The One Search Podcast
One Search is the original global Infrastructure search firm, and the One Search Podcast is the group's platform for interviewing special guests, as well as discussing key themes in the sector and sharing compensation data from time to time.
The One Search Podcast
2023 Infra Debt Compensation Update
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The most diverse team in global infra credit search is back again with some updates on compensation trends in the market, and more!
The OneSearch Podcast. Insights and opinions on the subjects that matter in global infrastructure, financing, and investment. With the OneSearch Credit Practice.
SPEAKER_07Hello everyone and welcome back to the OneSearch Podcast reboot for 2023. It's been a couple of years, yet here we are, we're back. And once again, the uh most diverse uh team in uh infrastructure credit recruitment worldwide uh is back to share some views uh around compensation in the market and some other um uh sort of issues that we see at the moment. Uh we're only one firing away from being totally diverse. It's just me left. When I'm gone and they cancel me, we'll be true we'll have found true diversity. So um great to see you all team. How are you doing?
SPEAKER_03Yeah, good, good, great, yeah.
SPEAKER_07Benny's on the pod. Benny wasn't on the pod last time. Megan, you weren't on the pod last time. We've got two new new podders. So I'm sure through the by listening to the pod, people feel like they get to know you. Um good. Okay, so look, let's get straight into it. The the uh the podcast two years ago was really successful. We had a huge number of uh hits and likes, which released dopamine into our heads as we saw the likes going up, and that's how we get sort of satisfaction and fulfillment these days, isn't it? Through social media likes. But we but uh on a serious note, we had a lot of people in the market talking to us and saying this was really useful. Um, at a lot of people going to knock in on their bosses' doors and saying, uh hey, look, according to the OneSearch Podcast, I need to pay rise. I don't think that's gonna be the same this time.
SPEAKER_05Yeah, they're hoping it's the other way around.
SPEAKER_07Exactly. It's gonna be bosses, okay? They'll all be hiding. The bosses are hey, according according to Namisha Sharma, you're overpaid. Um so um so look, we we we we wanted to do it again. People have been asking us to do it again. Uh, we wanted to reboot and see where compensation is uh is at in the infra credit market. Uh over to you guys.
SPEAKER_05Yeah, so um I I can go first for the US market on the junior and mid-side average comps. Everything pretty much stayed the same with the exception of associate comps. So for the project finance, banking, uh, origination execution teams, the analyst comps were 110 to 130 base with 30% to 40% bonus in 2022 and 2023. Um, the main difference here was with the associates, where last year it was 150 to 160 base with 50 to 80% bonus, where in 2023 it was 150 to 160 base with 50 to 70 percent bonus. As far as portfolio management, average comps were exactly the same. So analysts were 90 to 110, 20% bonus, associates were 150 based with 30 to 40 bonus, and VPs were 220 to 250 based with 40 to 50 percent bonus. So, like I said, the only difference was that 20% decrease on associate bonuses. Now, some of the interesting main trends that I saw, and I'm Megan, I'll be interested to see what happened on your side. Um, a lot of these associates that receive the 20% decrease, they either are you know working at banks that raised their bases in 2021 to 2022 or had massive hires on their teams. This a really big one was also a lot of these associates that are working at massive banks with different sectors, they didn't receive the same bonuses as last year, even though the work they did was exactly the same, if not more. And we're realizing it's because consumer retail, healthcare, all these other sectors just they didn't bring in as much revenue as compared to last year. So I've heard that leverage finance that took down the teams, yeah.
SPEAKER_07Let's unpack so there's a few things going on there, Benny. So I mean, first things first, did did Total Comp from 22 to 23, these more junior folks that you're talking about, did that stay flat? Did they did they end up making less money in total? Did they make a bit more? What you're saying is the bases were bigger, but the bonuses were smaller.
SPEAKER_04So it depends on the team, really.
SPEAKER_07Okay.
SPEAKER_04Bigger teams.
SPEAKER_07And where they made less money, what you're saying, I think what you're saying is that where people, um, some of the junior folks made less money was where they're working for big banks that cover uh, you know, uh uh so bulls bracket banks, for example.
SPEAKER_06Bulls bracket.
SPEAKER_07It it it kind of paid to be in an infra-specialist business. So if you work for a bank, it's good to be in a boutique, or if you work for a credit fund, uh, then yeah, maybe you'd be doing great business. But if you're if you're open to the savage uh uh uh wider world, then everyone got hit in some of those big institutions. Is that is that right?
SPEAKER_05Yeah, absolutely. I'll actually go off that, Benny, because I saw the same thing in the US market, just with the VPs to MDs type. Um the base that went and so when we spoke on the podcast, I think it was 2021, the bases went up an insane amount, right? It was almost like every month they we saw an increase on the base. It has stayed flat from last year to this year, even looking at it. And it is the bigger difference that you're gonna see is the bonus too with the senior folks, Benny. I actually think the more senior that you were, depending on the bank again from what you said, if it's a specialist or or bulger bracket, the bonuses took a hit. So what I saw was VPs in the 220 to 250 range, and that stayed flat. And then the bonuses tended to be around 80 to 100 percent. While last year I knew VPs that got over 100%, which is great, but we didn't see that this year. So then with the directors, 275 to 320, I've seen the same bonus. Uh I guess some of the places kind of stayed the same, but the bulge brackets again, I think they took a hit where it was actually significantly less at certain places. It I saw maybe 50%, which I know is is pretty low. Um and then on the MD 350, 400, 100%. Again, when you're looking at these project finance banks, if you want to get into the detail of each thing, each sector, because credit funds and banks, and then different banks are all gonna have a different range and bonus and and base, right? But where we saw the biggest drop is again the bulger bracket banks, where I think life in you saw a lot of of layoffs or or bonus reductions and that.
