This content is from: Corner Office

Carlyle, Others Staff Up Private Debt Groups

With institutional investors continuing to invest in BDCs and other forms of private credit, money managers are in hiring mode — and experienced private debt pros are in high demand.

  • Julie Segal

Carlyle Group and other money managers are hiring people for their private debt groups as pensions, endowments and others continue to invest in the growing asset class.

Money managers are beefing up their private debt operations in response to investor demand for higher-yielding loans to middle-market companies. According to data tracker Preqin, private debt assets quadrupled over the past decade, reaching $595 billion as of June 2016. Money managers are making direct secured loans to companies that want an alternative to bank funding, raising hedge fund-like vehicles for institutional investors, and offering private debt investments through a business development company structure, a legal entity for individuals that is similar to a real estate investment trust.

Carlyle has recently hired a number of senior people, including those focused on originating loans, said a spokesman for the private equity firm. Carlyle may also expand into real estate credit and opportunistic credit, which would involve lending to a variety of companies based on market conditions. Last year Carlyle hired Mark Jenkins to lead global credit from Canada Pension Plan Investment Board, with a mandate to restructure and expand the division. While a Carlyle spokesman would not confirm the move, the firm has also hired Alexander Popov from Highbridge Capital Management, according to a Wall Street Journalreport. Popov has not yet started at Carlyle.

Anthony Carlow, managing director at alternative investments recruiting firm Long Ridge Partners, says the industry has pulled in a lot of new money from investors, but there are a growing number of managers competing for the best deals and loans. As a result, many firms are competing against each other to hire experienced people with long-term corporate relationships to originate high-quality deals, which are essential for good fund returns. Managers are also hiring locally.

“It used to be enough, for example, to have originators in New York covering other areas of the country,” Carlow says. “Now they need troops on the ground.”

He stresses that five years ago, private debt hiring was booming, as firms like Goldman Sachs entered specialty lending. It then slowed down. “Now it’s an uptick, not a boom,” says Carlow.

Sasha Jensen, CEO of Context Jensen Partners, a recruiter focused on private debt marketing and fundraising, says many firms are hiring professionals in this sector “because there is a requirement to institutionalize these platforms and focus on different investors such as high-net-worth.” Jensen says the European private debt market will continue to grow in 2017 and 2018, as will demand for the asset class from private wealth management platforms. Jensen says compensation is rising particularly for professionals who have worked through an entire market cycle.