Unfortunately, there’s a lot of “group think” here, driven by endless forum threads and student groups over-hyping and over-marketing the concept.

Banks are also to blame because they now market spring weeks to students as young as 16.

If you want to work in investment banking in London, these “spring weeks” (1-2-week mini-internships in your first or second year of university) are helpful but not necessarily required.

It is 100% possible to win internship offers without attending spring weeks, and they have some downsides that no one ever discusses.

But before exploring “the dark side” here, I’ll start with a quick summary:

Investment Banking Spring Weeks Defined

Investment Banking Spring Week Definition: In a “spring week,” students in their first or second year of university complete a 1-2-week internship at a bank, normally in London, which may position them to win an official summer internship the next year.

Spring weeks are mostly “a thing” in the U.K., but large banks in Asia-Pacific may also offer them.

They do not exist in the U.S., Canada, or Latin America, and in continental Europe, you normally go to London to complete the spring week.

The concept is simple: Apply to dozens of these “pre-internships,” win and complete a few, and walk away with a penultimate-year internship already set up.

Unfortunately, it’s not quite that simple – due to massive competition, a fairly involved recruiting process, and low conversion rates at many banks.

Summary of Spring Weeks: Advantages and Disadvantages

My summary would be:

• Spring weeks can be a good pathway into full IB summer internships because, depending on the bank, 20 – 40% of students might receive internship offers (and at a few firms, this is closer to an 80%+ rate).
• Applications for March/April spring weeks open far in advance (August – October), and it’s “first come, first serve,” so apply as early as possible for the best chance.
• Expectations for technical skills and work experience are lower, but the process is more random than normal internship recruiting and depends on fit, grades, and activities. Many spring weeks also have a heavy “diversity” component.
• The odds of winning an individual spring week are low because many banks receive 2,000 to 5,000 applications for 50 – 100 spots. Since it’s a numbers game, you normally apply to dozens of spring weeks.
• To convert your spring week into an internship, you will go through interviews or case studies on the last day; ~50% of interns will then be invited to an assessment center, and ~50% of those might win a summer internship for the next year (but, again, the odds vary, and more than 25% will win internship offers at some banks).
• The main downsides of spring weeks are 1) Completing one does not guarantee you an internship, so you still need to keep networking, gaining work experience, and preparing even if you have won multiple spring weeks; and 2) Some students spend so much time applying to and completing spring weeks that their grades and activities suffer.

Which Banks Offer Spring Weeks?

All the bulge bracket banks in the U.K. run them, but so do many elite boutiques (Lazard, Evercore, PJT, etc.), middle-market banks (Jefferies, Houlihan Lokey, etc.), and “in-between-a-banks” such as RBC and Wells Fargo.

Outside of IB, various asset managers, hedge funds, consulting firms, and trading firms also run some type of spring week program, but we’re focusing on banking here.

The most important point is that the acceptance and conversion rates vary wildly by firm.

For example, Citi is known for awarding internship offers to 80 – 90% of spring week participants in many years, but other banks are in a much lower range.

You need to factor this in when making decisions because even if one bank is “better” on paper, a 90% conversion rate trounces a 15% or 20% conversion rate.

How to Apply for Investment Banking Spring Weeks

You need to pay close attention to application open dates and apply ASAP, just as with real internships.

You can easily look up banks’ “spring week,” “spring insight,” or “discovery” programs (they’re all the same), but you can also use various online trackers to find the dates.

In fact, here’s an example of one such tracker with dates and information by bank.

Applications normally open between August and October, offers are usually sent in December – January, and you get the scheduling information in February.

The exact process varies by bank, but you can expect something like this:

• Online Application: This includes your academic and contact information, CV, cover letter (if required), and competency questions, which are written versions of the standard fit questions (expect 1 – 5 questions with answers of 150 – 300 words each).
• Numerical / Verbal / Logic Assessment: These tests are very similar to those given at or before assessment centers, and you can practice the same way (we recommend JobTestPrep).
• HireVue and/or Phone Interview: Expect mostly fit/behavioral questions and maybe a few simple technical/deal/market questions.

The biggest difference vs. the normal recruiting process in the U.K. is that you may not necessarily go through a full assessment center (AC) before the spring week.

Since ACs are expensive to administer, banks usually reserve them for candidates who have advanced further into the process.

Also, students applying to spring weeks are in their first and second years of university, so the group exercises often given in ACs may not be useful at this stage.

Who Wins Spring Week Offers?

The acceptance rates for most spring week programs are below 5%, so the short answer is “not that many students.”

If 3,000 students apply to Bank A, perhaps 100 – 200 will be selected for interviews, and 60 might get spring week offers.

Since students have almost no experience, the selection process comes down to:

• Do you go to a target school, or at least a decently well-known school?
• Do you have good grades, such as a 2:1 or above? What about your A-Levels, especially if you don’t yet have an academic record?
• Do you have interesting hobbies, activities, or student groups?
• Are you in one of our diversity categories (e.g., female, international, non-STEM/finance major, certain ethnicities, etc.)?
• Are you personable?

Usually, at least 50% of the students who win offers are from target or semi-target universities in the U.K. (e.g., Oxford, Cambridge, LSE, UCL, Warwick, and Imperial).

The remainder come from a mix of target and semi-target schools in continental Europe and lower-ranked schools in the U.K.

What Do You Do in a Spring Week?

You might wonder what you do at a bank if you only intern for 1 – 2 weeks, as most deals take months or years to execute.

Your tasks will include:

• Shadowing a few bankers.
• Attending workshops and training sessions.
• Practicing some of the work skills with non-client companies.
• And getting plenty of networking opportunities and attending social events.

You won’t be allowed to work on live deals for confidentiality reasons.

And if you’re in sales & trading, you won’t be allowed to trade or sell, just as you’re similarly restricted in S&T internships.

Therefore, most of your success depends on how well you network and how you perform in the final interview(s) or presentation.

How Do You Convert a Spring Week into a “Real” Internship?

This one varies by bank, but you’ll usually have to prove yourself with an end-of-week interview or case presentation.

If you do well enough, you’ll get invited to an assessment center, and if you perform well there, you’ll get a summer internship offer for the next year.

That’s a huge advantage because you won’t have to worry about applying or going through the entire recruitment process again.

The overall odds look like this:

• < 5%: Your chances of winning a spring week from a single application.
• ~50%: Your chances of doing well enough in the spring week to advance to the AC or other evaluation afterward.
• ~50%: Your chances of winning a real internship offer out of the AC.
• ~25%: Your overall chances of converting a single spring week into a summer internship, with huge variation by bank. The average range is probably more like 20 – 40%.

For tips on performing well at each stage, please see the articles on IB internships, internship preparation, S&T internships, and assessment centers.

The rates trading article has some tips for S&T assessment centers and interviews.

Bankers look for the same criteria as always: Reliability, decent industry knowledge, and evidence that you learned something during the week.

The main difference is that they can’t judge your “work product,” so networking and following up with everyone you meet are more important.

In other words, don’t just attend a social event and chat with people there.

When you meet someone, get their contact information and follow up with a quick call later if they seem receptive and helpful.

What If You Don’t Win a Summer Internship?

If you complete a spring week that does not convert, all you can do is apply for standard summer internships the next year.

Ideally, you’ll complete a finance internship before bank applications open in ~August and do the usual networking and interview prep.

If you have multiple spring weeks, your odds of winning at least one internship increase substantially.

However, if some of these spring weeks overlap, even by a few days, you can’t complete them all – so you’ll have to pick the firm(s) you’re most interested in.

If your SW does not convert, you’ll need a solid explanation before your next interviews.

You can refer to the article about what to do with no return offer from an internship, but I would recommend keeping your explanations short and sweet:

“I did well in the workshops and training but didn’t fit well with the team.”

“I liked the work but preferred a different industry or product group.”

“They were looking for people with a more extensive background in [X], so I wasn’t the best fit.”

OK, So What Are the Downsides of Investment Banking Spring Weeks?

Reading everything above, you might think:

“OK, so winning spring weeks is very difficult, and your chances of getting a full summer internship aren’t great, but so what?

It’s the same as normal IB summer internships at the large banks.”

There are a few problems, but I’ll start with the most obvious one: Some students spend excessive time on spring week preparation and applications when they could use their time and resources more effectively.

It’s like the downsides of studying for the CFA: The certification won’t hurt you, but it’s not necessarily worth the time and money required.

Also, completing a spring week mostly helps when applying to one specific bank for the same role.

For example, if you do an IB spring week at Bank of America but then decide to focus on corporate finance roles at Fortune 500 companies, this spring week will not help much vs. a 10-week summer internship.

Bankers in regions like the U.S. also have a low awareness of spring weeks, so if you decide to move or work elsewhere, the experience won’t help much.

Finally, completing a spring week does not guarantee an internship next year, so it may not reduce your workload.

In other words, if you win 2 spring weeks at different banks, you can’t just say, “OK, I’m done – time to relax and not worry about next year.”

You might not convert either one, so you need to continue preparing and networking, and you’ll need to gain some solid experience between now and internship applications.

By contrast, you could ignore spring weeks, do student activities and clubs, and network a bit to win a summer internship at a boutique PE/VC/other firm.

You would be under less pressure because there’s no expectation of return offers there, and you could still leverage the experience to apply to internships at large banks afterward.

Final Thoughts on IB Spring Weeks

The bottom line is that investment banking spring weeks were more useful a long time ago – before every finance/economics student in Europe became obsessed with them.

Due to over-saturation and obsessive-compulsive behavior, the odds have worsened, and the value proposition has fallen.

If you want to work in IB in London and you’re starting early – before you arrive on campus in a 3-year degree or in Year 1 of a 4-year course – yes, apply to spring weeks.

But also realize that:

1. A 2-week internship does not determine your entire life’s destiny.
2. There are other paths into banking (do 1-2 internships and a good activity, do off-cycle internships, pursue lateral hiring after graduation, etc.).
3. At most banks, most summer interns have not completed a spring week at the firm.

If you understand these points and avoid freaking out over your acceptance status at 50+ banks, your spring week experience might be almost as much fun as a spring break.

The post Investment Banking Spring Weeks: The Full Guide appeared first on Mergers & Inquisitions.

The IB internship recruiting timeline is now so insane that even mainstream news sources like the Wall Street Journal are writing about it (“The Race Is On to Hire Interns for 2025. Really.”).

And yes, you read the news correctly: Banks like RBC, DB, Houlihan Lokey, Rothschild, and Guggenheim opened 2025 summer internship applications in calendar year 2023.

Admittedly, not all banks did this, and many bulge bracket firms will start in the normal time frame of January – March.

In practice, this means you must be on top of IB internship recruiting from Year 1 of university if you’re in the U.S.

I’ll cover the following points in this updated article:

How to Get an Investment Banking Internship: The “Ideal” Timeline in the U.S.

By the time internship applications open in Year 2 of university – whether that’s in the middle or beginning (!) of the year – you should have the following elements in place:

• A good GPA – at least 3.5 and ideally a bit higher.
• One (1) solid finance internship and one (1) student/leadership activity or two solid finance internships.
• A decent amount of networking completed with bankers (e.g., 30 – 40 coffee chats or informational interviews).
• And ~30 hours of interview prep, which you can stretch over 2-3 months or cram into a few weeks (your story, standard behavioral questions, technical questions, etc.).

To accomplish that, I recommend the following timeline:

How to Get an Investment Banking Internship, Step 1: Your First Year in University

You don’t necessarily need to pick your major at this stage, but I would recommend finance/accounting or something that will be useful for a wide range of jobs.

Think: Engineering, math, statistics, or something with elements of all these, such as “management science” or “operations research.”

Avoid options like sociology, art history, gender studies, etc., unless you’re at one of the top ~5 universities in the country (it’s easier to get away with irrelevant majors there).

Next, front-load your schedule with easier classes in your first year, such as language classes or university-wide prerequisites.

Earn a high GPA from these easy classes and save the hard, technical ones for later years.

Join 1-2 student groups that will help you network into finance roles, such as the student investment club or the business frat. You could also consider investing or case competitions.

Most importantly, you NEED to get a finance internship in your first year or in the summer after your first year.

In the past, you could wait until Year 2 for your first internship, but this is riskier today because applications keep opening earlier and earlier.

And yes, some banks will still start later, but you want to keep your options open so you can apply to as many firms as possible.

You probably won’t be able to get a “real” IB internship, but you can find some good alternatives:

• Search fund internships.
• Internships at local venture capital or private equity firms.
• Internships at regional boutique banks.
• Corporate finance roles at nearby companies.
• Wealth management.
• Corporate banking.
• Anything in real estate, such as brokerage, appraisal, or lease management.
• Big 4 or independent valuation firm internships.

There is no set process, so you’ll have to find people on LinkedIn, send them messages or emails, and repeat until you find something.

How to Get an Investment Banking Internship, Step 2: The Summer After Your First Year

Ideally, you’ll complete your first finance internship in this period (see above).

You should also start learning the technical side (accounting, valuation, and basic M&A and LBO concepts) and begin networking with alumni.

It might even be a good idea to start networking before the end of your first year so you have more time to follow up with alumni and set up calls.

This may sound unbelievable, but with recruiting moving up and start dates becoming more random, it is better to start too early than to wait too long.

If your internship has normal hours, you could target ~10 hours per week for networking + technical prep.

A good target might be to complete 20-30 coffee chats or informational interviews by the time your second year starts.

With the technical prep, the most important point is to learn by doing.

Yes, you can read guides, take courses, and watch YouTube videos, but you should also spend a few hours building simple DCF models or 3-statement models to learn the key concepts.

You will retain far more information if you practice with companies you’re interested in than if you passively consume content.

How to Get an Investment Banking Internship, Step 3: Your Second Year in University

This is where it becomes unpredictable because it depends on when banks open their applications, which seems to change each year.

Since you can’t know that beforehand, you should continue networking with alumni and preparing for interviews as your second year begins.

Weekend trips to places like New York or London can certainly help, but you don’t necessarily “need” them if you’ve been able to speak with many alumni already.

You’ll also have to consider your internship plans for the upcoming summer (after your second year) since they will appear on your resume/CV and in interviews.

I would refer to the “pre-internship” list above and focus on the area you’re most interested in.

If you don’t already have a “brand name” on your resume, aim for an internship at a large, brand-name company; if you do have that brand name already, aim for a highly relevant internship, such as one where you work on deals and value companies.

At some point in your second year, applications will open, and the recruiting process will begin – at least if you’re at a target school.

All you can do here is pay close attention to news alerts and job postings and be ready to pounce the moment applications open.

Some people recommend resources like The Pulse, the Adventis newsletter, etc., but I can’t personally speak to how useful or accurate they are for tracking the dates.

If you do well in HireVues and investment banking interviews, you might have something lined up by the middle to end of your second year.

How to Get an Investment Banking Internship, Step 4: The Summer After Your Second Year

You complete your second finance-related internship here.

Also, not all banks finish their summer internship recruiting by this stage, so if you haven’t yet found something, you might still have a shot.

Smaller firms tend to be a bit slower, so you could find some middle-market and boutique openings, even if the bigger banks are done.

Therefore, you can keep applying and networking – but your chances decrease the longer it takes.

How to Get an Investment Banking Internship, Step 5: Your Third Year in University

Some banks will continue recruiting even into your third year, so you might still be able to interview around.

But if you do not win an internship within the first few months, chances are that you won’t be in IB at a large bank for the summer before your final year of university.