SPEAKER_07So at this at the senior end, I mean, I think we're concurring that uh in the US market, we're seeing uh, I mean, to say the least, we're seeing that bubble really cool down, if not burst, around compensation. Is that is that a fair comment?
SPEAKER_05I think yeah, I think it's gonna it's gonna flatten.
SPEAKER_07And we're seeing, you know, we're seeing layoffs in in banks. We've obviously seen some spectacular banking collapses, they've been relevant to our market. Silicon Valley Bank is uh obviously a bank that that plays a lot in our space. And uh, yeah, uh great guy Bratt over there running the project finance business and and his team affected. And um obviously the issues with uh Credit Suisse and who knows what else to come. So I think it's the banking space in particular, is uh is um you know feels quite a delicate world right now, um, and compensations have have cooled down dramatically by the sounds of it. Is that so? I mean, these are we seeing that in Europe on the other side of the pond? I know um, you know, NAMI uh maybe we'll talk to some of the more senior stuff, but um interested to hear from Megan and Mercedes in terms of what they're seeing as well.
SPEAKER_03Yeah, I mean, look, I think it's definitely cooling down on the junior end of the market. I think slightly different to the US, we haven't had a kind of flat on the base from say 21-22 to to this year. Um, we've still had a pretty hefty increase. Um, and that's looking across kind of you know banks, funds, um, uh, and a range of banking teams as well. So I think to be honest, the range of salaries at the moment are are really broad and bonuses as well. There's there's been quite a big increase. Um, and at the associate level, we're kind of looking at anywhere from 70,000 on the base to 135,000. Um, and then bonuses from about 20 to 140%. Um, and then at the analyst level now, we're looking at anywhere from 50,000 to about 80,000 on the base, with again pretty strong bonuses of 20 to 100%.
SPEAKER_07Um so I think you know just to just to butt in there, Megan, so you you're seeing associates still getting 140% bonuses and analysts getting 100% bonuses. I mean, tell us what sort of institutions you don't name any names per se, but what sort of institutions are paying or have been paying uh junior people those levels of bonuses?
SPEAKER_03Yeah, so where we've actually seen it, it has been in say the banking teams where they work on a mixture of both lending and advisory transactions, and they've had really strong years. Um, and and to be really transparent with you, when we break those down to individuals within the team, um, it actually varies. And what we are seeing is that, you know, if you are very valued in the team and you've had a really strong year, you're gonna be at the higher end of that bracket.
SPEAKER_07Look, this I think there's a couple of things to discuss there. So one uh so one of the things I think that you're uh pointing to is people had a fantastic year in 2022. There are many teams in our space that had a fantastic year in 2022. Are we then seeing, because this is something that I've noticed in the past, and I don't know, genuine question, um, you know better than I do, you did in the detail with the numbers, that some of those institutions that declare bonuses earlier in the start of the year, like Jan Fair payouts, then see the benefit of a fantastic 2022. But when it's become more clear by March, April, and now we we record this on the 31st of May, um, it's become very clear that we're in for choppy times, and there are still some institutions that are paying out bonuses or yet to even announce them, even though they had a really good 2022, are those people now going to suffer because they're gonna be they're gonna do some really defensive bonus payments?
SPEAKER_03I think there's been some consideration of it. I wouldn't say it's true for all institutions, um, but we are definitely seeing some institutions being more considered about that. And, you know, even before, you know, before now, I would say, you know, maybe February time, there were um candidates saying that, you know, other teams have had bad years, which means, you know, we're kind of having to stick it out this year, which is why we've seen a little bit of a drop. That's not to say they're unhappy, but you know, a lot of candidates are recognizing a drop. And as you say, over in the US understanding that it's due to the wider business.
unknownYeah.
SPEAKER_07Okay, so look at say sorry, Jay.
SPEAKER_05Yeah, no, I I just think like you she brought up a really good point, Megan, where you see the the institutions that do debt advisory and lending, their bonuses definitely, Benny. I'm sure you can agree on this one, right? Um, from associate to MD, their bonuses definitely were higher. Yeah, for sure. That was a really good point, Megan. Yeah, that being able to do more than one deal, pretty much. And I think that's also why me and G saw a lot of banks trying to move into that advisory realm. Yeah, the advisory. Yeah. Yeah. That also has to do with the sectors that we're focusing on, right?
SPEAKER_02But yeah, and then I guess at the senior end of the market, put pretty much the same trends, to be honest, um, as at the junior end. Um, I think definitely a trend of base salary increases. Um, I'd say to be honest, at the senior end up up to about 5% is probably where most are at. Um, I think you know, inflation's obviously played a big part in there having to be base salary increases. Um, but on the whole, variable comp um is either flat or down from last year, meaning total comp is across the board um not necessarily improved on last year, to be quite honest. Um having said that, there are a group of a very small group of banks and funds that are up on both base and bonus um in comparison to 2022, but it's a small group. Um, the vast majority of the market have um have been hit here, even though it's not necessarily been a bad year. So I think that goes to Benny's point around sort of left in DCM teams, you know, those guys being impacted hard, which as a result, you know, if you're interested in an institution with those teams having been impacted hard, um, even if infrared's had a record year, your team suffering for that, which I think is is made a few juniors and seniors pretty, pretty upset.
