Private equity is dying. So wrote Professor John Colley of the UK's Warwick University Business School in an article for the Conversation this week. Blighted by a crowded market, competition for deals and risky investments, PE will make increasingly marginal returns, said Colley. - Try telling this to the junior Goldman Sachs bankers who still see the business as the crock at the end of the rainbow.
Goldman juniors' new preferred PE fund seems to be Summit Partners, a Boston Massachusetts based-fund focused on technology, healthcare and "growth products".
Summit has had an office in London since 2013. Its most recent accounts say it employed 18 people in the UK at the end of 2016, the same as the year before. However, Summit seems to have been adding juniors in 2017, and Goldman analysts have been only too willing to oblige.
Summit's most recent London hire is Nik Ohri, a former Goldman leveraged finance analyst who quit the firm after only a year. In May it hired Matt Heims, a former Goldman consumer banking analyst, who quit after 23 months. Summit's San Francisco office also hired Jessie Sheff, a former Goldman FX saleswoman who joined this summer after three years at GS.
Summit's secret isn't in its salaries. Average compensation at the fund's UK operation last year was just £151k ($200k) compared to $337k at Goldman Sachs.
Needless to say, though, private equity's appeal isn't in the fixed pay. It's in the carried interest, which gets paid out after deals are successfully exited and returns exceed a specified hurdle rate. This is what Goldman's juniors are undoubtedly after. They just need to hope that Professor Colley's private equity prognosis is flawed.
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