What’s the best place to work at Goldman Sachs? Depends who you ask, but two of the top answers in any opinion poll would probably be the Merchant Banking Division and the Special Situations Group. Both of these teams specialise in making investments in the debt and equity of private companies, and are a bit like working for Goldman Sachs and working in private equity (or debt) combined.
There are slight differences between the two. Goldman's Merchant Banking has more of a client-oriented approach while Special Situations has historically invested Goldmans’ own capital. For many years, they have co-existed happily. Until now.
Business Insider says a plan was recently hatched to combine these two divisions, along with some real estate and fintech investing businesses, into a sort of “mini-Blackstone” within Goldman Sachs, combining all of its private equity-like activities and opening them up to more client money. Unfortunately, the new plan isn't very well received internally.
At this level, internal mergers are not necessarily less traumatic than external mergers. They have the same issue of the ratio of top jobs to people who want them. According to multiple sources, conflict and jockeying for position has already begun. As anyone who’s been through a merger knows, this can be utterly debilitating to the business, as energy is diverted away from finding and executing good deals and toward internal politics. In order for things to work, there needs to be clear leadership from the top and a shared understanding that management on both sides are bought into the new vision. This doesn't exactly seem to be the case.
Goldman's Special Situations team is run by Julian Salisbury, and according to BI it has a reputation for something of a spiky, aggressive and opportunistic culture. Merchant Banking has been run by Rich Friedman since 1991 and tends to be less political and more tight-knit. But Friedman is 61, nearing retirement and was not necessarily a fan of the merger idea when it was proposed, according to “three people familiar with his thinking”. In April, he handed over control to Sumit Rajpal and Andrew Wolf, long term lieutenants with a strong track record in doing whatever Merchant Banking does, but with a comparatively low profile within the bank as a whole.
So it looks like the new GS private investing business will be partly run by Rajpal and Wolf, and partly by Salisbury (who is also taking over some real estate investing businesses). Goldman Sachs has a history of making co-head structures work and a famously collegiate corporate culture, of course. But a triple co-headship, with a recent merger, potential culture clash and with Friedman still on the management board and not necessarily committed to the change? That’s a pretty high difficulty manoeuvre to attempt at the best of times. There’s already been some personnel turnover, with Dan Oneglia of the Special Situations team leaving to be co-head of Distressed Investing at Blackstone.
This doesn’t mean these aren’t still great franchises, and among the most attractive places to work on the Street. But it does mean that they’re going to be unusually tense and political places to work, and you might find that your boss or mentor doesn’t make it through the struggle. Even so, Goldman is still a blue chip name for a resume, and I suspect that even the losers in this feud will end up financially all right.
Elsewhere, do you like sunshine? I mean, really, really like it? The Abu Dhabi Invesment Authority is hiring, particularly for fixed income and treasury roles, as it aims to increase the proportion of active management in its portfolio and to source more of its own private equity deals.
As a place to work, ADIA has pros and cons. Among the pros is that you will most likely get your phone calls returned a bit more quickly and reliably than wherever you work now; with nearly $700bn under management, it’s one of the largest sovereign wealth funds in the world, and the investment team is significantly more concentrated than most asset managers of comparable size – the whole of ADIA only employes 1.700 people.
The cons are … well, it’s very hot. You are just down the road from the pleasure domes of Dubai, but Abu Dhabi itself is somewhat more conservative and a lot less busy. And the pay is good but not great, albeit that there’s no income tax. Some reasonably big names have gone there in the past; it might not be the most obvious place to go and raise a family, but as expat jobs go it’s prestigious. And the weather’s better than the Norwegian sovereign wealth fund.
Deutsche Bank hired the former chief technology officer from hedge fund AQR to spend its €13bn technology budget. (Finextra)
The word “hottest” is considerably modified by the other words in the title, but here are this year’s “Hottest (male) Swiss Bankers”. Apparently there would have been a corresponding female ranking, but there were not enough women in prominent banking roles to fill out the competition. (Finews)
Gradually, and despite the regulatory requirements to ensure that business is only transacted on recorded lines, trading floor managements are gradually realising that they have no more hope of taking bankers’ mobile phones away than parents do of reducing their childrens’ screen-time. HSBC is now allowing you to keep your phone switched on, although you have to leave the floor to take a call (Financial News)
John Corzine is back, raising a (surprisingly small?) hedge fund, and agreeing that he won’t carry out proprietary trading alongside the fund’s positions, as part of the restrictions placed on him after the collapse of MF Global (Bloomberg)
Deutsche Bank is by no means on a hiring freeze; they have brought in Neal Pawar from AQR to oversee the latest round of technology overhauls, and Dan Timošenko from HSBC to be head of precious metals trading (Financial News / Financial News)
London banks often have a particular pub or bar that they think of as their own, and can be surprisingly territorial about them. Laid-off staff from Deutsche Bank were apparently not happy with journalists invading “their” branch of Balls Brothers. (Financial News)
How glamorous is the world of equity research these days, post MiFID? It’s being compared unfavourably to budget airlines. (Bloomberg)
How to stop work stress from destroying your relationships at home, from psychologists. The key appears to be to realise that different people deal with stress differently; not everyone wants to talk about it. (WSJ)
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