What If You Start Late or Miss Application Deadlines?

The best “Plan B” options depend on how far off you are.

If you can plausibly get finance internships in a related area, such as corporate banking or corporate finance, you could potentially aim for a full-time return offer in one of those fields, work for a year, and then go for lateral roles in IB.

Similarly, if you can win an offer at a boutique bank or another smaller firm, you could take a similar approach and work there for a year and then go for lateral roles at larger firms.

But if the best you can do is something like wealth management, it will be much harder to make this move (you want something with more financial or deal analysis – for more, see our article on wealth management vs. investment banking).

You could also think about fields like equity research that are less structured and that might allow you to get in without a previous internship.

On the other hand, if you missed the deadlines because you were on a totally different path – such as engineering, marketing, or pre-med – you will probably need to pivot more aggressively with something like a Master’s in Finance degree.

You could also work for a few years and go the MBA route, but I do not recommend that for your immediate “Plan B” because it’s slower and more expensive.

How to Get an Investment Banking Internship at the MBA Level

At the MBA level, the timing is less frantic because banks cannot recruit until students arrive on campus.

You should still expect a quick start to recruiting and on-campus events once classes begin, but that has always been the case at this level.

We have an article on the MBA investment banking recruiting process, so please refer to that for more details.

In short, you still need to prepare for interviews and do some early networking, but the entire process is very structured at the top programs.

So, your candidacy is more about presentation, consistency, and ensuring you have a good enough background to be competitive.

How the Recruiting Timeline Differs in Other Regions

In places like London and Hong Kong, the process has moved up to earlier start dates, but it’s not as ridiculous as in the U.S.

So, you can afford to take your time a bit more and get internships in Year 2 (assuming it’s a 4-year degree – if it’s a 3-year degree, you need to move more quickly).

Applications usually open ~10-12 months before summer internships begin, so it’s less accelerated than the U.S. timing.

The Big 5 banks in Canada seem to be starting recruiting season earlier as well, but they’re more in-line with the start dates of the U.S. bulge brackets (well, except for RBC).

One difference is that there are more avenues into IB internships in regions like the U.K., such as investment banking spring weeks.

How to Get an Investment Banking Internship: What to AVOID

If you attend a good university, earn good grades, get 1-2 decent internships, and network/prepare in advance, you’ll probably be able to win an IB internship.

But you could also make plenty of mistakes that reduce your chances, so here’s what you should avoid:

First, it’s risky to transfer to a better university – even if you’re moving from an unknown state school to the Ivy League.

This strategy made sense for students at non-target schools a long time ago, but the new recruiting timeline makes it difficult to execute – as you won’t have much time to network with alumni or join student groups.

Second, do NOT take difficult classes in your first year. You cannot afford a lower GPA because banks use grades to weed out candidates.

Third, do not wait too long to start networking. If you wait until the middle of your second year, it might be too late!

Finally, do not focus on activities at the expense of internships. Yes, leadership experience is nice, and clubs can be useful for networking, but you will not make it far without internships.

Additional Reading About Internships

I’ve written a lot about IB internships over the years.

Here are the most relevant articles:

• How to Write a Finance Internship Resume with No Work Experience
• How to Cold Email for an Internship: Investment Banking Cold Email Templates and Guide
• No Investment Banking Summer Internship Offers: What to Do
• The Off-Cycle Investment Banking Internship: The Best Side Door into the Industry?
• How to Prepare for Your Investment Banking Summer Internship in Less Than 8 Hours (Excel, PowerPoint, industry knowledge, and networking)
• Investment Banking Internships: The Ultimate Guide (tips for the job and receiving return offers)
• How to Decide on Investment Banking Summer Internship Offers: Who Has a 97.5% Full-Time Offer Conversion Rate?

Finally, if you want to speed up your preparation process so that you can succeed in this hyper-accelerated recruiting timeline, our friends at Wall Street Mastermind might be able to help you out.

They can coach you through the process I laid out above step-by-step and remove the trial and error you would have to go through on your own otherwise.

Their team of coaches also includes a former Global Head of Recruiting at three different large banks, so you’ll know exactly what banks are looking for in candidates.

They provide personalized, hands-on guidance through the entire networking and interview process, and they have a great track record of results for their clients.

You can book a free consultation with them to learn more.

The post How to Get an Investment Banking Internship appeared first on Mergers & Inquisitions.

But the events of 2023, including the UBS acquisition of Credit Suisse and the rise of firms like Wells Fargo, Jefferies, and RBC, have shaken up the traditional list.

As of 2024, I consider the following to be the list of bulge bracket banks (note that the “potential” category is speculative and could include other, similar firms beyond the 5 currently listed there):

Sources: The list above is based on deal volume and fee data from Dealogic, the Financial Times, and Statista over the past few years.

What is a “Bulge Bracket Bank”?

Bulge Bracket Bank Definition: The “bulge brackets” are the largest global banks that operate in all regions and offer all services – M&A, equity, debt, and others – to clients; they work on the biggest deals (usually $1 billion+) and have divisions for sales & trading, equity research, wealth management, corporate banking, and more.

The name “bulge bracket” (BB) comes from the prospectus for an IPO or debt issuance, which lists all the banks underwriting the deal.

The larger banks play more important roles, acting as bookrunners or joint bookrunners, and earn higher fees.

Therefore, their names are in bigger font sizes on the cover page, so they appear to be “bulging out” next to the smaller firms:

Note that “bulge bracket” and “BB” are online terms; I don’t think I’ve ever heard anyone use them in a spoken conversation.

Similar to terminology like “target school,” it would sound weird to use these words in an interview or networking setting.

So, if you need to refer to these firms in real life, try something like “large bank(s)” instead.

Why Have the Bulge Bracket Banks Changed? What About Deutsche Bank and UBS?

The end of Credit Suisse in 2023 means that it’s no longer on this list.

It also means that UBS, which acquired CS, is more firmly in the “bulge bracket bank” category, even though people sometimes debate its status.

The full list changes over time because banks get acquired, go out of business, and change their focus – while other banks make acquisitions and grow organically.

For example, Lehman Brothers and Bear Stearns were considered bulge bracket banks before the 2008 financial crisis – but many people today don’t even remember them.

As another example, some argue that UBS should not be a bulge bracket bank because it has focused on wealth management and areas outside the capital markets.

However, the global IB fees over the past two years do not support that argument:

UBS cares less about investment banking than the banks above it, but it is still in the top ~7 worldwide for IB revenue.

Also, following the acquisition of Credit Suisse, it’s hard to argue that UBS is not a BB bank (similar to how Barclays’ acquisition of Lehman Brothers’ operations turned Barclays into an official bulge bracket).

Deutsche Bank is a trickier case because it now generates less investment banking revenue than firms like Jefferies, Wells Fargo, and RBC.

It also tends to work on smaller deals than the top ~5 banks.

Older bankers might still think DB is a bulge bracket, but I would put it in the “borderline” category as of 2024.

I’m still listing it because it was #9 by global IB revenue in 2021 and 2022, but I would not be surprised if it fell off this list eventually.

This does not mean it’s a bad place to work.

It’s just that it’s not in the same category as GS, MS, JPM, etc., anymore (to be honest, I don’t think it has been in that same category for at least 5-10 years).

Bulge Bracket Bank “Challengers”: Do Wells Fargo, RBC, or Jefferies Qualify?

Looking at these lists, you might think:

“Wait a minute. Firms like Wells Fargo, RBC, and Jefferies all have annual IB revenue between $1 and $2 billion, so they’re not that far from Barclays and Citi. What’s the difference?”

There’s no exact revenue cut-off to qualify for this list, but these firms are less diversified in products and geography, so we do not consider them bulge brackets (yet).

For example, Wells Fargo always does well in debt capital markets but much worse in M&A advisory and equity capital markets.

You can see this if you break out the performance by product area and select “Loans”:

Wells Fargo is usually in the top 5-7 worldwide for debt but ranks much lower in the other areas.

Also, it has less of a global presence, as it’s U.S.-based and executes mostly North American deals.

Meanwhile, a firm like Jefferies is more diversified with a bigger international presence, but it also works on smaller deals than most bulge brackets.

One interesting case is a firm like Mizuho, which acquired Greenhill in 2023 (note that the deal has not yet closed as of the time of this article).

Greenhill was formerly considered an “elite boutique,” at least by some people, so this deal could turn Mizuho into more of an investment bank and give it a greater presence outside Asia, which is why I listed it in the “Potential” category above.

That said, it will still be many years before anyone starts thinking of it as a bulge bracket firm (if ever).

What About the Chinese Banks, Such as CITIC, China International, and Huatai?

While some Chinese banks earn high global revenue from their IB activities, they have virtually no presence outside China.

Also, they are often strong in ECM or DCM but far weaker in areas like M&A.

Due to the current geopolitical climate, it’s highly unlikely that these firms will expand significantly beyond China anytime soon.

But in the distant future, sure, one or more of these firms might join this list.

Bulge Bracket Banks vs Boutique, Middle Market, and Elite Boutique Banks

In addition to the bulge bracket banks, there are other categories: middle market banks, regional boutiques, and elite boutiques.

Each has a separate article on this site; there’s also a summary of the top investment banks.

I’d summarize the differences for front-office investment banking roles as follows:

• Bulge Bracket vs. Elite Boutique Banks: Both firms work on large/complex deals, and you gain access to very good exit opportunities from both. You’ll get higher compensation at an EB, more interesting work, and more responsibilities, but you’ll also get a smaller network and a lesser-known brand name if you ever want to leave the finance industry.
• Bulge Bracket vs. Middle Market Banks: You’ll work on smaller deals, have more limited exit opportunities, and get less of a network and brand name at MM banks. But the compensation doesn’t differ much for entry-level roles, and it is more feasible to win offers, particularly if you are at a non-target school, have a lower GPA, or got a late start in the recruiting process.
• Bulge Bracket vs. Regional Boutique Banks: The differences above are even more extreme here. You’ll work on very small deals at most regional boutiques, have even less access to private equity and hedge fund exits, and get even less of a network and brand name. But you might also have a chance at these very small firms even if you’re not competitive elsewhere.

Based on these comparisons, you might think the bulge bracket banks “win” across all categories.

But that’s not quite true because it ignores a few important points:

1. The elite boutiques are arguably better if you want to stay in finance long-term due to the compensation and work differences.
2. It’s harder to win offers at the BB banks, and you need more upfront preparation and an early start in university (or a top-tier MBA).
3. In some regions, the bulge brackets are not the best because domestic banks are stronger. For example, the “Big 5 (6?)” Canadian banks dominate investment banking in Canada, and the top banks differ in emerging markets such as Brazil.

So, my advice here is simple: Get a realistic sense of where you’re competitive and focus on winning the best offer you can.

If that’s at a bulge bracket bank, great.

If not, go for smaller banks, do your best, and think about moving around once you have more experience.

Final Thoughts: Bulge Bracket Bank or Bust?

A long time ago, many university and MBA students assumed that bulge bracket banks were the “be-all and end-all” for careers.

While they still have advantages, it’s a murkier distinction nowadays.

The elite boutique banks (Evercore, Lazard, Centerview, etc.) are now strong competitors, and you could easily make the case for accepting an offer there.

Also, many private equity firms and hedge funds now recruit undergrads directly via Analyst programs, and if you can win an offer at a large/reputable firm, it’s quite a good option.

Finally, technology firms now offer lucrative jobs to engineers, product managers, and salespeople, so many students go the tech route instead.

The bottom line is that while the bulge bracket banks are still appealing, they are no longer the clear winner in the “Post-Graduation Career Olympics.”

This is especially the case with the changes over the past few years and the disruptions to the traditional list.

Here’s how I’d sum up everything above:

Advantages of Working in Investment Banking at the Bulge Bracket Banks:

• Brand Name & Alumni Network: Everyone knows your firm, which is helpful for finance and non-finance roles.
• Broad Exit Opportunities: You have good options for both finance and non-finance companies because of the brand, network, and access to recruiters.
• Larger, More Complex Deals: You’ll work with multi-billion-dollar corporations instead of family-owned businesses, so the analysis is often more in-depth.
• Compensation: You’ll earn more than you would at smaller firms but less than at the elite boutiques.

Disadvantages of Working in Investment Banking at the Bulge Bracket Banks:

• Extremely Competitive: To win offers, you must start early, ideally attend a top university or MBA program, and have excellent work experience and networking.
• Long Hours and Unpredictable Lifestyle: You won’t have much of a life for the first few years (even with “protected weekends” and other measures).
• Larger Teams: While the deals may be more complex, larger deal teams also mean that Associates and VPs may do more of the interesting work.
• Compensation: Higher percentages of compensation start to become deferred and paid in stock as you get promoted, and the absolute numbers may be less than elite boutique pay as well.
• Regional Variations: Finally, depending on your region, domestic banks might have better deal flow than the BB banks.

If you’re not sure of your long-term plans and you’re competitive for roles at the largest banks, sure, go for it.

But if you are more certain and you can win offers at the elite boutiques or buy-side firms, one of those could be a better alternative.

And if you don’t know where you have a realistic chance, go back to Square One and review our coverage of how to get into investment banking.

Final Note: Everything in this article refers to investment banking jobs. If you are interested in corporate banking, wealth management, IT, or other areas, the top firms and groups differ.

The larger banks still offer advantages over smaller ones, but the rankings change depending on your area of interest. We may cover these points in future updates (for more, see our coverage of wealth management vs. investment banking).

The post Bulge Bracket Banks: 2024 Edition appeared first on Mergers & Inquisitions.

1. Wait a minute, isn’t healthcare a risky/growth-oriented sector? Why do PE firms operate there? Don’t they need companies with stable cash flows?
2. In most of the world, healthcare is either government-run or a mixed public/private sector. Are there many private healthcare companies for PE firms to acquire?

The short answer to #1 is that healthcare private equity firms operate in specific verticals with stable-ish cash flows, such as healthcare services, nursing facilities, medical devices, equipment, and healthcare IT.

They do not invest in risky biotech startups attempting to cure cancer (at least not within their traditional PE portfolios).

On #2, the government controls healthcare in many countries, but not everything in healthcare – there are still private healthcare firms even in Canada and the U.K.

For example, Medicare in Canada does not always cover services like prescription drugs, eye care, and dentistry, so there is room for the private sector.

That said, there is far more healthcare PE activity in the U.S. since it has some of the biggest healthcare companies and less government control.

Before delving into these nuances, we should take a step back and define the sector:

Definitions: What is a Healthcare Private Equity Firm?

Healthcare Private Equity Definition: A healthcare private equity firm raises capital from outside investors (Limited Partners), acquires companies in the healthcare services, devices, and healthcare IT segments, and aims to grow these firms and sell their stakes within 3 – 7 years to realize a return on their investments.

This definition excludes life sciences and biopharmaceutical companies because they differ greatly from service and device companies.

These firms lie in the territory of life science venture capital firms that invest in high-risk, early-stage companies.

Some PE firms also invest in this vertical, typically via separate groups (see below).

If you compare healthcare to technology private equity, one of the biggest differences is that different verticals in healthcare are more like completely different industries.

Pharmacies are closer to retail companies; nursing facilities are like REITs or real estate; small physicians’ practices are like consulting firms; and HCIT companies could be more like software or IT services firms.

For more on this, please see our healthcare investment banking article.

Why is Private Equity Interested in a “Boring” Sector Like Healthcare Services?

