Why it’s so hard to move from banking into a private equity job in Asia
Making a career change from a banking job into a private equity job in Singapore is typically more difficult than it is in Western markets. It can be an arduous and drawn-out process even for top-rated investment bankers as private equity is still quite a nascent industry in Singapore and across Southeast Asia.
PE firms of all types tend to field very lean teams in Singapore – often they have only about six to 10 front-office professionals, or fewer. A deal team might, for example, have one MD/partner, focused primarily on deal origination, and a senior execution expert at VP/principal level. A couple of associates and analysts do the financial modelling, financial analysis, due diligence and valuation work. Larger PE firms might also incorporate a specialist portfolio-management team, usually staffed by an MD and an associate.
But despite small team sizes, in the post-GFC era there are now a prodigiously large number of bankers looking to move into private equity jobs in Singapore. Private equity funds with a good track record can pretty much take their pick of any candidate – to call it a buyers’ market would be an understatement.
Fortunately, when a vacancy actually does open up, there is a strong desire among private equity firms to employ investment bankers from top-tier global banks who have strong M&A deal experience, mainly at associate or VP level. Senior bankers are also sought after if they have well-developed deal-origination skills and business networks in investment hot spots like Indonesia and the Philippines.
How private equity firms recruit in Singapore
In Singapore, PE funds do not usually have to advertise vacancies because of the close-knit nature of the financial community here – but often they will reach out to one or two recruitment agencies whom they have successfully worked with in the past.
Typically private equity funds in Singapore have an even longer and more intensive process than investment banks. The entire local team will meet the candidate and global PE firms will also organise video interviews with overseas-based managers.
A modelling test or intensive case study is standard these days and normally takes place about half way through the process. Some firms also have mandatory psychometric testing, while one or two even have a session with a company-appointed psychologist who compiles a report for senior management based on the candidate’s verbal responses to questions. Meanwhile, this whole hiring process is further elongated by the sheer number of candidates vying for each private equity job in Singapore.
The challenges of private equity careers in Singapore
For bankers looking to break into private equity jobs in Singapore there are a number of important issues to consider.
Professionals at the leading global private equity firms in Singapore work as hard as any investment banker, often without the satisfaction of the deal hit-rate that bankers are accustomed to. In a highly competitive private equity market like Southeast Asia, which is also fraught with significant transaction risk, it’s not uncommon for large international firms to experience long dry spells between major deals. The more regional funds, which are becoming more popular among candidates these days, are no walk in the park either as the additional deal flow comes at the cost of extra time spent on execution.
The primary difference between regional and global PE firms is that regional ones often have more of a risk appetite for investment into the sometimes murky economies of Southeast Asia. They also look for relatively smaller deal sizes which are more abundant in this part of the world. For candidates, this generally translates into better exposure with the regional firms as they get to work on (and actually close) a larger number of deals (albeit smaller ones).
Another important aspect to consider, particularly for mid to senior bankers, is that most private equity firms in Singapore require a ‘roll up your sleeves’ approach. Senior bankers who haven’t had to build financial models for several years may now find themselves having to delve into the detail of a model as and when required.
More junior bankers may find themselves having to step up and get involved in high-level areas of transactions, such as client liaison and project management, rather than simply being the ‘model guy/gal’. This is primarily because PE teams in Southeast Asia are lean and therefore less hierarchical.
However, for bankers who enjoy a hands-on approach, a private equity job in Singapore allows them to get involved in all facets of a transaction.
It’s important to remember that private equity jobs can pay very well but the rewards are often long dated. In most cases basic salaries are less than those at investment banks, but the real reward is in the carried interest which takes time to vest and is dependent upon deal performance.
Jay Abeyasinghe, manager, banking and financial services, Morgan McKinley Singapore.