SPEAKER_07And if you want to know who that small secret select group is of institutions that are paying above the market, you've got to come and talk to OneSearch. We know we're gonna keep it a secret. So they're one search clients, that's all you need to know. You want to go move there, you've got to come and talk to Nami Sharma. Is that right, Nanny?
SPEAKER_06That's right, you're gonna come talk to us.
SPEAKER_07And before you launch into Nami, before you launch into specific numbers, is it fair to say then that you've seen people um who've had, and obviously we know many people over the last couple of years have had pretty significant base salary increases. So that must mean that you've seen some of those people, and probably going into having had a good 2022, expecting that their total comp is then going to be way up on the year before, um, then getting much lower bonuses by percentage of base in uh in 2023.
SPEAKER_02Yeah, no, exactly that. Um, which yeah, people haven't been happy with, to be to be completely honest. Um, because as I touched on, you know, performance hasn't necessarily been down. So then people are sort of questioning, well, if we've had a standout year and that's been the result, what's it going to take for me to get paid well? Which obviously then has resulted to people being um pretty actively looking on the market.
SPEAKER_07But Nami, I thought that they were doing it to try and save the world and it was for um you know to try and stop the climate crisis. Uh uh, are you are you suggesting that people are in this for the money?
SPEAKER_02No comment. I think it's a good thing. Anyway, let's move on.
SPEAKER_07Let's move on. Let's move on. Tell us about the numbers, Nami.
SPEAKER_02So um, yeah, 2022 versus 2023 for MDs. Um, so base salaries around 210 to 330 in 2022. 2023 seen an increase to 230 to 350. Um and on the bonus side, it's been pretty similar to last year, 100 to 300%. So no real change there. Um director level has been around 150 to 210 in 2022 base salary, and in 2023 has crept up to 155 to 215 base, um, with bonus going up by say about 30% at the upper end. I think worth commenting at this stage, these bandings are obviously pretty wide-ranging. Um, and that's to Megan's point that at the sort of lower end of these bandings are obviously junior directors, but also pure lending institutions and pure lending teams. The upper end of these bandings are clearly senior directors, but also those institutions that do a mixture of lending and debt advisory, because that pays more. Um and then just to conclude on my piece before I move over to Mercedes, who will talk about portfolio management. Um, the VP level in 2022 was around 100 base to 160 base. Um, and that's crept up to about 105 to 110 base, up to 165 base, um, with bonus sort of ranging the same to be honest, 40 to 100%.
SPEAKER_07And and to that point on the wide, on the wide range, I mean, obviously that we're not even getting into at this point, many of the MDs in these days on the infra credit fund uh side of the equation are being rewarded partly in uh you know by way of carry. Uh you know, if they're if they're into um yeah, if a if applicable um for some of those sort of sort of mes uh strategies and and such like. And so you know the range isn't just down to uh, I guess, product of um that different banks are uh are sort of selling, this is down to just the level of success from fund to fund. Have they been able to raise a lot of money? Have they been has timing been right in that respect? Um, because there've been some great opportunities recently if you did have dry powder, and have you been able to put that money to work? And if so, some some very, very tidy uh money at work for some of these people and and total compensation looks very healthy. And then on the other end of the equation, if it's not been successful, if you've not been a platform that's been able to raise money uh for whatever reason, then compensation's gonna be very low. So we can't get away from the fact that there's a there's a really there's a there's a real delta between the low end and the high end. I think though the theme is, and we'll uh see if this is uh carries through to portfolio management with Mercedes, but the theme both sides of the Atlantic so far is that there's a real cooling.
SPEAKER_06Yeah.
SPEAKER_07And Merck, by way of intro, Merck, I think it's also worth saying that you in between the two podcasts, you went off and had your second child. And so welcome back from that maternity leave. But I think it's quite interesting because you left us at a moment uh where things were really hot, you've come back into this into this different market. So really interesting your broader perspective as well as just on portfolio management.
SPEAKER_00Yeah, no, it's great, great to be back. Hello, guys. Um, on the portfolio management side from 2022 to 2023 over here in uh EMIA. Um, I've seen that total comp was mostly flat. However, I'll break it down between market leaders, the laggers, and the average payers. Um, I would say that the market leaders tend to be your infrastructure debt funds. Um, and then, you know, as as the team discussed, uh, banks who um are a bit more specialized or blend lending and advisory, um, where the portfolio managers are, you know, really valued in the team. Um, they're sometimes integrated into the into the team, either, you know, uh supporting with execution or just doing the asset management, but you know, they're really, really valued in the team and they're they're not, you know, uh second fiddle to anyone. So these guys paid uh bonuses up to four like from 40% uh and above, and the bases had moderate increases. So that those are the market leaders. And in terms of the the laggers, they were flat on base salary. So I remember I had someone in process where you know the their salary was, you know, let's say 85K. And then when I've come back and see the same person in process, um the the base salary has only gone up 1K. So that was really, really flat. Um, and then so those those guys tend to be the DFIs or the or the banks doing purely lending. Um, and their bonuses tend to be, I would say, 10, 15%. Um, a lot of them surprise me, you know. A lot of them uh I say, wow, I didn't realize that this European bank was, you know, underpaying so much, and they generally lose those candidates to obviously the market leaders be in being the the banks um that do lending and advisory or the infrared funds, or sometimes they go on to you know do a hybrid of origination and um portfolio management, which is a new thing that we're starting to see where um clients you know are open to that sort of candidate. Um so then I'll go to the average. So yes, obviously overall the bases have been flat and the bonuses have been flat. And I would say that the bonuses hit between 20 to 30 percent from you know junior to to the senior end.
