personalities. "It's an interesting balance of qualities," he said. "We are looking for entrepreneurs with immense drive, but we are also looking for people with a lot of patience. - You can easily spend a year working on a deal which might not come off, and this might be the right solutiion," he said. "- You need the ability to be very driven, but also very calm and patient. That's a very unusual combination of skills - there are lots of calm people who never achieve anything."

He said the ideal private equity person also overlays their calm determination with persuasion and judgement. "We all know brilliant salespeople but unless they have judgement they can be very dangerous." Equally, the PE executive noted that you can have excellent credit analysts "with no persuasive ability," and that this is not helpful either.

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