This chart of PE deal activity from 2001 to 2022 in the Bain Capital Healthcare Private Equity report sums up the market quite well:

In short, healthcare had never been a huge sector for private equity, but activity ramped up in the late 2010s into the early 2020s, and it’s now one of the top industries by dollar volume (right after tech).

It appeals to private equity firms for a few reasons:

1. Stable/Predictable Cash Flows in Certain Sectors – While these companies do not necessarily have “annual recurring revenue” like a SaaS company, they often have government contracts or subsidies – which are highly likely to be renewed. For example, in the U.S., Medicare and Medicaid are the primary payers for nearly 80% of the residents in nursing homes.
2. Mispriced Companies and Assets – Some mature healthcare firms trade at low valuation multiples, often because the market misunderstands their contracts, revenue, or track record. PE firms view these companies as especially appealing since low multiples mean they can use higher debt percentages to fund the acquisitions.
3. Fragmented Markets with Many Add-On Acquisition Opportunities – Private equity firms have been snapping up specialist physician practices in the U.S. to consolidate their market power in specific regions. Critics would say they’re cutting corners, raising prices, and worsening patient care (see below).

Doctors often sell their practices to PE firms because it seems like a better alternative than being acquired by a huge hospital chain.

In both cases, the acquirer is likely to do something bad, but at least with the PE firm, there’s less bureaucracy.

A “typical” healthcare PE deal might resemble Cinven’s acquisition of SYNLAB, a medical diagnostic and testing provider in Germany:

This deal was done at a low 5.3x EBITDA multiple, mostly because the company went public during the COVID testing craze but fell off a cliff after the world moved on.

At the time of the deal, it was expected to grow sales at 3-5%:

Remember that PE deals do not require “growth.”

This deal works because SYNLAB can afford to take on a huge amount of Debt and can likely repay it quickly – since its EBITDA was depressed at the time of this acquisition.

Also, there are plenty of bolt-on acquisition opportunities in the sector, and if Cinven can grow it modestly and increase its margins a bit, the math works even with a lower exit multiple.

The Top Healthcare Private Equity Firms

If you want a good list of healthcare PE firms, check out the Healthcare Private Equity Association (HCPEA) “member firm” page here.

To be more specific, I would divide the sector into these four categories:

1. Mega-Funds and Large PE Firms – None of these firms specializes in healthcare, but they all have sector teams.
2. Upper-Middle-Market and Middle-Market Firms with Healthcare Teams – It’s the same idea, but they’re smaller and do smaller deals. Some of these firms might also fall in the “growth equity” category.
3. Healthcare-Only Middle-Market Firms – They tend to specialize in specific verticals, and many are in the “lower-middle-market” category.
4. Life Science and Biotech Teams – These are more on the venture capital side, but some large PE firms have internal teams that also do this.

Mega-Funds and Large Private Equity Firms in Healthcare

This list includes names like Apax, Bain Capital, Blackstone, Carlyle, EQT, Hellman & Friedman, Leonard Green, KKR, Thoma Bravo (for healthcare IT), TPG, and Warburg Pincus:

You might have noticed that Apollo is not on this list, even though they are considered a private equity mega-fund – because they’re less active in healthcare than the other firms.

Middle-Market (Upper/Lower) Firms with a Healthcare Presence

Starting with “larger firms” here, names include Audax, Court Square, Friedman Fleischer & Lowe (FFL), General Atlantic, Genstar, GTCR, Harvest, Kohlberg, Madison Dearborn, Nautic, New Mountain Capital, Nordic, Oak Hill, Summit Partners, TA Associates, Thomas H. Lee (THL), and Welsh Carson:

Smaller firms here with some healthcare focus include Arsenal, Gryphon, Vestar, and Vistria.

Dedicated Healthcare Private Equity Firms

Many of these firms are smaller or newer; names include Altaris, Avista, Chicago Pacific Founders, Consonance Capital, Cressey, Frazier, Gurnet Point, Linden, Patient Square, QHP (FKA NovaQuest), Varsity, and Water Street:

On the European side, you can add names like Apposite, Archimed, Astorg, G Square, GHO, and MVM Partners.

Life Science and Biotech Teams

Some PE mega-funds have specific teams that do VC-style investments; examples include Blackstone Life Sciences and Bain Capital Life Sciences.

Other firms that use a similar approach include Frazier, Hildred, Longitude Capital, QHP (FKA NovaQuest), RoundTable, and Vivo.

Some biotech hedge funds also do private placements for life sciences companies, which is effectively the same as VC or growth investing.

Examples include Baker Brothers, EcoR1, Perceptive, and Redmile.

Careers in Healthcare Private Equity

Careers in healthcare private equity have more to do with your firm’s size, strategy, and vertical focus within healthcare than anything else.

For example, if you’re at a firm that’s rolling up local pharmacies, it will be more like retail private equity, while healthcare properties or nursing facilities might be closer to real estate private equity.

Conversely, a smaller firm focused on life sciences or growth investing will be more like a VC role.

Your compensation depends mostly on your firm’s size and performance; healthcare PE pays, on average, about the same as any other PE firm or group.

In terms of mobility, you could easily join a healthcare investment banking team, move to a portfolio company in a corporate development role, or potentially even move into venture capital if you’ve had some life sciences exposure.

However, your chances of moving into early-stage VC are low unless you also have a serious science background, such as an M.D. or Ph.D. in biology.

You could also move into generalist PE firms or groups in other sectors, depending on your deal experience.

Can You Recruit into Healthcare Private Equity and Win Jobs?

As you’ve probably already guessed, there’s nothing “special” about private equity recruitment for healthcare firms or groups.

It’s still the same standard on-cycle or off-cycle process, and you might specify your group at the beginning or be placed after winning an offer, depending on the firm.

The two most common questions are:

1. Do you need healthcare deal experience in investment banking to have a shot at healthcare private equity?
2. Can you get in as an D. or Ph.D. based on your industry knowledge and scientific expertise?

The answer to question #1 is that healthcare deal experience helps and is strongly preferred, but it’s not “required” to get in.

Areas like healthcare services and medical devices are fairly generalist and follow standard accounting and valuation.

So, it’s not like real estate, oil & gas, or financial institutions, where you must learn a new set of jargon and accounting rules to have a good shot.

The answer to question #2 is “No, probably not” – if you have a pure medical or academic background, your chances of moving directly into healthcare PE are low.

These roles are for bankers and people with deal experience, such as corporate development professionals; firms care much more about your investment, financial modeling, and due diligence skills than your scientific knowledge.

If you have an M.D. or Ph.D., you should target life science VC roles, biotech equity research, or healthcare IB as a stepping stone.

In the recruiting process, you should expect the same private equity interview questions and LBO modeling tests, but often with a healthcare angle.

We don’t have a dedicated healthcare modeling course, but there are healthcare models and case studies throughout the others:

• Core Financial Modeling: There’s an LBO case study based on NichiiGakkan, a nursing facility company in Japan (deal led by Bain Capital).
• Interview Guide: There’s a DCF case study based on Attendo AB, a healthcare facility company in Sweden.
• Advanced Financial Modeling: There’s a case study on Jazz Pharmaceuticals if you’re more interested in that vertical.
• Venture Capital Modeling: There are examples of early-stage and pre-revenue biotech valuations here, including a Sum-of-the-Parts DCF for Ventyx.

The Outlook for Healthcare Private Equity and Possible Regulation and Crackdowns

Every sector has investment risks; for something like technology, most of these risks lie in the macro environment.

In other words, does paying 10x revenue for companies still make sense when interest rates are at 5%? What about when the IPO market is shut down and exits look uncertain?

For healthcare, most of the risks are regulatory.

Specifically, in the U.S., there have been dozens of stories about all the harm private equity does to the healthcare sector, such as this coverage from the NY Times.

Many people argue that PE firms buy up firms to maximize profits by raising prices and cutting costs and do not care about patient outcomes.

They make this argument in other industries as well, but it sounds much worse in healthcare because they argue that these issues are literally killing people.

This issue is now on regulators’ radar, and, like how they’ve cracked down on Big Tech acquisitions, they might also take a much stricter stance on healthcare.

Private equity has traditionally been lightly regulated because it’s limited to institutions and wealthy individuals, but that is starting to change because of its sheer size.

So, you are taking a risk if you join a group that focuses on roll-ups of doctors’ practices, pharmacies, or hospitals.

Areas like medical devices, diagnostics, or equipment are probably safer bets because these companies have a less direct relationship with patient outcomes.

Life science-oriented roles in VC and growth firms will also be fine because there’s always demand for new biotech and pharmaceutical products.

Final Thoughts on Healthcare Private Equity

Unlike tech, healthcare private equity has never been a hyped area; most people have neutral expectations.

That matches my verdict for the sector, which is also in “neutral” territory.

It’s nice because you can get in from various backgrounds and groups, you get a fair amount of mobility, and you can work in any vertical without becoming too specialized.

On the other hand, there’s also significant regulatory risk, at least in certain regions and for certain strategies, and I’m not sure the big increase in PE activity starting in the late 2010s is sustainable.

It’s not enough risk for me to recommend “avoiding” healthcare private equity, but it is enough to say that it’s middle-of-the-pack in terms of desirable PE sectors.

So, go for it if you have the interest and experience, and try to avoid those roll-ups of doctors’ practices and local pharmacies – or be ready to face the wrath of the regulators.

For Further Reading

I recommend these articles and publications if you want to learn more about the sector:

• Bain – Global Healthcare Private Equity and M&A Report (Google for the latest version)
• Leerink Partners – Podcasts and Research from a Top Healthcare Investment Bank

The post The Full Guide to Healthcare Private Equity, from Careers to Contradictions appeared first on Mergers & Inquisitions.

You’ll find influencers on Instagram, TikTok, LinkedIn, and other sites constantly praising Dubai and claiming it’s the best place to work or start a business.

It’s almost like the city has its own PR department and never-ending marketing campaign.

If you’re interested in the Middle East or have connections to the region, all this hype has probably made you wonder about finance careers there.

Specifically, should you aim for entry-level investment banking roles in Dubai rather than London, New York, or other financial centers?

Are the tax benefits, safety, and diversification worth the drawbacks of less deal activity, smaller intern classes, and somewhat “random” work?

The short answer is that, like other smaller regions, Dubai is best in very specific cases; the average student would still be better off starting in NY or London.

And if you want all the details and some sports analogies to sum up everything, read on:

Investment Banking in Dubai: Hub of the Middle East

Dubai acts as a hub for transactions in the Middle East and North Africa (MENA) region, which includes ~20 countries.

The most prominent three countries by deal activity are the United Arab Emirates (UAE) itself, Saudi Arabia (KSA), and Egypt:

The “Others” category includes countries like Algeria, Jordan, Lebanon, Qatar, Morocco, and Oman.

And while Dubai may be a hub for this region, deal activity across MENA is fairly low.

There are usually a few hundred M&A deals per year for $50 – $100 billion of total volume:

For context, that’s less activity than Canada in an average year, and it’s about 5-10% of the deal volume of the Asia-Pacific (APAC) region.

That doesn’t make Dubai “bad” – it just means it’s smaller than many think.

Industry-wise, oil & gas and power & utilities are huge, but sectors like healthcare, financials, and telecom are quite significant as well:

Technology has been growing, but it’s still less developed than in regions like London or NY.

You’ll also see a fair number of deals in the financial sponsors group due to the many sovereign wealth funds in the region.

The bottom line is that while there is a lot of energy-related deal activity, Dubai is more diversified than you might expect, and many bankers work as generalists.

Another selling point is that when other regions are doing poorly, Dubai often performs well and acts as a “counter-cyclical” finance center.

This happened back in 2008 and, more recently, in 2022, when deal activity fell almost everywhere except for the Middle East.

But I would be careful about reading too much into this because Dubai doesn’t necessarily defy long-term trends for long.

For example, total deal activity held up better than in other places in 2008, but it fell substantially in 2009, following the rest of the world.

Investment Banking in Dubai: The Top Banks

The usual U.S. bulge-bracket banks, such as JPM, GS, MS, and Citi, always rank well in the league tables.

The other bulge brackets (BofA, Barclays, UBS, and DB) tend to rank lower, but this varies each year.

Many people would say that the elite boutiques – specifically, Moelis and Rothschild – are the top banks in the region based on deal activity, business model, and overall experience.

Among the other banks, HSBC usually makes a strong showing, most middle-market banks are barely present, and the other elite boutiques (Evercore, Lazard, etc.) are much less active.

The most important point is that many bulge-bracket banks do “coverage work” in Dubai, which means more “process management” and less technical analysis.

This has changed over time and varies based on the industry, but in many cases, teams based in London do much of the heavy lifting in deals.

Moelis and Rothschild are unique because they do everything out of their Dubai offices, which means a better experience for Analysts and Associates in most cases.

It also means larger Analyst classes than at some of the other banks.

Some MENA-based banks also do a lot of deals in the region, but as in Hong Kong and Canada, they tend to focus on corporate bonds for domestic companies (DCM).

Example firms here include Riyadh Bank Ltd, Saudi National Bank SJSC, Abu Dhabi Commercial Bank, First Abu Dhabi Bank, and the Arab Banking Corporation.

As you can tell by the names, many are based in Saudi Arabia or other Middle Eastern countries and also operate in Dubai.

Finally, there are MENA-based boutique investment banks, such as Alpen, Arqaam, Awad, deNovo, EFG Hermes, SHUAA, and Swicorp.

Some of these firms offer internships or off-cycle roles, but there’s not much information about most of them.

Investment Banking in Dubai: Recruiting and Interviews

The biggest differences in recruiting and interviews are as follows:

1. Entry-Level vs. Lateral Roles – Dubai tends to be very skewed toward lateral hires, such as Analysts who spent 1-2 years working in Europe. Internships and off-cycle roles for fresh graduates pop up, but the “class sizes” are small (see below).
2. Technical Skill Required – Partially due to this emphasis on lateral recruits, the technical rigor seems to be higher than in London. Most of our students and coaching clients in the Middle East have had to complete modeling tests or case studies, even for entry-level roles, and something like the 90-minute 3-statement modeling test or DCF model on this site could easily come up.
3. Smaller Class Sizes – The numbers change yearly, but many banks in Dubai have “Analyst classes” of only 5 – 15 per year. There are probably a few dozen new Analyst hires per year in the city, making it comparable to Australia in terms of headcount.
4. Drawn-Out Process – Due to the emphasis on lateral hires, recruiting processes in Dubai are mostly “off-cycle” (i.e., network yourself, follow up repeatedly, and interview over several months to win the job).
5. Ideal Candidate Profiles – For the best chance of working in Dubai, you should attend a top-ranked university or Master’s program in the U.S. or U.K., gain 1-2 years of deal experience first, and have a strong connection to the Middle East.

Technically, Arabic is not required to win IB roles in Dubai, and banks hire non-Arabic speakers since English is the standard business language.

But native-level Arabic skills will give you an advantage and compensate for other weaknesses in your profile.

It’s just that language skills are not a “requirement” like they are in Hong Kong, nor do they give you quite the same boost as European languages in London.

Target School and Degrees

The investment banking target schools for Dubai combine the U.S. and European lists, but you can also add a few of the top schools in the Middle East, such as the American University of Beirut (perhaps more for consulting).

There is no preferred degree or major, as your university, work experience, interview prep, and networking matter the most.

Investment Banking in Dubai: Salaries, Bonuses, and Taxes

In most cases, IB salaries and bonuses in Dubai match New York compensation, with some banks paying slightly less – but there are no personal income taxes.