SPEAKER_07Okay, look, good to know. And um it's it's a I mean I look, I guess there's quite a there's quite a delta, isn't there, between origination execution and portfolio management on the bonuses, um, which is quite interesting. I mean, for for for someone that's been around as long as me and seen um, you know, coming through the the credit crunch and the aftermath, and how important good stoic portfolio management was in um you know, and where there had not been particularly sensible portfolio management and some crazy risks have been taken, banks that don't exist anymore. So um yeah, I wonder if we'll see or go through that cycle again of of real importance being placed on portfolio management and people being paid better bonuses for for great performance. Uh because you know it's it's it's quite interesting to see what happens when there isn't high quality portfolio management.
SPEAKER_05But um So Dan, just off that, just off that with the portfolio managers, because I don't think I I shared the senior comp on that. Um that their bases actually have gone up.
SPEAKER_07So are they in line with are the bases at least in line with the origination execution guys?
SPEAKER_05Or well, I think when I first started here in twenty in um 2018, so at one search, the bonuses are definitely lower. I think they've continued to increase. So a director in portfolio management has the same base or higher than someone in origination. So they're at 250 to 300 on the base, which is which is pretty good. And years behind, it wasn't as high. So I think they have pretty healthy bases, and the bonuses, which I believe used to be around 30% per director, are now 50 to 60 percent. So I have I do believe they've crept up, and then for the MDs, they're at 350 to 400 on the base. Bonuses around 60 percent. Uh not terrible. So yeah, I mean, you have a good point. Will they increase? They have been increasing.
SPEAKER_07So do you then see, G, because I know you've been you've been leading a couple of projects recently for for banks that want to build out and put someone senior in charge of a new portfolio management function. Um, are you seeing bankers who say, you know what, the difference is not that actually that big? And I feel like it's a it'd be a nicer job in portfolio management. Maybe it's a little bit more predictable and not as stressful being, you know, uh pinned to the success of origination campaigns. I I'll I'll flip to portfolio management.
SPEAKER_05Uh yeah, I definitely agree with that. And by the way, I think this is a really big point for banks to understand that in order to retain, which we'll get on to in a bit, having a team that just does portfolio management makes a huge difference for origination execution teams. And we can get into that in a bit. But I do think the importance of it, people need to understand. And I do think from your point, a lot of people are more reluctant. Okay, the comp's not that big of a difference. Depends on the individual and what they want to do.
SPEAKER_07Well, look, let's let's do it now. Let's flip straight into uh retention because I know that this is and the reason we wanted to talk about retention on this podcast is it's it's front and center of a lot of our clients' minds. Um, and you know, they have had to work really hard over the last couple of years. A lot of these banks uh and funds actually have been working hard to try and keep their people in uh what's you can only describe as a war for talent. Um, and people have been asking us, haven't they, uh guys? Um stuff like gym memberships, will that help retain folks? Um what do you what do you folks think?
SPEAKER_05Uh I don't I don't think gym memberships is gonna do it. Uh I I actually did go out to market because I've been asked by more than one client now. And so instead of making something up, I went and asked the market. Uh and and two things came up.
SPEAKER_07Normally we just make it up. Come on, gee, what did I find out? Wow, go, we've got real data here. Come on, tell us.
SPEAKER_05Yeah, we do. This is real. This is real. Um, I did. I went and asked associates BP's directors to kind of get the full market view. Because obviously everyone's different, everyone has different opinions, but the main things that I keep hearing, it's comp. That's always gonna come up. I always think people get retained by comp, right? And then, like I just said, a lot of these associates, and you have to understand, even from us, and Amisha and Megan, I'm sure you're doing this too, and Mercedes. Sometimes when you are presenting a candidate to go from a bank to a bank, sometimes the biggest sell genuinely is this bank has their own portfolio management team. You you won't have to do that. You're gonna be focused on origination, financial modeling, maybe debt advisory. Megan and Ben, you're nodding your heads. I mean, what have you heard? And that on my end, that's a very big one. Uh a lot of analysts come into these execution teams and they they're not doing any modeling yet, which over time means that it's gonna be harder for them to get better, find better jobs, move to a fund. Um, I think they're tired of doing things that to them seem like back office when they got into this space to one day become an originator.
unknownYeah.
SPEAKER_00I mean, genius, right? I have a problem with that, guys. It's not fair for the clients. I mean, I I don't think I I've heard it like around Europe and stuff, and sometimes they call it middle office. And I just don't think if we look at project finance, it should like the portfolio managers should be on a different floor or be second-class citizens. Because I think to finance and invest in these projects, you have to have them close, especially for those um, you know, financing, those deals that are really, really complicated. Um, you I mean, a lot of the portfolio managers don't have the background to manage those sorts of transactions. So the originators have to get involved in the slightly hairier situations. And there's there's brilliant portfolio managers, maybe the head of the team um would would know how to tackle with that. But a portfolio manager with you know, like three to five years of experience is not gonna, you know, know how to manage a complex transaction. So that's why they have to be integrated and talking to each other and friends. You know, I spoke to someone to to give me referrals, for example, and he's like, Oh, I don't know where the portfolio managers are. They're I don't even we're not friends. Terrible, you know. So it's just like, how do you know they're in the middle office, aren't they?
