The massive hiring in 2023 is in private credit
It's not just multi-strategy hedge funds that are going all out on recruitment this year. Recruiters covering the private credit space say they too are awash with work, and that they're only likely to become more busy.
"We're doing searches for five different firms," says Richard Risch CEO of private markets specialist recruiter The Risch Group. "Private credit funds have been adding headcount, big time."
Risch, who is based in New York, tracks the number of people moving jobs in private credit. In the first six months of 2023 his data shows there were 1,211 moves globally. "About 375 of those were in the marketing space, the rest were spit up between investment/origination/portfolio management."
Growth in the private credit market is well documented. From nothing in 2000, assets under management in private credit went to $500bn in 2015 and $1.5 trillion last year according to the Financial Times, quoting figures from Preqin.
As AUM have increased exponentially, so has the need for people to manage those assets and keep the fires burning. "There's been a lot of hiring activity around fundraising and marketing," says Risch. "Funds don't just want people who can give introductions, but who really understands the way the credit product works and how it's structured."
Risch says a lot of business development and marketing professionals are moving into private credit from capital introduction in banks, or - if they can prove an understanding of the space - from private equity or real estate funds. By comparison, he says origination and structuring professionals in private credit are more likely to come from banks. Diligence and underwriting talent comes from banks or insurance firms.
The big players in private credit include the likes of Oaktree, Ares Management, Sixth Street, Blue Owl, HPS, Stonebridge Financial Corp and Monroe Capital. Their appetite for banking talent is well-established: Ares hired Richard Sehayek, Credit Suisse's former London-based head of fund financing origination in May and its head of alternative credit in America was formerly head of global markets for the Americas at Natixis; Sixth Street poached Mike Dryden, the former global head of securitized products at Credit Suisse last April.
Big asset management players like Apollo, KKR and Blackstone are adding to the heat as they build private credit teams too. Apollo hired the remains of Credit Suisse's securitised product originators for Atlas. Blackstone is said to have hired 50 people to pursue wealthy individuals in Europe as it raises money for ECRED, its European private credit fund, which unfortunately said to be proving a hard sell.
Once private credit funds have raised money and made investments, Risch says their other big need is for structuring and syndication professionals to package up the loans and sell them on again. HPS and Blue Owl have both issued collateralised debt obligations in recent weeks as private credit CLOs become a thing. "As the default rate increases, you will see more and more deals being syndicated," says Risch.
The default rate is a moot point. Oaktree's Howard Marks warned in May that as interest rates rise and defaults increase, the private credit sector will be tested: “Did the managers make good credit decisions, ensuring an adequate margin of safety, or did they invest fast because they could accumulate more capital? We’ll see.”
Risch remains optimistic, though. Even if defaults rise, he predicts the private credit sector will expand and need more people as banks try to shift debts off their books. "The regional banking crisis means that none of these regional banks want anything on their balance sheets now, so direct lending from private credit funds will only increase."
Risch's optimism echoes that of Ludovic Phalippou, a professor of financial economics at the University of Oxford's Said Business School. As rates rise, Phalippou predicts private credit funds will buy assets from private equity funds whose portfolio companies are struggling: "They will be unable to meet interest payments and will lose control of their portfolio companies."
In the meantime, funds are expanding globally. Muzinich & Co, a New York firm, just expanded in Asia. 17 Capital is said to be expanding in the US from the UK. "Private credit hiring will be hot as a pistol for at least the next 14 months," predicts Risch.
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