For reference, you can view our NY-based IB salary and bonus report here.

If you’re a U.S. citizen, you still need to report and pay taxes on your worldwide income, but you get an exemption on the first ~$120K per year, which means you save a good amount.

The Dubai influencer team likes to highlight this lack of personal income taxes as one of the top selling points of the region.

They’re correct that it is a significant benefit, but they also miss some important points.

First, the tax savings are much more impactful when you earn, say, $500K+ at the senior levels and your home country has a high tax rate.

If you’re earning $150K per year, the lack of taxes helps, but you don’t necessarily want to change your life and career to save $30K.

Second, working in Dubai makes it more difficult to transfer to other regions if you change your mind and want to return to the U.S. or Europe.

Finally, although I don’t have hard data to back this up, I assume that most Managing Directors in Dubai earn less than in NY because of the reduced deal flow and smaller deal sizes.

They might still come out ahead post-tax, but the lower pre-tax pay may translate into a smaller-than-expected difference.

With all that said, the tax benefits are great, and if your main goal is to save as much money as possible over a few years in investment banking, nothing beats Dubai.

Pretty much any other city with real IB roles has income taxes or pays less than NY – or both.

And while Dubai is an expensive city, it’s also cheaper than NY and London in rent, food, and transportation, so your savings can be substantial.

IB Lifestyle, Culture, and Hours in Dubai

Banks in Dubai have a reputation for maintaining a “sweaty” culture (i.e., you will work even longer hours than usual).

Clients tend to be demanding and unsophisticated, which often translates into a lot of last-minute work (especially when you factor in the smaller team sizes).

So, expect the usual 70-80-hour workweeks with spikes to higher levels when deals heat up, or when there’s an emergency.

People often say that the work culture is “no-nonsense,” meaning that bankers are direct about the quality of your work and your overall performance.

That could be a positive if you like transparency but a negative if you don’t respond well to criticism.

Getting promoted can be very political because banks tend to favor certain nationalities and offices within the broader MENA region.

Like the issues with sovereign wealth funds there, you’ll face a much tougher path if you’re not from the right country or you don’t have the right connections.

I hesitate to say much about Dubai as a “place to live” because it’s subjective and depends on how you want to spend your free time.

But even the biggest Dubai influencers would admit that there are fewer cultural hotspots and activities than in cities like London, New York, or Tokyo.

There are sports, outdoor activities, and shopping, but the city’s main draw is that it’s great for weekend trips due to the cheap flights to other parts of the Middle East.

Of course, this assumes that you’ll have the occasional free weekend, which is a bit of a gamble as a junior banker.

Investment Banking in Dubai: Exit Opportunities

The standard exits – private equity, hedge funds, corporate development, family offices, and sovereign wealth funds – exist, but they’re all smaller than in other regions, except for SWFs.

I’ll back this up by citing Capital IQ data about the number of firms in different regions:

• Private Equity Firms:S.: ~7,200 | U.K.: ~1,000 | Dubai: ~150
• Hedge Funds:S.: ~3,200 | U.K.: ~500 | Dubai: ~15

Admittedly, the real numbers are slightly higher, as these lists include only firms headquartered in Dubai.

The Dubai PR team even claims that 60 hedge funds are setting up base there.

But even if you add up all the PE firms and hedge funds in the entire Middle East and Africa region, it’s still less than the total number in just the U.K.

All the private equity mega-funds have offices in Dubai or Abu Dhabi, and the big SWFs all do PE-style deals as well.

The 2018 collapse of Abraaj, one of the most prominent domestic PE firms, hurt Dubai’s local private equity scene, and it still hasn’t fully recovered.

There are a few MENA-specific PE firms that have done well, such as Gulf Capital, Waha Capital, and NBK, but they would all be considered “lower-middle-market” by U.S. standards (i.e., low billions up to $10 billion in AUM across all funds).

But the biggest issue with the exit opportunities is that it is much harder to go from Dubai to NY/London than to do the reverse.

So, if you spend a few years there, build up your stacks of cash, and decide you want to leave, it might not be the easiest transition.

Recruiters and bankers still tend to “discount” experience gained outside the major financial centers, and that’s unlikely to change anytime soon.

Is Investment Banking in Dubai an Oasis or a Mirage?

If you consider the advantages of Dubai:

• After-tax savings potential.
• Deal/market diversification.

And the disadvantages:

• More difficult recruiting.
• Questionable deal experience, depending on the bank.
• More limited exit opportunities (except for SWFs)

It makes the most sense to work there in three scenarios:

1. You’re a High Earner Who Wants to Save More and Leave – If you’re already at the senior level in finance and want to boost your savings for a few more years before you leave the industry, Dubai is great (ideally, you’ll also be a non-U.S. citizen).
2. You’ve Already Worked in London or NY and Want Something Different – You might be able to enhance your profile with this experience, especially if you stay for 1-2 years and then move on.
3. You Have a Strong Connection to the Middle East – In some cases, a strong enough connection might make you competitive for Dubai roles even if your profile is not quite good enough for London or NY roles.

Online detractors sometimes say that working in Dubai is like joining “the minor leagues” in U.S. baseball.

But I think another sports analogy is more apt: a banker moving to Dubai is like Lionel Messi leaving Paris Saint-Germain to join Inter Miami.

Messi has already established himself as one of the best football/soccer players of all time, he’s earned over $1 billion, and he just won the World Cup.

But at 35 years old, he doesn’t have that much time left in his sports career, and he’s unlikely to win another World Cup.

So, he’s joining a weaker, U.S.-based team to downshift and get a huge pay package for his last few years.

If you move to Dubai toward the end of your finance career, you’ll get similar benefits.

Just don’t expect to win the World Cup again.

The post Investment Banking in Dubai: The New York of the Middle East? appeared first on Mergers & Inquisitions.

Seemingly every MBA student wants to get into one of these industries, and when you combine them, the hype tends to multiply.

Over the past few decades, technology private equity has gone from “barely existing” to representing the largest single sector in PE by both deal value and deal count.

And just as tech and TMT investment banking have become the most desirable groups on the sell-side, tech private equity has reached a simlar status on the buy-side.

Some tech specialist firms have delivered an incredible performance, often with annualized returns (IRRs) of 30-40%, while others “followed the herd” and didn’t do quite so well.

I’ll cover the top firms, deals, recruiting, and career differences here, but as with any superhero saga, I’ll start with the origin story:

Definitions: What is a Technology Private Equity Firm?

Technology Private Equity Definition: A tech private equity firm raises capital from outside investors (Limited Partners), acquires minority or majority stakes in software, internet, hardware, and IT services companies, and grows and sell these stakes within 3 – 7 years to realize a return on their investment.

This definition includes both traditional private equity (buyouts and control stakes) and growth equity (minority stakes) because many “tech PE firms” do both.

The lines between different strategies have blurred over time, and many firms have multiple funds that target companies at different stages.

Why Did PE Firms Start Buying Tech Companies?

When private equity was relatively new in the 1970s, 1980s, and 1990s, most firms stayed far away from technology.

If they did invest at all, they stuck to areas like hardware/semiconductors and services since they were seen as “less risky” than software.

Hardware companies had significant assets that could be used as collateral, pleasing the lenders, and services companies often had large corporate contracts that represented predictable revenue streams.

But all that started to change during the dot-com boom of the late 1990s.

Two of the biggest tech PE firms, Silver Lake and Vista, were founded in 1999 – 2000, partially as contrarian bets on the sector.

At the time, most people assumed that the only way to “invest in technology” was for venture capitalists to pay computer science majors to drop out, strap themselves to Red Bull IVs and espresso machines, start coding 24/7, and launch new websites that might become worth billions overnight.

But Vista and Silver Lake (and eventually Thoma Bravo) saw an opportunity to acquire and grow mature firms, and as the tech industry developed, that opportunity expanded.

Four major trends caused PE interest in tech to skyrocket:

1. The Shift to Subscription-Based Software (SaaS) – Software companies always had some recurring revenue from maintenance & support fees, but the switch to 100% subscriptions made revenue and cash flows far more predictable – and turned SaaS accounting into a major issue.
2. Industry Maturation – By the 2000s, many technology companies had matured and fallen into the “low-to-moderate growth, with too much corporate bloat” category.
3. Software Took a Few Bites of the World, But Didn’t Finish Eating – As Marc Andreessen wrote in his famous editorial, software became integral to so many industries that PE investors could no longer ignore it. But some areas proved much harder to “disrupt” than expected, so there remained a perception of untapped opportunity.
4. Loose Monetary and Fiscal Policy – Zero and negative interest rates and massive money printing tend to inflate valuations the most for high-risk, high-growth companies. So, as central banks kept printing, PE firms, VCs, and other investors kept benefiting as they could buy companies at nosebleed multiples and sell them at even higher multiples.

Tech represents the best of both worlds for PE firms: it offers high growth potential with light capital requirements, but also some downside protection because of most companies’ annual recurring revenue (ARR).

There is some risk that customers could switch to other vendors, but if the software is truly “mission-critical,” it’s likely to be deeply entangled with companies’ operations.

That makes switching or canceling long and very expensive processes, further reducing the risk.

Because of these factors, PE firms have been able to pay high multiples for software and other tech companies and still earn high returns.

The Top Technology Private Equity Firms

I would put tech PE firms and PE firms that “do many tech deals” into 6 main categories:

#1: Large, Pure-Play Tech Private Equity Firms

There are three main firms here: Vista, Thoma Bravo, and Silver Lake.

Vista and Thoma Bravo have accounted for around half of all software buyouts over the past few years, and they use a similar playbook: cut costs, increase efficiency, and raise prices when possible.

They also use “buy and build” strategies, such as bolt-on acquisitions, but most large deals are motivated by efficiency gains.

A great example of this is Vista’s $2.6 billion buyout of Duck Creek Technologies (insurance SaaS) in early 2023 for a seemingly nonsensical 234x EBITDA multiple and 7.6x revenue multiple:

And this was not a high-growth business: Historical Year-Over-Year (YoY) growth rates were in the 15 – 25% range (solid but unremarkable for tech).

But Duck Creek also had low margins, which PE firms likely viewed as an opportunity to cut costs:

A standard LBO model where you assume similar growth rates and margins into the future wouldn’t support this deal.

But if you assume the company can reach 20% or 30% margins, the IRR math might become much more plausible.

Silver Lake, in contrast to these two firms, is less of a software specialist because it also does plenty of hardware, communications, services, and even media deals.

It also does plenty of non-buyout deals, including minority stakes and occasional “rescue” deals for troubled companies, such as for Airbnb when COVID first struck in 2020.

#2: Mid-Sized and Smaller Tech-Focused Private Equity Firms

In this category are firms like Francisco Partners, Vector Capital, Accel-KKR, Marlin, Siris, Hg, Clearlake (more than tech), Symphony Technology Group, and GI Partners (more than tech).

You could also add names like Ardan, Luminate, Fulcrum, and Hermitage (Asia tech) to this list.

Some of these firms, like Francisco Partners, were founded around the same time as Silver Lake and Vista but did not grow to the same extent, with about half as much in AUM currently.

They still execute large deals but do fewer transactions in the $1+ billion range.

If you go even smaller, you’ll find names like Sumeru (Silver Lake’s middle-market firm), Banneker (founded by ex-Vista employees), Riverwood, and Leeds (with a “knowledge industries” focus).

Smaller firms in this category often focus on organic growth and bolt-on acquisitions to scale their portfolio companies.

You will still see traditional buyouts and some efficiency focus, but this group is closer to the “growth equity” side.

#3: Tech-Focused Growth Equity Firms

This list includes firms like Summit, General Atlantic, TA Associates, Insight, PSG, Susquehanna Growth Equity (not structured as a traditional PE/VC firm), and Vitruvian in Europe.

Many large PE firms and mega-funds also have smaller, growth-oriented funds (ex: “Tech Growth” at KKR and similar names at Blackstone, Providence, TPG, Bain, Advent, Permira, etc.).

The business model here is simple: find high-growth tech companies that need more capital to reach the next level, typically to pay for sales & marketing, and invest in minority stakes.

These stakes often have structure attached, such as liquidation preferences, which reduce the downside risk if growth slows or multiples compress.

Many of these deals also include both secondary purchases (existing shares) and primary purchases (new shares issued, which boost the cash balance).

Growth equity firms can often buy existing shares from employees at lower valuations, giving them more potential upside – while they can attach terms like liquidation preferences to primary shares for more downside protection.

#4: Private Equity Mega-Funds and Other “Large Funds” with a Tech Focus

All the PE mega-funds do tech deals, as do other “large PE firms,” such as Hellman & Friedman, Advent, Warburg Pincus, Permira, Bain, EQT, and Apax.

Some of these firms compete with Vista and Thoma Bravo to win deals, so you’ll see many of them in the same sell-side M&A auction processes.

In some cases, they might even team up to acquire companies together – one example was Blackstone and Vista partnering to acquire Ellucian in 2021.

I would also put many sovereign wealth funds and pension funds in this category – especially ones that are more active in deals, such as GIC in Singapore and CPPIB in Canada.

In some cases, they can be even more aggressive bidders because they’re funded by the government, not traditional Limited Partners.

#5: Middle-Market Private Equity Firms with a Tech Focus

You could add many of the firms in the middle-market private equity article to this list, but a few worth noting are Welsh Carson, Veritas, Genstar, New Mountain, and Audax (some of these do more than tech, but they all have a solid presence in the industry).

These firms usually do not compete with Vista or Thoma Bravo to win deals – the key competitors include smaller tech-focused PE firms and other MM PE firms.

Sometimes, these firms will put together custom deals outside bank-run auction processes, often via “sourcing” (cold outreach) and existing relationships.

#6: Tech Venture Capital Firms

Venture capital is a whole separate topic, but I list it here because many traditional, early-stage firms have moved up-market over time and now have separate funds that do growth deals for later-stage companies.

Also, you’ll occasionally see Vista, Thoma Bravo, or Silver Lake go “down market” and invest in earlier-stage companies alongside VC firms.

One example was MedTrainer’s $43 million Series B round in 2022, led by VC firm Telescope Partners and Vista.

On the Job in Technology Private Equity

You might look at these lists and think, “OK, there’s a metric ton of PE firms operating in tech. But how is the day-to-day experience different? And how is tech PE different from any other vertical within PE?”

Unfortunately, the answer here is boring: “It’s not that much different.”

The differences relate mostly to your firm’s strategy and size, not whether you work in tech vs. industrials vs. consumer/retail.

So, at a middle-market tech PE firm, expect the usual MM PE differences: smaller companies, less bureaucracy, more focus on operations and less on financial engineering, and more accessible recruiting.

Compensation has more to do with your firm’s size and performance than its industry focus, and the hours and lifestyle are similar.

The main difference is that you’re more likely to specialize in a vertical, such as insurance software, at the pure-play tech PE firms, while you’re more likely to be a generalist at a tech team within a larger PE firm.

Also, working at one of the “Big 3” tech PE firms might seem more like working at a mega-fund than working in tech at an actual mega-fund.

Since the entire firm does tech, it feels like “the team” is massive.

By contrast, tech is only a small part of what the PE mega-funds and other large firms do, and the day-to-day teams are smaller.

Recruiting at Tech PE Firms

Again, most of the differences here relate to the firm’s size and strategy, not its industry focus.

Recruiting differs far more between private equity vs. growth equity vs. venture capital firms than it does between industrial vs. tech PE firms.

