The Funds Partnership Asia’s Salary Guide 2019 : Private Equity Investments

2 May 2019

OVERVIEW

Overall, the Asia Pacific’s Private Equity (PE) market has gained momentum and maturity, closing at USD 757 billion funds raised in 2018, according to research done by Preqin. We continue to see a sustained demand for talent across front-office as 2019 brings forth an improvement in the rise of fundraising activities.

In this year’s report, we have expanded our focus beyond a mere overall view of Asia Pacific’s (APAC) front-office hiring demands but to granular levels of the individual PE strategies, its trends and how it impacts the hiring demands in 2019. We have spoken to 2,074 contacts in this space to share the latest news happening in Private Equity Investments.

We have covered the following topics in this article:

  • Roles & Seniority

  • Qualifications & Salaries

  • Location

  • Private Equity Strategies

    • Growth Capital

    • Buyout Funds

    • Fund of Funds

    • Private Debt

    • Real Estate & Infrastructure

ROLES & SENIORITY

Private Equity opportunities are highly competitive in the finance industry; most junior professionals would have accumulated a number of years’ work experience before embarking on their PE careers. As each firm’s internal structures differ, we have defined the typical organisational hierarchy for the purpose of this salary guide:

  1. Analyst/ Associate ( 0 – 3 years)
  2. Associate Vice President (AVP)/ Senior Associate ( 3 – 5 years)
  3. Vice President (VP) ( 5 – 7 years)
  4. Senior Vice President (SVP)/ Director ( 7 – 10 years)
  5. Managing Director (MD)/ Partner/ Principal ( Above 10 years)

Similar to previous years, Analyst/ Associate levels are constantly in high demand. Firms are growing from within, which has significantly reduced the demand to hire senior professionals from VP to MD levels.

Qualifications & Salaries

Candidates with an Ivy League (or equivalent) educational background, coupled with the right experience, are more sought-after by firms and also have the advantage of commanding a higher salary in comparison to their peers from non-Ivy Leagues.

That said, not all hiring are biased towards top-tier education and some are notably more inclined towards bulge-bracket banking or consulting experience above education and background. The key is to be on the right career runway and are dynamic.

As the overall PE market continues to progress, we have identified that junior professionals’ salaries have increased marginally. The decline of APAC investments made in 2018 means that there is hiring demand for senior professionals hiring to improve the quality and quantity of investments this 2019.

Location

We noticed that salaries were up to 30% higher for those investment professionals with strong deal experience in China. Such candidates who also had experience covering cross-border deals were able to command higher salaries. However, given the difficulties in transferring funds out of China, we have seen an overall decline in demand for outbound investment talent this year.

After China, the second largest demand for hiring investment professionals came from Hong Kong followed by Singapore, Korea, Japan and Australia.

In comparison to these core markets, India continued to show strong demand for investment talent, despite being paid the lowest. As the PE market matures in India, we are beginning to see incremental improvements, due to the influx of candidates with working experience in US or Singapore returning back.

PRIVATE EQUITY STRATEGIES

Funds Partnership Asia_PE Investments Table

*In thousands USD per annum

Growth Capital

In 2018, the hiring demand for growth funds has declined in comparison to previous years. Salaries paid out in this strategy are second to buyout funds.

  • Junior level : This is a competitive arena with focus in identifying the rising stars in the market. There is a war for talent at this level and growth capital funds preference is to hire Big 4 or investment banking talent.
  • Middle level : There has been little hiring for professionals in this category as firms are caught between hiring for someone slightly more senior versus an associate to groom.
  • Senior level : Base salaries have plateaued at this stage for professionals as firms are focused on financing its continued expansion and/or exit strategy with compensation linked to the performance of portfolio companies and deals closed.

Based on our poll with a class of INSEAD MBA graduates in January 2019, the interest levels was skewed towards this strategy compared to all others.

Buyout Funds

Asian funds have definitely stepped up their game with some regional PE funds raising multi-billion dollars in capital and this increase in fund size has attracted candidates from other strategies to participate in this active market.