SPEAKER_07That's where they are. It's just like it is middle office, is that like middle earth? Is that like where the hobbit lives? Is it is it like what is it?
SPEAKER_05No, I don't think people refer to them as uh I don't think portfolio management is middle office.
SPEAKER_07Yeah, they do. They they actually no they do. I I think people regard in many, I think there's a this is look, my view is that different institutions, and this is really pivotal to the point that we're making about portfolio management, is different institutions regard it with different levels of importance. Okay, and I think if you look at banks like I I will name Nord LB because it's I'm naming it in a in a couple of things.
SPEAKER_05I was just thinking of them for the back.
SPEAKER_07And and just I just think it's a great, I think it's a great place in this regard that the that in every sort of you know deal team, they'll have someone from portfolio management and a couple of people from origination execution, and they work together as a team. And the portfolio management then is you know, when you're looking at a deal that you want to do, it they you you get in the perspective of a portfolio manager saying, Well, hold on a minute, here are some of the pitfalls that we could that we've encountered and things that could go wrong. And um, you know, dare I say it, thinking in a sensible way about maybe we shouldn't do this deal. But when we do go and do the deal, then there's a continuation through, and we, you know, that person can, you know, and it just seems to make logical sense to me. So in an institution like that, it's very much front office, but I totally agree with Mercedes in the sense that there are many institutions who do not, even now, even after the lessons of 2008-2009, still think it's kind of look, you know, it's just kind of a necessary thing. We've got these assets on the book, and we I guess we better have this team of hobbits in Middle Earth who uh who deal who deal with them, and and um yeah, that's there's some pitfalls to that, as we've seen before. Sorry, they're not hobbits. Like, you know, it's just a joke before anyone tries to count. Just to clarify. Can I be kicked off uh like surely I can't be kicked off LinkedIn for saying that on a podcast? Anyway, I hope. Um what else in what else about retention folks? What else should we be talking about here? Things that are important to people to retain them in the organization. Obviously, comp is is a big one, we know that.
SPEAKER_05Yeah.
SPEAKER_07Um what else?
SPEAKER_05Dare I say it? Flexibility? Yeah. I feel like that's a big company. I feel like that's a big topic.
SPEAKER_02Yeah, there's a few clients. Well, I think there's quite a lot of few institutions in the market that have not necessarily said, look, you've got to go back in five days a week. I mean, there's a pocket that have said that, but there's another pocket that haven't said that. But if you're a junior and you're not in five days a week, you're missing out, you're not getting staffed on the best deals, um, you're looked down on, et cetera, et cetera. Um, and I think there's enough institutions out there that are providing flexibility. Um that essentially both at the junior end and the senior end, um, you know, individuals are looking for it, I think that's a huge one.
SPEAKER_07Um, come out and give us some solid talk here. What does it mean? Like just flexibility. What what do you mean by it?
SPEAKER_02So still still in the office three days a week, but having three days where two days a week you can work from home. And, you know, if one week it's three days a week you're at home, it's not going to be the end of the world. Um, but I think you know, flexibility has changed over the last year or something.
SPEAKER_07One day it's not the end of the world either, right? It works both ways.
SPEAKER_02Yeah, exactly. Yeah.
SPEAKER_07Okay, good, good, good.
SPEAKER_02Um but I think it's changed over the last year, 18 months, sort of post-COVID, because I think initially, you know, individuals were probably back in the office a couple of days a week. And I think it's now moved to, you know, three days being a standard.
SPEAKER_03I agree. I think we've also seen as well, just rolling off on that flexibility. Um, clients are now able to offer employees say a week every quarter working from another country. So in COVID, um, many European employees, you know, might have headed home for that and they were allowed that kind of grace period to head back home and work from there whilst nobody could be in the office. And now coming back to, you know, kind of dare I say it, pre-COVID time, so people are in the office a lot more to offer, you know, a kind of retainment tactical tool. People are allowed to now work out of the country for a week, um, you know, and not have to use their annual leave, which is going down really well. People are definitely liking that. Uh a little initiative.
SPEAKER_07Nice, but is is anyone seriously gonna say, oh, you know what? I yeah, I'm I'm gonna turn down this great job offer elsewhere because they're you know, I like having my one week a quarter working from the you know the Spanish villa.
SPEAKER_03I mean, ultimately, probably not, but you know, people do take it into consideration. Um tell me what the things are, guys.
SPEAKER_07Tell me what the things are that really make a difference, that make people to go, no, no, I want this, you know, I'm staying here because we've got this.
SPEAKER_00I've I've heard like good old-fashioned uh growth in your in your role, like um again, going back to portfolio managers, because it's like an example that I have fresh in my mind. A lot of them are like, well, no, I don't want to go to this portfolio 100% portfolio role because they've promised me to you know get experience in origination. So I wouldn't want to miss out on my career development. Um, the negative one is holding money hostage, right? So um, you know, shares and things like that, it just isn't really attractive um to you know market to candidates and things like that. So I think those are gonna leave too exactly.
SPEAKER_05Right, Mercedes? They'll leave anyway. And a sign on or about brought out.
SPEAKER_07Mm-hmm. Okay. Um yeah, another thing uh that we were gonna talk about Benny, maybe you were just about to go into this is around what things do what things do organizations think are going to be great and good ideas for retention, but maybe people don't, you know, people who are on the receiving end don't think so much.