That said, the “Top 3” tech PE firms have a reputation for starting very early, often launching the entire on-cycle private equity recruiting process each year.

So, you can expect fierce competition to win a role at one of these firms, as you’ll be up against all the other 1^st Year Analysts in the best groups.

Having tech or TMT experience in investment banking helps, but it’s not essential if you have good technical skills and can confidently explain your deals.

At the smaller tech PE firms, you can expect the off-cycle recruiting process (lots of networking, outreach, and following up) and open-ended private equity case studies.

Growth equity firms tend to use a mix of the on-cycle and off-cycle processes, depending on their size, but they test slightly different topics (see below).

And most VC firms are in the “off-cycle” category, as they’re not necessarily competing for the same types of candidates.

If you ignore firm size and the on-cycle vs. off-cycle distinction, the biggest recruiting difference is that different types of firms test different skills in case studies and modeling tests.

Here’s a summary from our Venture Capital & Growth Equity Modeling course:

Expect more qualitative case studies in VC and possibly a few cap table exercises; growth equity tends to focus on “customer analysis” and 3-statement models; and LBO modeling tests in private equity are more about the formulas and calculations.

Final Thoughts on Technology Private Equity

Technology private equity has had a great run, but I’m skeptical that it will continue at the same pace.

We’re now in a very different macro environment than the 2008 – 2021 period, enterprise software is increasingly difficult to sell, and tech valuations have fallen across the board.

Some of these points could change over time, but I doubt that we’ll return to QE Infinity anytime soon.

Tech and software will continue to be growth industries, but I don’t think pure growth will be valued as highly going forward.

And I expect that many of the funds raised and deployed toward the end of this cycle will deliver underwhelming returns (see: PE funds raised in 2007).

I’m not predicting the apocalypse; just that overall tech performance will move closer to the industry median over time.

That means the tech/PE hype train will probably decelerate – even though it will never go off the rails completely.

For Further Reading

I recommend these two articles/interviews if you want to learn even more about tech PE firms and one of the most prominent people in the industry:

• Operating Manual – Profile of Robert F. Smith of Vista
• Bain – Global Software Private Equity Report

The post The Complete Guide to Technology Private Equity appeared first on Mergers & Inquisitions.

1. Students who are from Southeast Asia and are considering whether they want to work in Singapore, NY, London, or other places.
2. People who want to work in Asia but have no chance of winning an offer in Hong Kong and see Singapore as their “Plan B” option.

If you’re in the first group, congrats! You’ll learn about the trade-offs of Singapore and other locations in this article.

If you’re in the second group, you might want to think again because Singapore may not be quite the “Plan B” option you think it is.

But before I crush your hopes and dreams, I’ll start with an overview of the industry and the top banks:

What is Investment Banking in Singapore All About?

Singapore (SG) serves as a hub for Southeast Asia and the many cross-border deals that take place there.

It’s safe, stable, low-tax, and light on corporate regulation – you can safely ignore the occasional executions of cannabis traffickers.

As a result, many companies from nearby countries want to do deals there.

Even though Singapore itself is not an emerging market, you’ll be exposed to plenty of emerging markets if you work there because most Southeast Asian countries fall into this category.

That said, it is also much smaller than NY, London, and HK in terms of average office size, deal volume, and deal size.

The IB industry there is arguably even smaller than in countries like Australia and Canada, which makes it quite difficult to get hired.

Yes, Singapore is a hub for Southeast Asia, but Southeast Asia has relatively few deals in the Asia-Pacific region vs. places such as China/HK or even Australia.

Asia-Pacific sees ~$1+ trillion of M&A deal activity per year, and SE Asia accounts for only ~10% of that (note that the first image below is only for 9 months of the year, so the full-year numbers are higher):

You can see a breakout of deals by specific country below, based on the same sources (ION Analytics, Dealogic, and Merger Market):

It’s just that it’s smaller than you might expect, which means a lower investment banking headcount than true financial centers.

Investment Banking in Singapore: Top Banks, Industries, and Deals

You can divide firms in Singapore into “large international banks” and “Asia/Singapore-focused banks.”

The basic difference is that the international bulge bracket banks tend to be stronger in M&A advisory and weaker in equity and debt capital markets.

If you look at the M&A league table for Southeast Asia, you’ll see the expected names: Morgan Stanley, Citi, BofA, JP Morgan, Credit Suisse (now acquired by UBS), and so on.

Goldman Sachs’ status has been questionable for a few years due to the continued fallout from the 1MDB scandal in Malaysia.

Among the elite boutiques, Evercore has the strongest presence in Singapore, and Rothschild also works on many deals, mostly in the middle-market space.

Lazard also used to be active but has since shut down its Southeast Asia M&A practice.

If you focus on the capital markets, you’ll still see some of these names (e.g., Morgan Stanley, BofA, and UBS/CS), but also a huge range of other firms.

The top three domestic banks in Singapore are DBS Group, United Overseas Bank (UOB), and Overseas-Chinese Banking Corp (OCBC), which, despite the name, is actually Singaporean.

You’ll also see banks from other Southeast Asian countries, including CIMB, Bangkok Bank, Kasikornbank, and Maybank, and various Chinese banks, such as CITIC and the Bank of China.

Then there are the European “In-Between-a-Banks,” such as HSBC, Standard Chartered, and BNP Paribas, the Japanese banks (Nomura, Sumitomo, and Mitsubishi UFJ), and Australian firms like ANZ and Commonwealth Bank Australia.

These banks focus on the capital markets, so you should target the bulge brackets if you want to work on M&A deals.

In terms of industries and deal types, Singapore is quite diversified.

You can expect to see everything from energy, mining, and agricultural deals to real estate, consumer retail, chemicals, semiconductors, and pharmaceuticals; technology has also become increasingly popular.

Some of the most common industries for M&A deals are shown below:

The deal types span a wide range, but equity and debt deals are more common than M&A since many companies in emerging markets are in “growth mode.”

Investment Banking in Singapore: Recruiting and Interviews

The overall recruiting process, timeline, and interviews are not that different in Singapore.

The main differences are:

1. Candidate Profiles – You are at a huge advantage if you are a Singaporean citizen or Southeast Asian national with language skills and attend a top university in the U.S. or U.K. (but the top few Singaporean schools can also work).
2. Target Schools – The top target schools in the U.S. and Europe are also targets in Singapore, but the top few SG universities also join the list (see below).
3. Small Intern Classes – Many bank offices in SG hire 4-5 summer interns per year, so there might be a total of 50-100 spots available, putting it in the same size range as Australia.

As in the U.S., the undergrad recruiting process starts a year or more in advance of internships, and it has moved up over time.

The most important controllable factors are your university’s quality/ranking, your GPA, your previous internships, and the networking you do.

(You cannot control whether you’re a Singaporean citizen or a native speaker of Thai or Vietnamese, so these points are not on the list).

As in other regions, the most important point is to start as early as possible in Year 1 of university because you need time to complete off-cycle internships at boutique firms.

A few smaller IB/PE firms known to offer these internships include Reciprocus, Redpeak, Titan Capital, Pickering Pacific, and Provident.

Some bulge bracket banks, such as JP Morgan, also offer off-cycle internships as a “pipeline” into summer internships and eventual full-time offers.

Interviews are not much different, and you can expect the same behavioral, deal, and technical questions you’d get in other regions.

Firms do not appear to use formal assessment centers as they do in the U.K., but they might still ask you to complete a case study or group exercise.

Do You Need to Know Southeast Asian Languages to Work in Singapore? Do You Need to Be a Citizen?

The short answer is: “Technically, no, but Southeast Asian languages and Singaporean citizenship help a lot.”

Since there are so many cross-border deals in Singapore, English is the common business language.

But many companies do not necessarily have all their information in English, so knowing a language like Vietnamese, Thai, Tagalog, or Indonesian can give you a huge boost.

Chinese might also help, but most deals involving Chinese companies have shifted to Hong Kong, so it has become a bit less relevant over time.

On the question of citizenship: For many decades, Singapore actively encouraged foreigners to work in the country as it developed.

But more recently, it has taken a protectionist/nationalist turn and made employers jump through more hoops to hire foreigners (often requiring them to “prove” that no local candidates could do the job).

You could still apply and get a firm to sponsor your work visa, but it’s more difficult than it was in, say, 2015 or 2005.

Investment Banking Target Schools for Singapore-Based Roles

The U.S. and U.K. target schools are also target schools for Singapore IB recruiting (especially the top 2-3 in each country).

You could even argue that recruiters prefer candidates from Southeast Asia who attend top schools in the U.S. or Europe and plan to return to Singapore.

Within the city-state, there are also 3 target universities: Singapore Management University (SMU), Nanyang Technological University (NTU), and the National University of Singapore (NUS).

People often say that SMU is the “best” among these due to its alumni network and placement record, but I’m not sure I want to get into that argument/debate in this article.

The specific degree/major you choose doesn’t matter that much, but Business Administration & Accounting (or “Accountancy & Business”) is a popular choice.

Accounting is far more relevant for IB than general “business” skills, and at a place like NTU, it’s a 4-year degree rather than a 3-year degree, giving you more time for internships.

Investment Banking in Singapore: Salaries, Bonuses, and Taxes

As with the IB in Australia article, I found contradictory data from different compensation reports.

The main claims were:

1. Base salaries are similar to those in NY, but bonuses are slightly lower percentages of the base.
2. Or base salaries are similar numbers to the ones in the U.S., but they’re all in Singapore Dollars (SGD) instead. So, instead of earning a $120K USD base salary, you would earn the $120K in SGD, which is about $90K USD.

I do not know which claim is correct, but if you split the difference, you can assume that you’ll earn at least slightly less pre-tax in Singapore than in the U.S.

On the other hand, the pay seems higher than in London and most European countries.

And if you factor in taxes, the post-tax compensation is quite good because the top rate is currently 24%.

As an Analyst, you’ll pay something in the 15 – 20% range, similar to Hong Kong.

Singapore is an expensive city, but it’s also cheaper than NY in terms of rent, food, and other expenses (and about on par with HK; maybe slightly more, depending on the metric).

So, even if total compensation is lower in USD, you could easily save more in Singapore due to the lower taxes and reduced cost of living.

And if you have better numbers for the base salaries and bonuses, please feel free to leave a comment.

The Lifestyle and Hours in Singapore

The hours are somewhat better than in Hong Kong or New York but worse than in London and most other parts of Europe.

Like investment banking in other regions, if you’re at a large firm and have a relatively “easy day,” you might arrive home after ~10-12 hours at the office.

If you have a bad day (client emergency, deal blow-up, last-minute pitch book, etc.), you might be at the office until 5 AM.

The average is somewhere in between, so expect lots of office stays past midnight and limited free time outside of weekends, at least as an Analyst.

In terms of the actual work, there are relatively few mega-deals, so even at the largest firms, you’ll see a lot of transactions in the $500 million – $5 billion range; the non-BB banks will go well below that range.

Offices also tend to be smaller, with perhaps a dozen or two people in each, which is both good and bad: you get more exposure but also less “cover” when something goes wrong.

Sector specialization tends to occur later because no single industry dominates all deal activity.

Investment Banking in Singapore: Exit Opportunities

The standard exit opportunities – private equity, hedge funds, and corporate development – are all available in Singapore, but everything is smaller.

I’ll contextualize this with Capital IQ search results for PE firms and hedge funds in different regions:

• Private Equity Firms: U.S.: ~7,200 | U.K.: ~1,000 | Singapore: ~170
• Hedge Funds: U.S.: ~3,200 | U.K.: ~500 | Singapore: ~50

Even Hong Kong has 50-100 more firms in each category, and that’s not counting the China-based funds with HK offices.

That said, the private equity mega-funds all operate in Southeast Asia, and most have offices in Singapore.

PE recruiting mostly follows the “off-cycle” process, which can be long, drawn out, and somewhat random.

The large firms recruit Analysts from Singapore and occasionally other locations, like London, NY, and HK, so you’re not necessarily region locked.

Outside the biggest firms are Asia-focused funds like Barings (now owned by EQT) and L Catterton Asia, followed by firms that invest in smaller deals or only in specific countries.

Other PE names here include Hillhouse Capital (East Asia focus), Affinity Equity (Pan-Asia), Lighthouse Canton, Aura Private Equity (Pan Asia), Creador (SE Asia), Dymon Asia Private Equity (SE Asia), Navis (SE Asia), Makara Capital, Axiom Asia, Northstar (SE Asia), and Gateway Partners (EM focus).

Then there are pension funds and sovereign wealth funds, including Singapore’s own Temasek and GIC, which are very active in deals there.

Because of the emerging markets focus, most “private equity deals” are more like growth equity deals, with minimal leverage and more complexity operationally than financially.

You’ll still get modeling experience, but you won’t be building the same LBO models that you would in the NY office of Blackstone.

The hedge fund side is much sparser, and while many of the large multi-managers operate in Singapore, there aren’t many domestic funds.

To be fair, hedge fund activity anywhere outside the U.S. and U.K. is limited, so Singapore is not unique here.

Many bankers also stay in banking and advance up the ladder, as it’s tough to beat the after-tax savings and somewhat-better lifestyle.

But be careful about staying too long if your long-term goal is to work elsewhere.

Deal experience in Singapore doesn’t always translate well to other regions because of the focus on emerging markets, so leave early if you want something else.

Investment Banking in Singapore: Final Thoughts

The biggest takeaway is that Singapore is not a great “Plan B” if your goal is to work in Asia without knowing a local language or having a strong connection to the region.

Yes, it’s more plausible to win a role in SG than HK as a foreigner, but both have become more difficult over time.

Singapore has its advantages, but it is very much geared toward people with a background in the region who want to be there long-term.

I think the more relevant question here is: “If you’re from Southeast Asia, should you aim to start working in Singapore, or should you start in NY or London?”

And I would still recommend NY or London for the networking, resume/CV value, higher number of positions, and exit opportunities.

Singapore could be interesting after you gain experience in a bigger financial center and then return to the region (due to family, higher savings, or a desire to specialize).

It could also make sense to transfer to Singapore for 1-2 years and then move elsewhere to get a unique experience without getting “stuck.”

And if you ever find yourself disappointed by the downsides of Singapore when you’re stuck at the office at 2 AM, just think about the taxes vs. NY or London for a quick boost.

Want More?

You might be interested in reading about Investment Banking In Dubai.

The post Investment Banking in Singapore: The Best Gateway to Asia for the Non-Chinese? appeared first on Mergers & Inquisitions.

Many people viewed the sector as a short, poorly dressed cousin of oil & gas, but concentrated in places like Canada and Australia.

The two industries have a lot in common, but in the current cycle, different forces are driving mining – such as the demand created by renewable energy, electric vehicles (EVs), and the promised “energy transition.”

The good news is that if you work in mining IB, and your clients produce the cobalt, copper, or lithium that ends up in EV batteries, you can feel good about saving the world.

The bad news is that your clients might also be exploiting underpaid workers and child labor in the Democratic Republic of Congo, which may slightly offset “saving the world.”

But let’s forget about the children temporarily and focus on the verticals, the drivers, deal examples, and the exit opportunities if you escape from the underground mines:

What Is Metals & Mining Investment Banking?

Metals & Mining Investment Banking Definition: In metals & mining investment banking, professionals advise companies that find, produce, and distribute base metals, bulk commodities, and precious metals on debt and equity issuances and mergers and acquisitions.

