Private equity firms and hedge funds remain bankers' favourite route out of the sell-side, but competition is tough. Only a fraction of those in banking make it on to the buy-side, and increasingly both types of firms are training their own people.
But when it comes to the types of companies financial services professionals want to work for in the alternatives sector, one thing is clear – size matters.
In private equity, Blackstone topped the 2016 eFinancialCareers ideal employer rankings, which asked over 6,500 finance professionals in the U.S, UK and Asia which company they’d like to work for. Other big buy-out firms – KKR, The Carlyle Group, Apollo Global Management and CVC Capital partners – make up the remainder of the top five.
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Meanwhile, our hedge fund rankings reveal a transatlantic divide. Bridgewater Associates, which employs some 1,300 people and is generally considered to be both an elite and a bit of a weird place to work, topped the rankings globally. However, among UK-based finance professionals, Brevan Howard, one of Europe’s biggest hedge funds run by former Credit Suisse prop trader Alan Howard, is the most popular.
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In the hedge fund world, a little mystery appears to be alluring. Bridgewater has revealed something about what it’s like to work there. It has a 110-page ‘principles’ document on it’s website, which reads like a cross between a corporate mission statement and founder Ray Dalio’s personal memoirs – as well as a series of interviews with its employees, where they talk enthusiastically about its culture.
Interviews there are supposedly both cerebral and strange. Candidates are said to be quizzed on issues like their belief in god or their views on abortions. Most people hired are liberal arts graduates in their early 20s – and 30% leave two years after starting.
Brevan Howard, meanwhile, remains even more secretive. Working there is said to be especially demanding – even for a hard-driving hedge fund – pay is exceptional and it continues to attract a steady stream of investment banking traders, even as performance has dipped. It also hires graduates, who tend to be very quantitative and often come from Imperial College London – where Howard himself studied.
Private equity firms tend to hire junior investment bankers after a couple of years working in the industry, of course. And only those considered to be among the elite make the cut.
Private equity is generally considered less demanding than the 70+-hour weeks demanded of junior bankers in IBD, but respondents to our survey are not attracted to big buy-side firms because of the working hours they offer.
Only 16% of those wishing to work for Blackstone said they perceived manageable working hours to be a strength and 14% of those listing KKR as a top employer. Instead, compensation was the main motivation for working for these firms.
This is not hugely surprising – most employers on our ideal employer rankings are perceived to pay well – but private equity firms scored especially highly on these criteria. 82% of respondents voting for Blackstone said that both a competitive salary and bonus was a strength. Meanwhile, 86% of those voting for KKR would demand a good salary and 90% expected a competitive bonus. These scores were higher than the vast majority of banks on our rankings.
Blackstone also outperformed its banking rivals on the perception of offering interesting or challenging work. 82% of respondents agreed with this sentiment – which is on a par with Google’s score in the rankings and beats any investment bank.
It also helps that, relatively speaking, private equity jobs are much more secure than investment banking. The last time it emerged, publicly at least, that the Blackstone was cutting headcount was in 2008.
View the complete 2016 Ideal Employer Rankings
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