SPEAKER_05Exactly. I I was just about to say we're talking about a lot of positive reinforcement, where I feel like on my end, I'm seeing a lot of like negative. So I've seen clawbacks. Um I think Megan has said this plenty of times to me, uh, deferrals. And those are things that are obviously retaining people, but they're not the best. Um specific thing.
SPEAKER_07Retaining people, do you have people who say, Well, no, I'm sorry, I just cannot leave because I've got to wait for the next three years to pick up my deferred bonus?
SPEAKER_04For associates, it it it sometimes can be a little tough. So there was a clawback method that was put into place recently at a bold bracket, I won't say exactly.
SPEAKER_05Basically, they all signed a paper saying that if they were to leave by the end at by the end of the year or they were given a time, they would have to pay back in growth and gross revenue. And these are associates. I mean, they might not even have it, yeah. Yeah, like so the tax that they they want the tax back as well that they'd paid to the revenue.
SPEAKER_04Yeah. Because I asked I had to double check on that. I was like, Are you sure?
SPEAKER_05Um, I'm yeah. So I know Megan you spoke about deferrals on your end too.
SPEAKER_07They signed it, did they, Benny? These people signed it so they're they're being a good thing.
SPEAKER_04They had to. They had to sign it.
SPEAKER_07What do you mean they had to? I mean, they could sign it and then complain about it, or they could just say, No, I'm not signing this, I'm gonna go and look for another job. Thank you very much.
SPEAKER_05Yeah, I guess they could have just left right then and there and quit. It's a tough time to quit, though. Yeah, I don't know.
SPEAKER_07Oh, that's interesting. So do you think that that is, do you think because that is in terms of building trust with someone's employer and that that relates, do you think that there's a perception that okay, you caught us at a weak moment? Right you've seen that you've seen that the market's tough now, it's it's tightening up, and and this you've come in with the the knife of the of the of the clawback. Do you think that's gonna work long term? No, make people want to be able to do that.
SPEAKER_05I think for the specific for the specific bank I'm thinking of, no, it's not gonna work. It's it's a bank that's losing a lot of money right now, so they're trying to save their own save themselves. Um for other banks that I've seen it, no people leave because if they're going to another bank refund they they're getting pay them out. They're getting sign-on bonuses.
SPEAKER_07Oh, right. So the new institution's gonna pay back money.
SPEAKER_05Yeah, correct. Yeah. Imagine.
SPEAKER_07What if they don't? Then they're literally then it then it has worked, hasn't it? Then they're stuck.
SPEAKER_04Yeah.
SPEAKER_07I mean, are we seeing are we are we seeing sign-ons being thrown around right now?
SPEAKER_05Yes. Yeah. For associates, yeah.
SPEAKER_07Okay. So it works as long as you can keep going up. It it works as long as you you your career keeps heading in a very positive trajectory. But if you've reached your peak, you can't keep going up, potentially you are genuinely trapped.
SPEAKER_04You're yeah, waiting to get laid off, maybe.
SPEAKER_05I don't know.
SPEAKER_07You're a hostage. You're a hostage in an organization, and that's look, yeah, that's what all these organizations want. They want people that are literally trapped there and can't leave.
SPEAKER_01Yeah.
SPEAKER_07Wow. Okay, look, that's really interesting. Any other points to add before we move on on the retention point? Any anything else to add before we before we move on?
SPEAKER_03Yeah, so something negative that's happening this side is the deferrals. So at the junior year end, um, it's becoming increasingly popular. Um, and kind of from 22-23, there's been kind of 10 to 40% deferrals on bonuses, which are paid out kind of one to four years later, um, which I have to admit is not going that well in the market at all at the junior end. Um, if anything, it it really has caused them to react in the opposite way. Um, you know, they're willing to leave that percentage behind and and find somewhere else to work.
SPEAKER_07You've you've you've had people come and say, you know what, the thing that's pushed me over the edge is I don't like having, I don't know, 30% of my of my bonus deferred. And that's enough to make me leave and go work somewhere that I'll get all my bonus in cash at the end of the year.
SPEAKER_05Yeah.
SPEAKER_07Okay. Interesting.
SPEAKER_05Yeah, just one thing off that off of the flexibility, by the way, and this is a big trend in the last almost I think it's six months now. A lot of clients have come to me really frustrated. And it project finance banks, credit funds, it doesn't matter. The MDs are frustrated. Because when you're a junior, and I I know this might kind of I don't want to cross the line, but I'm just saying what I'm hearing in the market. But a lot of these folks want flexibility, right? Megan, you said they wanna work abroad for a week. It doesn't look good when you're a junior coming into a coming into this industry. And in the past, when you start at a job, it's like you want to work as hard as possible, right? Get the hours in with your boss, right? Learn as much as you can. Uh and we're not seeing as much of that of that anymore. I think Benny had a a meeting with a client yesterday who was really frustrated that nobody they don't want to work, they want to work from home. Um we also heard 2020 vintage is not a vintage that these clients want. I'm I'm not gonna laughing. I kid you not.
SPEAKER_07That's what they in terms of what the 2020, in terms of that the the year of graduation and the people who came in into the yeah, correct.
SPEAKER_05So yeah, to G's point, there, I mean, there's been a massive title inflation on the market. You have analysts that started out working remote that probably didn't have the same experience as the people above them, but because it's their title and they've been working there, they now want more and more, and they're not there yet, technically. And the clients are that's what I yeah, that's a lot of things. So just keep in mind when you're looking at a job, don't go for the flexibility, just try to get your reps in, try to get your deals in, try to work on really complex structures. I think that's the key to being really successful if you're a junior in this industry. That sounds like hard work. Yeah, exactly.