  • Junior level : Candidates with strong exposure in investment banking stand a higher chance to land a PE career in comparison to consulting or Big 4 candidates. This represented 24% of hiring in 2018, a small increase from 2017’s 21%.
  • Middle level : Once again, there is little demand for senior associates to VP level professionals with firms giving preference to promote their people from within as a mean to retain staffs. In 2018, the hiring demand was as little as 5% as companies promote internal growth.
  • Senior level : We witnessed a demand for strategic hiring of senior professionals with knowledge on the Vietnamese & Indonesian markets in 2018, thus we anticipate this hiring trend will continue in 2019, in particular the Healthcare and Technology verticals.

Fund of Funds

We have seen approximately 25% increase in hiring across PE Fund of Funds (FOF) or Limited Partners (LP) in general. This was driven by the demand for primary focused funds to start building their secondary strategies and/or to double down on co-investments. We have also seen insurance firms build their capabilities in FOF asset allocations and we are expecting this to continue in to 2020. As reported previously, the highest demand is driven by Chinese based fund managers or Peer-to-Peer (P2P) lending firms with strong interests in building FOF strategies.

  • Junior level: Demand is sustained for junior level hiring with clients opting for candidates coming from an investment banking background mainly to ensure financial modelling skill set for their co-investment strategy.
  • Middle level: Western based FOF managers typically did not hire at VP level mainly because they wanted to promote internally when they had attrition. However, with the number of growing Chinese FOF in the region, team build outs are common and we’re seeing a marginal increase in mid level hiring compared to previous years.
  • Senior level: With the increasing number of institutional LPs opting to create their own direct and co-investment teams, we see hiring for senior professionals increasing. Most of the LPs prefer to hire directly from PE funds but Chinese FOF managers are opting to acquire talent from other PE fund of funds to broaden their relationships across the market.

Private Debt

For the purpose of this report, we refer private debt to strategies such as direct lending, mezzanine, distressed debt, special situations and venture debts.

Private debt remains a steadily growing asset class for most investors and currently 13% of institutional investors are from Asia. Globally, this industry has definitely piqued investor interest but activity levels are still minimal, especially in Asia. This untapped market is expected to grow to USD$1 trillion by 2020, the Alternative Credit Council reported recently. We are certain that in the next couple of years this will evolve the market and hiring will definitely pick up. To candidates in the space, now is a great time to enter this burgeoning market.

  • Junior level : Candidates should get exposed to a variety of industries and gather as much experience as possible. It is advisable to start off with a banking background or perhaps a smaller private debt fund to gather the knowledge before stepping up the ranks.
  • Middle level : Build out your portfolios and start specialising in a particular sector for this strategy. In comparison to 2017 where mid-ranking staff were at their highest levels according to an article by eFinancialCareers, firms now prefer to develop existing analysts and associates.
  • Senior level : Senior movements have already began in this strategy. Medium to large sized firms are interested in diversification and hence sector-specialism is primary for senior candidates.

Real Estate and Infrastructure

Real estate generally remains quite a safe option. Geographically, SEA is still leading the way, with Vietnam as the focal point. Broader Sydney maintains its stability at this point, although  uncertainty on whether the bubble will burst remains. Real Estate funds in Singapore are performing well and have not lost confidence as of yet. Opportunities for more senior hires exist, although relatively sporadic, while hiring at Associate-level is at the highest. Candidates who have worked for Big 4 accounting firms or top investment banks are often considered.

Infrastructure projects are very much at the forefront for sovereign wealth funds globally and in particular, governments in SEA’s burgeoning economies. There are a growing number of big infrastructure funds that are currently being developed in countries such as Malaysia and Indonesia, also in frontier markets such as Myanmar. Additionally, solar and renewable energy projects are very much in demand, with Vietnam and China pushing ahead in these project areas.

 

Read the pdf version of the Funds Partnership Asia’s Salary Guide for Private Equity Investments here:

Funds Partnership Asia Salary Guide 2019_Private Equity Investments