The concepts of upstream (“find”) and midstream/downstream (“produce and distribute”) still exist, as they do in oil & gas.

For example, an iron ore miner is “upstream” since it extracts the raw materials, and the steel producers that turn that ore into steel and distribute it to customers are downstream.

However, mining companies are usually classified based on their focus metal.

For example, Capital IQ splits up the sector by metal type (aluminum, diversified, copper, gold, precious metals, silver, and steel).

I think this is a bit too complicated, so this article will use these 3 categories:

1. Base Metals and Bulk Commodities – Anything used for energy (coal), as a precursor to other metals (iron ore), or to produce electronics, batteries, and other products (copper, cobalt, lithium, aluminum, etc.) goes here.
2. Precious Metals – Gold is the biggest component here, but metals like silver, palladium, platinum, diamond, and emerald also go in this category. Some of these may be used for non-industrial purposes, such as investment or jewelry, but others, such as silver and platinum, have many practical uses in cars and electronics.
3. Diversified Miners – These companies have a wide global portfolio of mines, and they extract, produce, and distribute just about every metal in the two categories above.

The metals & mining team’s classification varies based on the bank.

Sometimes, it’s in the broad “Natural Resources” group, but it could also be in Industrials, Renewables, or even Power & Utilities.

And in regions where it’s especially important, such as Canada and Australia, metals & mining is often a separate team at banks.

Recruitment: Tunneling Your Way into Metals & Mining Investment Banking

Metals & mining is highly specialized, so you have an advantage if you have a background in geology, geophysics, or mining.

But it’s not necessarily required, and plenty of undergrads join these groups via internships without detailed knowledge of the engineering side.

If you have an engineering background, you might get hired for your ability to read and interpret technical analyses such as feasibility reports and help bankers incorporate them into financial model assumptions.

Aside from that, banks look for the same criteria as always: a high GPA, a good university or business school, previous internships, and networking and interview preparation.

You don’t need to be a technical mining expert to pass your interviews, as all the standard topics will still come up, but you should know the following:

• The main categories of metals and the factors that drive their prices, production, and supply (see below).
• A recent mining deal, especially if the bank you’re interviewing with advised on it.
• Valuation, such as the different multiples used for mining companies and the NAV model in place of the DCF (see below).

What Do You Do as an Analyst or Associate in the Group?

If you’re advising mostly large companies like BHP or Rio Tinto, expect lots of debt deals, occasional M&A mega-deals, and many smaller asset-level deals.

Here’s an example from BHP’s deal activity:

If you’re at a smaller bank that advises growth-stage companies, expect more equity deals, private placements, and sell-side M&A transactions.

Here’s an example from Olympic Steel’s deal activity:

If you’re wondering about the modeling and technical experience, most differences relate to the company type rather than the specific metal.

In other words, a gold miner and a copper miner are slightly different, but they are much closer than a pure-play miner and a pure-play producer.

In practice, you’ll usually work with various companies (miners, producers, vertically integrated, royalty-based, etc.) in your focus area.

Metals & Mining Trends and Drivers

The most important sector drivers include:

• Overall Economic Growth – When the economy grows more quickly, companies need more raw materials for cars, TVs, infrastructure, and everything else in modern life. The sources of growth also matter; emerging markets’ infrastructure spending drove up metal consumption for a long time, but now there’s a rising demand in developed markets due to EVs and renewable energy.
• Commodity Prices – Higher metal prices help upstream mining firms but hurt downstream firms that purchase raw material inputs from other companies. And vertically integrated firms are in the middle since they experience both higher prices and higher costs. Oil, gas, and electricity prices also factor in because most metals are extremely energy-intensive to produce.
• Production and Reserves – All mining companies deplete their resources as they extract more from the ground, so they’re constantly racing to replace them. But new mines take a very long time to come online – years or even decades. As a result, supply and demand shocks tend to make a much greater short-term impact on prices than growth from new projects.
• Capacity and Spreads – Production companies always have a certain amount of “capacity” in their plants and factories, and they earn revenue based on the percentage capacity used to produce finished products and their realized prices. Profits are based on the spreads between the cost of the raw materials (iron ore) and the finished products (steel).
• Exploration and Development (Capital Expenditures) – How much are companies spending to develop new mines and expand existing ones? CapEx spending affects everything in metals, but because of the long lead time required to launch new mines, it’s a greatly delayed effect. On the producer side, you can see how much they spend to build new plants, factories, and processing centers.
• Taxes, (Geo)Politics, and Regulations – Many mining projects are in regions with unstable governments, wars, and other problems. These governments are often eager to charge foreign companies a premium to access their resources, and the rules and taxes around extraction can change at any time.

You might be wondering if “inflation” should be on this list.

It is a driver for precious metals, especially gold, but it’s less of a demand driver for metals with mostly industrial purposes.

Metals & Mining Overview by Vertical

Here’s the list:

Base Metals and Bulk Commodities

Representative Large-Cap Public Companies: ArcelorMittal (Luxembourg), Jiangxi Copper Company (China), POSCO Holdings (South Korea), Nippon Steel (Japan), Baoshan Iron & Steel (China), thyssenkrupp (Germany), Vale (Brazil), Aluminum Corporation of China, Nucor (U.S.), JFE (Japan), Tata Steel (India), Hindalco (India), Hunan Valin Steel (China), Cleveland-Cliffs (U.S.), Freeport-McMoRan (U.S.), and Steel Dynamics (U.S.).

Note that most of these firms are steel producers, not iron ore miners, so they’re closer to “normal companies.”

Also, note that some of these companies, such as Freeport-McMoRan, also mine precious metals, but they’re classified as “copper” since most of their revenue comes from copper.

Finally, some significant companies are missing from this list because they’re state-owned – the best example is Codelco in Chile, the world’s first or second-biggest copper producer.

With those disclaimers out of the way, let’s assume that you’re analyzing a copper mining company. You’ll think about issues such as:

• Production and Consumption: Chile is the world’s largest producer, while China is the largest consumer, which means that shocks in one can greatly impact prices and production.
• Costs: These vary based on the region and metal; for example, some metals are more energy-intensive (aluminum), while others are more labor-intensive. Shipping costs may also be a major factor for some metals, especially those with lower “value to weight” ratios, such as coal and iron ore.
• Key Uses: Since copper is the best conductor of electricity among non-precious metals, it’s widely used in machinery, appliances, batteries, and even electrical wiring for entire buildings.

All mining companies care about their production and reserves and always want to convince investors that they can grow them over time.

Here’s an example from the Capstone / Mantos Copper presentation below:

Companies often go into detail on individual mines, with estimates for their useful lives, annual production, and “all-in sustaining costs,” or AISC.

AISC is usually defined as the cash costs to operate the mine plus corporate G&A, reclamation costs, exploration/study costs, and the required development and CapEx.

Companies often provide long-term production forecasts in their investor presentations, so you don’t necessarily need to make many judgment calls in your models:

Gold and Precious Metals

Representative Large-Cap Public Companies: Zijin Mining (China), Newmont (U.S.), Barrick Gold (Canada), Anglo American Platinum (South Africa), Sibanye Stillwater (South Africa), Zhongjin Gold (China), Shandong Humon Smelting (China), Impala Platinum (South Africa), Sino-Platinum Metals (China), Agnico Eagle Mines (U.S.), and Industrias Peñoles (Mexico).

The big difference here is that the end markets differ – but many precious metals still have industrial uses beyond wealth storage and jewelry (e.g., silver and platinum).

Precious metals miners are driven by many of the same factors as the base metals ones above: reserves, production, all-in sustaining costs (AISC), and the lives of individual mines:

But there are some key differences:

1. Reserves and Extraction – Since metals like gold and diamond are rare, companies usually present their reserves in tonnes and estimate a “grade” they expect to find (in grams or ounces per tonne). On the other hand, gold also requires little to no refining once it is extracted, so at least part of the process is “easier” than the one for base metals such as copper.
2. Global Pricing and Market Dynamics – The value-to-weight ratio of precious metals is high, so the freight costs are insignificant, and they can be shipped anywhere in the world. As a result, they operate in more of a global market, with fewer regional disparities. By contrast, metals like coal, iron ore, and steel are much more localized, and copper and aluminum are in between.
3. Valuation – Since many people perceive gold as a stable, irreplaceable store of value, gold miners often trade at higher multiples than base metal miners (see the examples below).

Precious metals miners earn much less revenue than companies that focus on copper or steel, but the sector gets a disproportionate share of M&A activity because of the factors above.

Diversified Metals & Miners

Representative Large-Cap Public Companies: Glencore (Switzerland), BHP (Australia), Rio Tinto (U.K.), Anglo-American (U.K.), CMOC (China), Vedanta (India), Norilsk Nickel (Russia), Grupo México, Mitsubishi Materials (Japan), Teck Resources (Canada), Baiyin Nonferrous Group (China), Saudi Arabian Mining Company, and Sumitomo Metal Mining (Japan).

These companies are so large and diverse that their performance reflects mostly sector-wide trends rather than regional or metal-specific issues.

This entire vertical is highly concentrated because of the huge barriers to entry and economies of scale at this level.

Companies tend to present their results in a high-level way, rarely going down to the level of individual mines:

So, you tend to create equally high-level forecasts for these firms unless one is a client company sharing much more detailed information with you.

You focus on the mix of different metals, production levels, and long-term prices and use them to project revenue, expenses, and cash flow.

For example, many of these companies have been expecting stronger demand for lithium, nickel, and cobalt to power renewables, so you might tweak your long-term production assumptions based on that:

Metals & Mining Accounting, Valuation, and Financial Modeling

Let’s start with the easy part: there are virtually no differences for “production-only” companies.

One example is Steel Dynamics, which we feature in our Core Financial Modeling course:

To value it, we build a standard DCF based on production volumes, CapEx to drive capacity, and assumed steel prices:

The valuation multiples are also standard (TEV / Revenue, TEV / EBITDA, P / E, and maybe TEV / EBIT or even TEV / NOPAT).

Most of the differences emerge on the mining side.

As with oil & gas, I’d split the differences into three categories:

1. Lingo and Terminology – You need to know about different reserve types and resources, mine types (underground vs. open pit), and the extraction and refinement processes used for different metals. Standards like NI 43-101 in Canada or JORC in Australia are also important.
2. Metrics and Multiples – You can use standard multiples, such as TEV / EBITDA, to value mining companies, but you’ll also see a few new ones and some resource-specific metrics.
3. New or Tweaked Valuation Methodologies – As in the E&P segment of oil & gas, there’s also a Net Asset Value (NAV) model for mining companies, and it’s set up similarly (essentially, it’s a long-term DCF with no Terminal Value).

Starting with the terminology, mining companies split their minerals into “Reserves” and “Resources.”

Reserves have a higher probability of recovery, and they’re divided into the “Proved” and “Probable” categories.

Resources are split into Measured, Indicated, and Inferred, with the first two often grouped as “M&I Resources” (I like this name!).

You can see an example of a company’s Reserves and Resources here:

You might build a NAV model based on Reserves if you want to be more conservative or include the Resources if you want to be more speculative (but discounted by some percentage).

The NAV model follows the same steps as the one in oil & gas but uses different inputs:

1. Split the company into “developed mines” and “undeveloped/potential mines.”
2. Assume that the existing mines produce over their lifespans (usually 10-20 years, and sometimes more) until they become economically unviable.
3. Assume the development of the new mines, which might take years or decades, and estimate the CapEx required for each one.
4. Forecast the production levels for each new mine until it becomes economically unviable. There’s usually a ramp-up of a few years in the beginning, a peak, and an eventual decline.
5. Build a price deck with different long-term metal prices. You might assume differences from current levels in the near term, but you’ll set these to long-term assumed averages after the first few years.
6. CapEx will depend on each mine’s reserves and geography, while OpEx and the cash costs to operate the mine will usually be based on a per-unit metric, such as $ per ounce produced for gold miners.
7. Aggregate the cash flows from all the mines, add corporate overhead, and use these to estimate the company’s cash flows over the next few decades. Again, there is no Terminal Value since you forecast production until the mines stop producing at viable levels.
8. The Discount Rate is often fixed at some pre-determined level, such as 5% for gold or 8-10% for copper. You might also add a premium for emerging/frontier markets and mines in the middle of war zones and pirate camps.

I don’t have a great visual of a mining NAV model, but here’s a good example of long-term cash flow projections from TD’s presentation to Turquoise Hill Resources:

And yes, you read that correctly: they forecast cash flow until the year 2100.

In terms of metrics and multiples, this slide from the Gold Fields / Yamana Gold presentation sums it up well:

These multiples are high because gold miners often trade at premium valuations; P / NAV multiples are often below 1x for other miners.

This P / NAV multiple is based on the Net Asset Value methodology output above, but it’s often simplified for use in valuation multiples.

You can still use the TEV / EBITDA multiple, but it’s more appropriate for the diversified miners since their output fluctuates less.

Another common multiple is TEV / Resources or TEV / Reserves, which values a mining company based on its “potential capacity.”

Some banks even combine these metrics and use them to illustrate companies’ relative valuations, as in this example from BMO for Turquoise Hill:

You’ll often see references to metrics like “Au Eq.” and “Cu Eq.”; these stand for “Gold Equivalent” and “Copper Equivalent.”

If a company owns/mines several metals but is dominant in one, you can convert the dollar values of their other metals into this dominant metal to create an “equivalent” metric.

For example, if they have 1,000 ounces of gold and 10,000 pounds of copper, and prices are currently $2,000 per ounce for gold and $4.00 per pound for copper, the “Gold Equivalent” resources are 1,000 + 10,000 * $4.00 / $2,000 = 1,020 ounces.

Example Valuations, Pitch Books, Fairness Opinions, and Investor Presentations

There are many examples here, so I will split these into Base Metals and Bulk Commodities vs. Precious Metals:

Base Metals and Bulk Commodities

• Rio Tinto / Turquoise Hill – Acquisition (CS, Rothschild, RBC, BMO, TD, MS)
  • Deal Process Update (BMO)
  • Deal Process Update and Valuation (TD)
  • Fairness Opinions (starts on page 38)
• Capstone Mining / Mantos Copper – Acquisition (Scotia, CIBC, and GenCap)
  • Investor Presentation
  • Fairness Opinions (go to page 322)
• Westmoreland – Restructuring (Centerview)
  • 13-Week Cash Flow Projections
• Cosan / Vale – Minority Stake (Citi, JPM, Bradesco, and Itaú)
  • Investor Presentation
• Cleveland-Cliffs / AK Steel – Acquisition (Moelis, BofA, CS, GS):
  • Investor Presentation
  • Fairness Opinions – Moelis | GS

Precious Metals

• Gold Fields / Yamana Gold – Acquisition (JPM, BofA, CIBC, Canaccord, Scotia, Stifel)
  • Investor Presentation
• Kinross / Great Bear – Acquisition (BMO, CIBC, GenCap, Canaccord, Trinity Advisors)
  • Investor Presentation
  • Fairness Opinions (page 204)
• Newcrest / Pretium Resources – Acquisition (Lazard, RBC, BMO, Citi)
  • Investor Presentation
  • Fairness Opinions (page 204)
• Impala Platinum / Royal Bafokeng – Acquisition (JPM, Macquarie, Ned Bank, Standard Bank, PSG, BofA, QuestCo)
  • Investor Presentation
• South32 / Sierra Gorda – Minority Stake (UBS and RBC)
  • Investor Presentation

Metals & Mining Investment Banking League Tables: The Top Firms

If you look at the investment banking league tables, you’ll see the usual large banks at or near the top: GS, MS, JPM, BofA, Citi, etc.

