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The Asset Class That’s Paying Off — for Employees

As the private capital industry expands at a record pace, most firms are raising pay and adding to their headcounts.

If you work in private capital, you probably got a raise this year. Over the last year, 78 percent of private capital managers increased base salaries for employees firm-wide, according to a Preqin report released Wednesday. A further 68 percent said they anticipated salary increases between 2017 and 2018.

In addition, 61 percent hired more staff between 2016 and 2017, while 65 percent of firms planned to add to their headcounts over the next year. The new investments in talent come as investors continue to pour money into private capital funds, with the industry reaching $4.6 trillion in assets under management as of the end of last year, according to Preqin.

“The private capital industry is seeing a record-breaking period of expansion, with fundraising accelerating, assets under management growing, and more investors than ever becoming active,” Preqin’s Selina Sy, who edited the report, said in a statement. “In order to keep up with this growth, many private capital firms are looking to increase their staff headcounts to better enable them to expand their operations, make deals, and attract investor capital.”

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Sy added that most firms cited investment roles as the most important jobs they were hiring for. According to Preqin, junior staff were the most in need, targeted by 40 percent of firms. A third of firms said they wanted to hire or retain mid-level staff, while a fifth were seeking senior employees. “In an environment where attracting and retaining top talent is key, private capital firms may look to their compensation practices as an enticement,” she said.

The majority of firms, 56 percent, said they increased base salaries by less than 10 percent. Roughly a fifth increased base pay by more than 10 percent, with 5 percent of firms upping employee salaries by more than 20 percent.

Similarly, 54 percent of firms planning to raise base pay in the next year aimed for an increase of less than 10 percent, while only a tenth intended to increase salaries by more than 10 percent.

Preqin surveyed executives from private equity, venture capital, private debt, real estate, natural resources, and infrastructure firms, as well as funds of funds, for the report. The data tracker estimated that there are more than 7,500 active private capital firms globally, employing roughly 200,000 staff.

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