SPEAKER_07Hold on a minute. I are you saying that hard work would get would would help you progress? No, it's not crazy sometimes, and also why is it the 2020 vintage? Because I you're just interested. What's wrong? What about the 2021 vintage? Because yeah, those guys I'm just I don't know, maybe I'm overthinking this, but I'm thinking, God, they have a year in the office.
SPEAKER_05Yeah, 2021 started in the office around everyone.
SPEAKER_07Um all right, okay, I get it. The 2020 vintage it's widely thought lost a year essentially, and they were they started their jobs at home, and that sort of set the pace and the tone, and they just never kind of never got out of that mentally.
SPEAKER_05It's not their fault, but just come out of this work, like work hard, you know? Yeah, when you come into it, so I didn't make that up, but I genuinely heard 2020 vintage from yeah, yeah, she's not lying.
SPEAKER_07Yeah, like a bad bottle of wine. Correct.
SPEAKER_05We were talking about wine, and that's when it came up.
SPEAKER_07Court. Don't like no, take it away. But bring me a 21. Um, yeah, look, it's interesting. And and look, you know, on that point now, I think job title inflation is um, this is one of my kind of key key points. Uh, very interesting to hear from Benny about the job title inflation at the junior end. But I think it it it um it it it applies uh more broadly as well. I think where some of the hiring that we've seen at the more senior levels actually, where people are making their first step to MD, first step up to director, um, is that and has that been a lever that uh hiring organizations have pulled because there's a war for top talent and you know, and we're already maxing out on what we can pay, and everyone's gonna pay well, and your existing organization's gonna pay you well, but what they maybe can't do is give you that immediate promotion up to MD or up to director, but we can. So come join us and you'll be a director tomorrow, and that's very enticing. And then when you see that repeated over and over uh in the market, as I think we have done, being quite honest, um, what you're left with is a sort of slight redefinition of what it means to be a director or a VP. I don't think a lot of people would necessarily like this, but I think there's some truth to it. And I think that it's certainly been mentioned to me now on many occasions by um in different scenarios. You know, I've had clients of investment banks saying you just don't get the same bang for your buck out of an associate in an investment bank anymore, or you know, um, what I expected from a director in my team uh has really changed and been devalued over the last few years. Um I'm I've been hearing that a lot. Um is that fair?
SPEAKER_05I think I think that's fair. Um, I spoke to a client that said they don't want any more one trick ponies, meaning they don't want someone who's just doing like on the societien one type of model. They they need more if they're gonna pay more. Um I think this goes back to in 2022 and a lot of it was a candidate market. A lot of candidates were moving around, getting I don't know, counter offers, all this different stuff, and they put a little bit of a target on their backs, I think. To be fair, if I was in their shoes, I would have taken it too paid. So we're not lying to ourselves here. Um but yeah, not as much I think plug and play action.
SPEAKER_07Yeah, I think that's right. I think I think look, I think there's there's there's a there's a there's a reset. Uh and there's a there are a lot of people, particularly younger folks that have never been through a recession before. Uh, I think I think what's to come and what is starting to happen and what we may see in the next year, 18 months, it could be quite tough for a lot of these folks. And dare I say it, there's been a sense of sort of entitlement uh in that in the junior market. And um, yeah, I I I dare I even go a step further and say I think that a lot of senior people in the market who have been have been waiting for this and um you know are quite interested to see how some of the maybe the younger folks in the market deal with it, and um it could be the making of some people, right? To G's point. I think people who who can buckle down and and um show the right attitude will be invaluable to their organizations. But I think there will be some other people I I suspect that maybe go by the wayside. Um good. Okay, look, we've talked about retention, let's move on into and and on that note around the yeah, the wider economy and the the issue of recession. It feels like a strange one because I I still don't think technically um anyone's saying, Oh, look, we're in this recession. I suspect that when, you know, like a lot of things in the in the the modern world, um, a couple of years down the line, they'll look back and say, Oh, actually, yeah, it was a recession. Um, but the uh it definitely feels like we're coming into a recession. Um how uh you know the infrastructure investment world that we're in um is meant to be resilient, certainly resilient through COVID, wasn't it? Although, you know, that that certainly wasn't really a a recession as such, um, not in the traditional sense. Um is is this the case? Are we seeing that resilience and is this a is this the best place to be in the uh in the in the recession to come?
SPEAKER_02I'd definitely say so. Um I think the asset class is very strong, still, still growing, still widening in terms of what infrastructure and energy means. Um and yeah, I think, you know, as we talked about earlier when we were talking through the comp figures, you know, we're still having record years last year for for a number of banks and funds out there in the market. And I think that's just testament to the asset class. Um I think probably the only thing this year that I've seen in the last sort of five months is maybe certain certain funds struggling a little bit more with fundraising. Um whether that's you know to do with the recession or not is is you know TBD. But I think that's the only thing that I've seen a slight struggle on. Um, but I think that's more down to institution as opposed to anything else, being quite honest. And you know, the institution strategy as well.