But you’ll also see many Canadian banks there, including BMO, which is usually viewed as the top metals and mining group in all banking (but is also a complete sweatshop).

The other large Canadian banks (CIBC, TD, Scotiabank, and RBC) also make a strong showing in most league tables.

The elite boutiques do not have a huge presence in mining, but you’ll sometimes see Rothschild or Perella Weinberg on the list.

Macquarie also shows up occasionally, likely due to its HQ in Australia and all the mining deals there.

A few middle market and regional boutique names in the space include Canaccord Genuity, Maxit Capital, Cormark, Haywood Securities, and Eight Capital.

Some of these, like Canaccord, do more than just mining but happen to have a strong presence in the sector.

Exit Opportunities

Let’s start with the bad news: As with any other specialized group, metals & mining investment banking will tend to pigeonhole you.

Also, few private equity firms are dedicated to the sector because commodity prices are volatile, and mining companies are levered bets on commodity prices.

Even if you work with standard spread-based companies, such as steel manufacturers, headhunters will rarely take the time to understand your full experience.

OK, now to the good news: This situation is starting to change.

More private equity firms are springing up to invest in the sector, driven by the “energy transition” and the importance of mining for renewables.

Some private equity mega-funds do occasional mining deals; outside of them, several smaller firms do equity and credit deals in the sector.

A few names include Appian Capital, Resource Land Holdings, Greenstone Resources, Proterra, Denham, Tembo, Sun Valley, Resource Capital, Ibaeria, Waterton Global Resource Management, Orion Resource Partners, EMR Capital, and Sentient Equity.

There are also quite a few hedge funds in the space, and many global macro funds and commodity funds will be interested in candidates with mining backgrounds.

(You’d still be better off working in sales & trading if you want to enter one of these, but a mining IB background gives you a higher chance than other bankers.)

The most common exit opportunity for mining bankers is corporate development since you can apply all your modeling, technical, and deal skills directly to acquisitive companies.

Another option is to aim for PE firms that work in broader areas that have some overlap with mining, such as in industrials or power/utilities.

For example, KPS Capital technically operates in the “manufacturing” space, but it does deals involving basic materials, including metals and mining companies.

So, the exit opportunities aren’t great, but they’re a bit better than in oil & gas, and they are improving due to the ESG/renewables/EV craze.

For Further Reading and Learning

No, we don’t have a metals & mining financial modeling course.

I’ve considered it before, but it’s a niche area, and the economics never made sense.

There’s an outside chance we might release a short version as a $97 course, but I can’t estimate a time frame.

For other resources, I recommend:

• News: Mining Feeds | com | Financial Times
• Research: EY | PwC | KPMG | Deloitte | McKinsey
• Market Data: London Metals Exchange (LME)
• Books: Fisher Investments on Materials | The Mining Valuation Handbook

Is Metals & Mining Investment Banking for You?

Despite the positive recent trends, I still wouldn’t recommend metals & mining over sectors like technology, TMT, healthcare, or consumer retail for most people.

If you really like mining and want to specialize in it, sure, go ahead.

Of the “specialized” sectors within IB (real estate, FIG, and oil & gas), metals & mining probably has the most growth potential through ~2030.

But cyclicality and specialization are major issues.

Yes, mining is hot right now due to renewables and EVs, but I wouldn’t bet money that this will last “forever.”

Traditionally, these shorter commodity cycles tend to run for 5-10 years – which matters if you enter the industry or get promoted at the wrong time.

Finally, you have more exit options than bankers in other specialized groups, but you still have worse overall access than bankers in the generalist groups.

But at least you’ll get to make the world a better place – if you forget about those child laborers in the Congo.

Want more?

You might be interested in:

• Investment banking product groups
• Investment banking industry groups
• Industrials Investment Banking: The Complete Guide

The post Metals & Mining Investment Banking: The Full Guide to Ground Zero for the Energy Transition appeared first on Mergers & Inquisitions.

1. Make a lot of money or gain power/prestige.
2. Take little-to-no risk.
3. And work normal, stable hours.

If you’ve read this site before, you know this set of goals is impossible for most finance careers: you take a lot of risk, work long/stressful hours, or both.

But one possible exception lies in sovereign wealth funds (SWFs), which are similar to funds of funds in some ways.

The pitch is that you do a mix of high-level “macro” work and occasional “micro” work, such as direct investments, you may get to live in exotic locations and pay less in taxes, and you work much more normal hours than in other finance jobs.

And while the pay ceiling is lower, it’s not that big a difference until you reach the top levels – especially after factoring in the lower taxes.

I’ll address all these points here and cover the advantages and disadvantages of SWFs, but let’s start with the definitions and overview:

What Are Sovereign Wealth Funds?

Sovereign Wealth Funds Definition: Sovereign wealth funds (SWFs) are state-owned vehicles that invest significant reserves from commodities or foreign exchange assets in various sectors to build up savings, stabilize the government’s revenue during downturns, and diversify wealth and income.

Sovereign wealth funds are the most common in countries with one or more of the following:

1. Commodity Wealth – Oil-producing countries tend to have cash surpluses, especially when oil and gas prices are high.
2. Trade Surpluses – Some countries, like Singapore, are not rich in commodities but serve as trade hubs and generate significant revenue from these activities.
3. Tax Revenues and Pension Contributions – In places like Canada and Australia, the pension or “superannuation” system generates significant funds to invest (but some would call the investment firms there “pension funds” or “superannuation funds” rather than SWFs).

SWFs in places like the Middle East, Norway, and Russia are heavily linked to commodities, while the ones in places like China, Hong Kong, and Singapore have more diversified reserves.

Commodity-linked funds want to diversify and avoid complete dependency on oil, gas, or lithium prices, while other funds are motivated by some combination of diversification and “saving for future generations.”

Sovereign Wealth Fund Strategies

Sovereign wealth funds can invest in almost anything, from equities to fixed income to real estate, infrastructure, private equity, hedge funds, and more.

Some SWFs operate like long-only asset managers (i.e., mutual funds) that allocate their assets top-down and then pick specific indices, companies, and securities that meet their criteria.

Others operate more like funds of funds and delegate much of the investing process to private equity firms, hedge funds, and other asset managers.

More recently, many SWFs have built direct investing teams to pursue minority-stake deals, credit deals, and even control deals for > 50% stakes in companies.

Examples in this last category include GIC and Temasek in Singapore and Mubadala in Abu Dhabi.

Also, many SWFs without official direct investment teams still co-invest with PE firms they’ve invested in, like the private equity fund of funds model.

Some sovereign wealth funds also pursue unconventional strategies.

One good example is the NZ Super Fund in New Zealand, which invests based on “diversifying risk” rather than a traditional asset allocation.

The firm uses passive and active strategies, often deviating from its reference portfolio based on the macro environment.

Sovereign wealth funds have much longer time horizons and more “permanent capital” than traditional PE firms, hedge funds, and funds of funds, and these points create differences in timing, strategy, and willingness to pay.

For example, many SWFs take their time making decisions and are sometimes willing to outbid traditional investment firms in areas like infrastructure assets.

They do not “need” to exit their investments within a specific time frame because they have no Limited Partners, so they can do things that traditional firms cannot.

The Top Sovereign Wealth Funds

You can easily find a list of the “biggest” sovereign wealth funds online: the Government Pension Fund (GPF) of Norway, the China Investment Corporation (CIC), the Abu Dhabi Investment Authority (ADIA), the Kuwait Investment Authority, GIC in Singapore, the Public Investment Fund (PIF) in Saudi Arabia, the Hong Kong Monetary Authority Investment Portfolio, Temasek, the Qatar Investment Authority (QIA), Mubadala, and so on.

Some people would also put CPPIB in Canada (and other Canadian funds) on this list, but these firms are usually classified as pension funds rather than sovereign wealth funds.

But the more relevant question is: “Which of these funds would you want to work at?”

And the short answer is: “Some of the Middle Eastern ones, plus GIC and Temasek.”

These tend to be the funds that pay better, actively recruit new entry-level hires, and do at least some direct investing.

Funds like Mubadala, GIC, and Temasek are good for direct investing work, and ones like ADAI, PIF, and QIA offer competitive pay, even if there’s less direct investing.

Some other large funds might also qualify; unfortunately, there’s little information available on most of them.

I assume you probably need to be a Chinese or Hong Kong national to have a good chance at anything based in China or HK, but I’m not 100% certain of that (feel free to clarify in the comments).

On the Job at a Sovereign Wealth Fund

To understand the nature of the job, you should know what PE Analysts, PE Associates, and HF Analysts do because much of it is similar.

If you compare a junior role at a sovereign wealth fund to these jobs, the work tends to be broader and shallower:

For example:

• Time – Traditional PE: You might dig into 2-3 potential deals each week, build models, and conduct market research. You’ll also spend time supporting existing portfolio companies and reviewing their results. Almost everything you do at the junior level is “micro” in nature.
• Time – SWF: You might spend 50% of your time looking at specific deals and the other 50% on higher-level asset allocation decisions (sectors, strategies, funds, etc.) and supporting your Portfolio Manager’s ideas and requests.
• Presentations – Traditional PE: The “deal review” pace above means that you could make several presentations to the investment committee or Board each month. And each one will take a fair amount of time and effort.
• Presentations – SWF: You will not make nearly as many presentations to the committee or Board; it might be closer to one per month, depending on the number of direct investments you work on.
• Deal Approval – Traditional PE/HF: To win approval for an investment, you don’t necessarily need to please “everyone” – just the key decision-makers. But they will dig into your work and ask detailed questions.
• Deal Approval – SWF: More people will review your process and recommendations, but they won’t go into as much detail as much as a traditional PE Partner. The approval process might take longer (say, 2-3 months rather than 1 month) because more people need to weigh in.
• Depth of Work – Traditional PE/HF: You’ll spend time doing market research, meeting management teams/customers/competitors, and building detailed financial models for any deal that moves past your quick screening.
• Depth of Work – SWF: You’ll still complete many of these tasks, but not to the depth that you would in most PE/HF roles. For example, you might focus on the model’s 2-3 key points that will drive returns rather than getting all 273 line items correct.
• Returns – Traditional PE: The targets vary by fund type and strategy, but traditional buyout funds usually achieve IRRs in the 15 – 20% range.
• Returns – SWF: Targets are often 3 – 5% lower, whether directly stated or implicitly acknowledged. This might not sound like much, but it could be the difference between a 2.0x and 1.6x multiple over 5 years (for example).

If you do direct investing, you’ll be closer to the “PE/HF” side of the spectrum, but there will still be some differences.

For example, minority-stake investments, credit deals, and co-investments in leveraged buyouts are all common.

But control transactions where your fund acquires over 50% of a company are less common, partly because of rules restricting foreign investment ownership in many countries.

Sovereign Wealth Funds: Salaries, Bonuses, and… Carried Interest (???)

You should expect pre-tax compensation that’s ~25% lower than pay at large PE firms at the junior levels.

So, expect something in-line with pay at middle-market firms, such as $200 – $250K rather than $300K+ total.

As you move up, the pay differential increases because base salaries and bonuses increase more slowly, and carried interest is much lower or non-existent; at the Director level, it might be more like a 40-50% difference.

At the senior levels (MD or Partner), earning $1 million or more is still possible, but it’s less common or “expected” than in traditional PE.

But the biggest difference relates to carried interest.

The “Limited Partner” of any sovereign wealth fund is the government, and the government does not like to pay high fees on its investments.

So, carried interest either does not exist or is greatly diminished at most of these funds, which means that the potential upside at the senior levels is much lower than in traditional PE.

Some places offer “shadow carry” or other vesting compensation that’s linked to performance, but the total amount is much lower than in direct investing roles.

That said, there is a tax advantage if you work in the main office of a sovereign wealth fund because the personal income tax rate is 0% in many Middle Eastern countries and only 22% in Singapore.

If you’re a non-U.S. citizen, these rates make a $200K total compensation package go much further than in other countries.

If you are a U.S. citizen, you still must pay U.S. taxes, but you’ll pay a significantly lower rate due to the foreign earned income exclusion.

So, you could easily earn more after taxes than in a traditional PE job in the U.S. or Europe – at least up to a certain level.

Lifestyle, Hours, and Promotions

The good news is that you also work much less in exchange for the reduced compensation.

At the junior level, you might work anywhere from 40 to 60 hours per week (the upper end of the range is more likely for direct teams), which is much less than most IB and PE groups.

Also, taking time off, planning vacations, and having a real life outside work are much easier.

The general attitude is that you’re in the office to work, but you’re not “on call” 24/7.

The bad news is that it can be quite difficult to get promoted, partially because working at a SWF is much more political than most PE firms and hedge funds.

Completely unqualified people sometimes get hired just because they’re connected to Powerful Politician X or Oil Baron Y, and hardly anyone at the top ever wants to leave.

Another issue is that many SWFs only hire local candidates, greatly prefer local candidates, or promote local candidates more quickly.

The classic example is Singapore, where you’ll get promoted more quickly as a Singaporean citizen at funds like GIC.

But it also happens at many Middle Eastern funds, so it’s not Singapore-specific.

If you’re in a SWF satellite office in the U.S. or Europe, this is less of an issue, but promotion there could also be tricky because these offices are smaller.

How to Recruit at Sovereign Wealth Funds and Win Offers

As mentioned above, in some cases, you need to be a citizen of the SWF’s country to have a good shot at winning a job in the fund’s main office.

This varies by fund and region and changes over time, but it is something to consider before you apply for these roles.

Most SWFs do not recruit undergraduates, with some exceptions, such as GIC and Temasek (if you fit their profile).

So, your best option in most cases is to gain traditional investment banking or private equity experience and use that to move in.

It is possible to move in from backgrounds like equity research, hedge funds, or asset management, but you should target groups that do asset allocation and public-market investments rather than deals.

Some larger funds use headhunters, but networking is essential to win these roles because the process is more like off-cycle private equity recruiting.

If you are a U.S. or European citizen with experience at a large bank, you probably have the best shot at Middle Eastern SWF roles at firms like ADIA, QIA, PIF, and Mubadala.

For more about this one, see our coverage of investment banking in Dubai.

Interviews and Case Studies

Just as the investment process is broader and shallower at SWFs, so is recruiting.

A typical process might look like this:

• Round 1: You might speak with HR or investment staff about very standard questions (“Why the buy-side?” “How would you invest in Industry X?” “Why this firm?” “Why this country?”). They might ask you to pitch a stock, but it will be less formal than in ER and HF interviews.
• Round 2: You answer other fit/behavioral questions about your leadership experience, strengths and weaknesses, and so on.
• Round 3: You might have to prepare and present a short case study or investment pitch in this round (~60 minutes). For example, they could give you information about two similar companies (Visa and Mastercard, Google and Facebook, etc.), ask you to recommend investing in one, and have you answer questions from the PMs about your decision.

You are unlikely to get a traditional LBO modeling test, a growth equity modeling test, or even a simple 3-statement modeling test – but there may be exceptions for teams that focus on direct investments.

Unlike the private equity funds of funds process, you are also unlikely to get a “fund evaluation” case study where you recommend investing in a specific PE fund.

Sovereign wealth funds do more than just PE fund investing, so this task might be too niche for many teams.

The technical questions are similar to the standard ones in any IB or PE interview, but you should also expect broader questions about markets and the economy, similar to an asset management interview.

