[ad_1]
Fund houses are increasing incentives to keep private market staff in the middle of a war for talent with some of the world’s biggest alternative houses.
Asset managers are seeking to reduce the risk of talent in sought-after sectors being scouted by larger rivals, and are fighting back with higher salaries and bonuses, as well as longer-term contracts to retain top performers. ing.
“We’ve seen compensation increases for people covering private markets capabilities,” said Max Heppleston, managing director at executive search firm Fredricks. “If you’re competing with Blackstone or KKR or companies that can offer much more money, it means there’s a higher risk of people being poached. There’s a lot more deep pockets in these funds. It is.”
Traditional fund houses are beefing up their private market capabilities as investor demand for fast-growing assets such as private credit, private debt, infrastructure and real estate surges.
BlackRock acquired Global Infrastructure Partners in January for $12.5 billion, while Amundi on February 7 acquired Zurich-based private markets specialist Alpha Associates in a deal worth up to €300 million. announced that it had been acquired.
Some companies have acquired private markets experts and teams to increase their expertise, while others, such as Fidelity International and Royal London Asset Management, have chosen to build teams from scratch.
readSkagen Fund chief warns private markets: ‘Pricing is a real problem’
Piers Hillier, chief investment officer at RLAM, said: financial news Despite considering 40 to 50 private market companies to acquire last year, the company decided growing it in-house was the best path forward.
But as asset managers move into private markets, they face a growing threat of being poached by the world’s biggest alternative players, recruiters say.
According to some recruiters, traditional asset managers tend to pay 20-50% less than the big private equity and alternative firms in the UK’s private markets sector.
“As a result, private equity firms are now able to cherry-pick the best talent from traditional companies,” said Tara Bagley, partner in Page Executive’s global banking and wealth management practice. Ta. “We expect this trend to become even more pronounced over the next 12 months, as investing in the private market becomes increasingly attractive for investors.”
Bagley said some traditional asset managers are increasing base salaries, increasing bonus potential for staff and offering better long-term incentives to retain talent.
However, they face stiff competition from alternative firms, which could significantly increase total wage increases.
“Someone who might get $300,000 to $400,000.” [at a traditional asset manager] We have the potential to double that within the right companies,” Heppleston said.
He cited the example of a funds professional who moved into a private markets role and secured a salary of $900,000, up from the $375,000 he was paid at his previous employer.
“The compensation they’re paying is enough to lure someone away from a more traditional company,” Heppleston said.
FN It was recently reported that private credit professionals are among the highest earners in Europe, with some senior executives earning an average of €13.7 million last year, according to figures from executive search firm Heidrick & Struggles. Ta. This includes salary, bonuses, and interest.
Figures for managing partners and partners working in the division show that remuneration consisted of a salary of 389,200 euros and a bonus of 710,000 euros, with the bulk of the salary coming from interest payments.
read Salaries of European private credit talent soar to $15 million as banks enter
With such high compensation packages on offer, asset managers have become more concerned about how they can compete and retain talent.
Tim Wright, senior client partner at Korn Ferry, said that “high-performing teams with a good track record in this space are highly vulnerable to being poached by companies with deep pockets.” “There’s a lot of recognition,” he said. “But another real risk is the possibility that individuals or teams with strong brands in the market could raise funds and set up independently.”
Mr Wright said some asset managers had introduced incentive programs “to address potential flight risks”.
However, despite these high incentives, it is unlikely that asset managers will be able to compete with large alternative companies.
“It still doesn’t match the top private equity houses, which can pay significantly more on a total fee basis and are more likely to provide carry,” Bagley said. “Unfortunately, this is a bit of a two-tiered affair.”
To contact the author of this article with feedback or news, email David Ricketts.
[ad_2]
Source link