The best way to prepare for the case study or stock pitch is to practice reading about different companies and making decisions quickly.

You won’t have time to build a simple DCF model or do more than look at multiples and qualitative descriptions, so you must think and act quickly based on limited information.

Sovereign Wealth Fund Exit Opportunities

The good news is that at the junior levels, plenty of people at sovereign wealth funds move around to other buy-side roles.

For example, it’s possible to win offers at middle-market private equity firms, funds of funds, family offices, and even venture capital and growth equity firms if you have tech investing experience.

You can also potentially join a portfolio company if you’ve worked in a group that does direct or co-investments.

On the other hand, it is extremely unlikely that you will go from a SWF to a PE mega-fund because they tend to “discount” SWF experience and prefer candidates from the top bulge-bracket banks.

You can get into good business schools in the U.S. and Europe from SWFs, but your chances at the top 2-3 schools are slightly lower because they also tend to discount SWF experience, especially in the Middle East.

That said, if you do IB/PE first and then work at a sovereign wealth fund for 2-3 years, your exit opportunities will be only marginally diminished.

Your chances at hedge funds depend heavily on what you did at your fund.

You can move to strategies like long/short equity if you have experience there, but if you’ve only done high-level asset allocation, you won’t be competitive.

The bad news is that the exit opportunities get much more limited as you move up the ladder to the VP/Principal/Director level.

Most traditional PE firms will not hire SWF professionals who lack normal PE experience at this level, so many people end up “stuck” at SWFs.

They don’t want to leave and take a big pay cut, but they also can’t easily move to other roles that offer similar pay.

Do Sovereign Wealth Funds Live Up to the Hype?

While sovereign wealth funds have their downsides, I would argue that they come close to offering the perfect mix of high compensation and relatively normal hours.

They are especially good in two specific situations:

1. IB/PE Burnout – Maybe you’ve worked in deal-based roles for a few years and enjoyed some of the work but want more of a life and a slower pace. In this case, joining a SWF for 2-3 years can be an interesting option that will set you apart from others without limiting your exit opportunities too much.
2. Long-Term “Buy and Chill” Career – If you do not care about advancing to the MD/Partner level in traditional PE or starting your own PE fund, and you’d be perfectly happy earning $500K – $1 million while working relatively normal hours, senior-level jobs at SWFs can be quite cushy.

The main problem with sovereign wealth funds is that everything between these two career positions is tricky.

Getting promoted can be very difficult and political, you’ll deal with a lot of bureaucracy, and if you stay too long, you’ll likely take a big pay cut if you decide to leave.

So, I’m not sure I would recommend SWFs over traditional PE/HF/VC/GE roles if your main goal is career advancement.

But if you’re willing to make a side trip to the desert for a few years, you might find a few diamonds in the rough right next to the oil wells.

The post Sovereign Wealth Funds: The Full Guide to the Industry, Recruiting, Careers, and Exits appeared first on Mergers & Inquisitions.

These complaints center on a few aspects of the banking industry there:

1. Recruiting – People often claim that it’s much more difficult to win interviews and job offers, that nepotism is widespread, and that there aren’t many “side doors” into finance.
2. Compensation – As with most other regions outside the U.S., you will typically earn less than in New York.
3. Exit Opportunities – Finally, there appear to be fewer traditional exit opportunities than in regions such as the U.S., U.K., and Canada.

There is some truth to these complaints, but they also miss the country’s positive aspects, which we’ll cover below.

Personally, I’ve spent about a year living/nomading in Australia.

When people ask me what it’s like, my answer is always the same: “It’s a mix of the U.S. and the U.K., with some added quirks.”

And that description also applies to the investment banking industry there:

Investment Banking in Australia: Top Banks

If you look at the Australian league tables, you’ll see many of the “usual suspects” at or near the top: Goldman Sachs, JP Morgan, Morgan Stanley, Citi, and Bank of America.

The big difference is that UBS is unusually strong in Australia, often ranking #1 or in the top 3-5 by advisory fees.

Also, “large domestic investment bank” Macquarie tends to rank well, often above the international bulge brackets.

The Big 4 Australian banks – ANZ, Commonwealth, NAB, and Westpac – are also very active, but primarily in debt capital markets, where they do more volume than the international banks mentioned above.

However, these banks have minimal involvement in M&A, equity, and other non-debt deals, so they’re perceived as less desirable in terms of careers, compensation, and exit opportunities.

Many “In-Between-a-Banks,” such as RBC and HSBC, also have a presence in Australia, but more on the capital markets side than M&A.

Most U.S.-based middle-market banks have little presence in Australia; you’ll see Jefferies but not many others.

Similarly, the U.S. and European elite boutiques do not have a huge presence in the country.

Of the EBs, Rothschild is the strongest if you go by deal volume, but you’ll see the likes of Moelis, Lazard, Qatalyst, and Greenhill as well.

Taking the place of many EB and MM banks in Australia are domestic boutique banks that are quite strong, surpassing some of the bulge brackets in terms of M&A deal volume.

The two best-known firms are Barrenjoey and Jarden, both of which were formed by former UBS bankers (among others).

Other names include Gresham, Luminis (affiliated with Evercore), Record Point, Clairfield, Allier Capital, Highbury Partnership, Grant Samuel, and J.B. North & Co.

Some of these act as “small Big 4 firms,” so they work on more than just M&A and capital markets deals.

Locations, Industries, and Deals

As you might expect, Sydney is the center of the finance industry in Australia, so most deal activity takes place there.

Many banks also have smaller Melbourne offices, and the few offices that exist in Perth are dedicated to the natural resources / mining sector there.

Traditional investment banks do not have much of a presence in other cities, such as Brisbane, Adelaide, Canberra, etc.

In terms of industries, materials, mining, and natural resources represent a significant percentage of all deals, and power & utilities companies are common M&A targets and equity issuers.

Refinitiv has a good breakout of the top “targeted industries” in M&A deals:

Outside of M&A, the industries are a bit more diversified.

Materials is still significant, and financials represents the highest percentage of total deal activity due to its high volume of debt deals.

No single deal type dominates the market if you look at the fee data:

Investment Banking in Australia: Recruiting and Interviews

While the top banks and industries differ in Australia, the recruiting process really is a mix of the ones in the U.S. and the U.K.

As in these other regions, you still need previous finance-related internships to have a good shot, and you should intern at a large bank and convert it into a full-time role for the best chance of breaking in.

If we use the U.S. recruiting process as a baseline, the key differences in Australia are:

1. Very Small, Fiercely Competitive Market – In the entire country, investment banks might hire fewer than 100 interns each year (~5-10 students at each bulge bracket bank and fewer at the boutiques). And thousands of students apply for these jobs, so your odds are not great – they’re worse than in the U.S., U.K., and even Canada.
2. Widespread Nepotism – The dearth of positions in Australia also means that nepotism is an even bigger problem than in other markets. In other words, expect a good percentage of the interns and full-time hires to have a family or other connection with the senior bankers, clients/prospective clients, etc.
3. Online Tests – Similar to the U.K., various psychometric tests are common in the first round of the recruiting process. You will still go through a HireVue or phone/in-person interview and multiple interviews after that, but the first step may be a bit closer to the U.K. process.
4. Superdays or Assessment Centers – Banks in Australia do not necessarily label the final step of the recruiting process a “Superday” or an “assessment center,” but it usually includes elements of both, such as back-to-back interviews, case studies, group presentations, and some evaluation in a social setting, such as a dinner or cocktails.
5. Types of Candidates – Most successful candidates come from the “Group of 8” universities (see below) and complete Commerce/Law degrees with top grades. Unfortunately, MBA and Master’s-level recruiting is almost non-existent, and if you’re an international student, your chances are low because it’s extremely rare for banks to sponsor international students.

If I had to put a number on it, I’d say it’s at least 2-3x more difficult to get into IB in Australia than in the U.S. or the U.K.

Is It Impossible to Break into IB in Australia as a “Career Changer”?

The biggest issue here is that MBA-level recruiting is not well-developed, so career changers lose a major pathway into the industry.

There is occasionally lateral hiring, but mostly for people who already have similar jobs: accountants, corporate lawyers, and management consultants.

Therefore, if you’re working in a completely unrelated field, Australia is probably one of the worst places to move into finance.

Your best option, in this case, is to move abroad to the U.S. or the U.K. and do a top MBA or Master’s degree there.

If you can’t do that, do not even bother with an advanced degree in Australia if you have no corporate finance experience because your chances of getting hired are close to 0%.

Instead, think about related options that might be a bit easier, such as working at one of the Big 4 firms, entering commercial real estate, or joining a sovereign wealth fund.

Investment Banking Target Schools in Australia and the Top Degrees

The “target schools” in Australia consist primarily of the Go8 universities:

• University of Sydney
• University of New South Wales
• University of Melbourne
• Monash University
• Australian National University
• University of Queensland
• University of Adelaide
• University of Western Australia

If you’re not going to one of these, getting into IB will be even more difficult.

Traditionally, banks have preferred the Commerce/Law dual degree, but you’ll also find bankers with just Commerce, Commerce/Engineering, Science/Commerce, and other combinations.

“Commerce” is a mix of Finance and Accounting, with options for actuarial studies, economics, marketing, and related areas.

Banks also prefer candidates who complete an “Honours” year in undergrad, which is nice since it gives you more time to win internships.

Universities in Australia use a grading system based on the “Weighted Average Mark” (WAM), which differs from the scales in the U.S. and the U.K.

In most cases, banks want candidates with WAMs above 75%, which is roughly comparable to a 3.7 – 3.9 GPA in the U.S. [NOTE: 75% may be closer to a 4.0 in the U.S. system – see the comments to this article.]

Finally, extracurricular activities, such as business/investing societies, case competitions, and sports, also matter, and you’ll usually need 1-2 solid ones to win interviews.

UBS runs a famous case competition each year in Australia (the “Investment Banking Challenge”), which many successful candidates participate in.

Investment Banking in Australia: Salaries and Bonuses

In the interest of full disclosure, I have never found comprehensive, reliable data for IB salaries and bonuses in Australia across all levels.

I’ve found one site that does Australian corporate salary surveys, but it’s missing bonus data and numbers for senior bankers.

On average, though, you should expect a 10-20% discount to U.S. compensation because of a few factors:

1. AUD/USD Exchange Rate and a Weaker AUD – There have been periods where the AUD was trading at parity to the USD or even above it, but it has been at a 10-30% discount for most of the past decade.
2. Similar/Higher Base Salaries (But paid in AUD) – Similar to regions such as Canada, base salaries are close to ones in the U.S. but paid in AUD instead. In some cases, they may be slightly higher, which offsets some of the weaker exchange rate.
3. Superannuation Oddities – In Australia, all employers must pay ~10-12% of each employee’s earnings into a “superannuation” (pension) fund. You may benefit from this money far in the future, but you cannot access any of it today, and some compensation reports include it, while others ignore it.

Using the U.S. salary/bonus levels as a guide, you might expect something like the following ranges in Australia (converted to USD for comparative purposes):

• Analyst: $130K – $170K
• Associate: $200K – $400K
• VP: $425K – $600K
• Director: $500K – $700K
• MD: $600K – $1.3M

But, again, I have low confidence in these numbers, so if you have better data, feel free to share it in the comments.

IB Lifestyle and Hours in Australia

The overall culture varies widely from bank to bank, with some resembling sweatshops and others offering better work/life balance.

On average, you will probably work less than in New York or Hong Kong (London is debatable because the hours there are also better).

So, a “busy week” at the junior level might be 80+ hours, while a “less busy week” might mean 60-70 hours.

A few factors account for the slightly better hours/lifestyle:

1. Smaller Industry with Smaller Deals and Less Deal Flow – Smaller deals tend to be less stressful because there’s less urgency to close, and fewer stakeholders are involved.
2. Less Financial Sponsor Activity – Deals involving private equity firms tend to be more stressful because PE professionals work a lot and expect everyone else to work long hours as well. But there’s less domestic PE activity in Australia, and much of it is focused on asset-level deals in real estate and infrastructure (see below).
3. Less of an “Up or Out” Culture – It’s more common for bankers to start as Analysts and advance up through the ranks in Australia, so senior bankers don’t necessarily want to kill their junior staff with impossible workloads.

Investment Banking in Australia: Exit Opportunities

The bad news is that traditional exit opportunities such as private equity and hedge funds are scarce in Australia because there aren’t too many of these firms.

To quantify this statement, Capital IQ searches produce the following numbers of PE firms and hedge funds in the U.S., U.K., and Australia:

• Private Equity: U.S: ~7,200 | U.K.: ~1,000 | Australia: ~250
• Hedge Funds: U.S: ~3,200 | U.K.: ~500 | Australia: ~50

The private equity mega-funds all operate in Australia, but private equity recruiting is ad hoc and follows the off-cycle process; people also tend to move over a bit later, sometimes as Associates (like the London process).

There are also some larger domestic private equity funds, such as Pacific Equity Partners (PEP), BGH Capital, Quadrant, CPE, Crescent (more for credit), Archer, Allegro, and Advent.

By U.S. standards, most of these would be considered middle-market or upper-middle-market funds based on their AUMs and typical deal sizes.

However, the #1 point is that Australia is more of a center for private equity activity in real estate and infrastructure.

For example, Blackstone in Australia focuses on real estate, and many traditional funds, such as Brookfield and MIRA (Macquarie’s PE fund), also focus on asset-level investing.

There are even domestic PE funds dedicated to these sectors, such as CP2 in infrastructure and RF Corval in real estate.

And then there are the “superannuation funds,” such as Australian Super, that often focus on RE and infrastructure to aim for lower-but-theoretically-more-stable returns.

So, exit opportunities exist, but corporate-level private equity roles are much rarer than in the U.S. or Europe.

The most common paths for bankers in Australia include:

1. Stay in IB and move up the ladder.
2. Transfer overseas to work in IB or use it to win a PE/HF/other role.
3. Move into corporate development or corporate finance at a normal company.
4. Move to a real estate or infrastructure fund.
5. Complete an MBA or Master’s degree abroad to access more opportunities.
6. Win one of the few corporate-level PE roles or an even-more-elusive hedge fund role.

Investment Banking in Australia: Final Thoughts

So, considering everything above, is investment banking in Australia worth it?

Is there any reason to prefer it to other countries/regions?

And if you’re in another country right now, is there any reason to push for a transfer so you can work in Australia?

My answer to all three questions is the same: “Probably not – unless it is your only option.”

Australia’s main advantage over other regions is that it may be better for a long-term career in banking since the pace is a bit slower, advancement up the ladder is more common, and compensation is still good (though lower than in the U.S.).

These are nice benefits, but they mean nothing unless you can break into the industry in the first place – and breaking in far more difficult than in the U.S. or Europe.

If you’re currently in Australia and want to work in investment banking there, but you’re a non-traditional candidate, go overseas or forget about IB for now and aim for finance-adjacent roles.

And if you’re in another country but have your heart set on working in Australia, get a few years of experience at a large bank elsewhere and request a transfer – and hope that a spot is available, and your bank can sponsor you.

I have nothing “against” Australia and enjoyed my time there as a nomad / tourist / remote worker.

But visiting a place is quite different from working at a company there.

And if you can work in the U.S., Europe, Hong Kong, or even Canada, I recommend all of them as better starting points for an IB career.

But if you enjoy fighting uphill battles, feel free to ignore this advice and continue toiling away on your IB applications in Australia.

If you have enough family connections, you might even succeed!

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