SPEAKER_07Sorry, G, just to just quickly on that point of fundraising that, and um, you know, it's quite an interesting one. And if you look at sort of, you know, the the figures that have come out for Q1 this year, it's way uh down on the same quarter last year, sort of broad infrastructure fundraising. Um, but we've got, you know, there are there are various reasons for that in yeah, the denominator effect, whereby LPs have got allocations for infrastructure that look bigger than they should because all their other investments in other areas have been so devalued by um yeah, the events of the last uh year or two. Um, so you know, I don't know, I don't know to what extent that you know that will correct itself. Um yeah, I just want to make that point.
SPEAKER_05Um, definitely no, that's actually a really good point. I I didn't think of that.
SPEAKER_07Um I guess yeah, I just don't think it's necessarily a direct, I might be I might people might correct me and the you know much smarter people than me might be listening to the podcast and correct me, but I I I just feel like that's not a di I don't think that's a direct causal thing. Like recession means I actually think that recession means LPs want to come to infrastructure more because it's a safe place to come and bring you money. And I think that's that I believe in that direction of travel.
SPEAKER_05Yeah, I mean, there's a couple things that we've been seeing. For one, I when I tag along on meetings with MDs at private equity firms or IR and in credit, I think the main thing in the US that I've heard is that people aren't having a difficult time fundraising for infrared. In fact, I've gotten a lot of CVs from candidates at credit funds who don't have infrastructure for energy wanting to get into infrared energy because their funds aren't aren't doing well, but they realize that infrared is fundraising, is deploying, is building out. So that's interesting. Yeah, we're heroes.
SPEAKER_07Yeah, not the main reason, but just one, you know, little, little reason to come.
SPEAKER_05So I just think that's interesting, just in the what you had said after that.
SPEAKER_02Yeah, definitely. I think um even if funds are struggling with fundraising, I think it's all relative, right? I think what what does struggling mean if you compare it with other sectors? Um it's probably not struggling. Um so I think it's just all relative to the boom that we've had basically over the last three years, where everything has just almost been, you know, too good to be true. Um, I think maybe it's just steadying slightly um in in infrared energy.
SPEAKER_07I I think you know, it's been my thesis this year that this is probably, you know, just as we start to wrap this up, but it's been it's been my belief, as you all know from our weekly calls as a as a credit uh practice that um that 2023 is the year of credit. What do I mean by that? I mean that um LPs, I had heard um, well, through the grapevine, of uh a dear friend and advisor of mine. I won't embarrass him by naming him, but has got a um a number of relationships with serious family officers, billionaire uh officers basically, who had said to him, all in the space of a week around the turn of the year, um, you know, 2023 is going to be about credit. We're gonna be looking for credit funds. We think that's a good place to put our money, we think it's quite safe and resilient. Infrastructure credit is gonna be a great place, and actually we can make some good returns relative to the risk we'll take in equity investing. Um, so I think look, on the credit side, we've had the the the you know, we've had the um, you know, the thin end of the wedge, haven't we, for a long time? People always say, oh, you know, credit's boring and uh where the real action is inequity and the debt chases the equity, and we've always been like second-class citizens, haven't we, guys? But yeah, I think that this is the year of credit. What do you think to that?
SPEAKER_05Oh, I agree. Um, I actually think even the credit fund strategies have changed in the last year. Just that they're looking at higher returns than they were, I think, five years ago when I first started here. Um, and that's why they're looking for different candidates too. That's another thing we're seeing, right, Benny? Um and I'm sure you guys are seeing that in the UK. Left in is huge for so many different reasons. It's for the strategy that's changed a bit. Everyone, I a lot of people, it's senior secured, it's mez, and now people are doing leverage, right? And I also think I had one client that was honest with me who said, please map out leverage finance as um, I don't want to pay 200k for an associate this time around. So there's that.
SPEAKER_07Look, which is ironic because you know, there's some top caliber people historically coming out of leverage finance teams in big banks. Yeah, they've yeah, they're smart people. Uh there's you've already said in this conversation that there's a there's a pull for them towards infrastructure, the energy transition. Um, and they've also been maybe they've been brought down a peg over the last couple of years, as opposed to those in the infrastructure and energy transition teams who have been getting paid really, really well because it's been yeah, boom times. So it makes perfect sense, I think, especially for some of these credit funds who are um not looking to be a and other infrastructure finance shot, but looking to get out there and do some funky stuff. And to your point, even factoring in interest rates, you know, relative to interest rates are punching for much higher returns than they used to be. Uh, you we've got institutions with much um uh higher risk appetite coming into infrastructure investing that weren't in infrastructure investing five, 10 years ago. And so you you'd I totally agree with G that the needle has moved, it's made it a more exciting place to be. Um, and so infrastructure credit is the one to watch. There's some fantastic products out there. Um uh, you know, I don't want to start naming them because then I'll be I'll be in trouble for the ones I didn't name.
SPEAKER_05They can call you after you release it.
SPEAKER_07Exactly. But Patrick Triers, one of my favorites. Because he will literally beast me if I don't mention him. But um, no, look, some great teams and new uh new uh products coming to market, um, like Power Sustainables, uh Infrastructure Credit Shop. That's one to watch with Tom Moray here in the States, Will Devenny in London. Um, you've got some of the older, now tried and tested and stalwarts of the market, Edmund De Rothschild, another great platform, um, with uh JF Douche. Um, so look some great vehicles that are plugged into the fundraising. Um, when the fundraising really comes back with a vengeance, uh, I think we're gonna see this um, you know, this theme of of the flock to infrastructure credit. I think it's these are gonna be the golden years for infrastructure credit.
SPEAKER_00Yeah, I think um it's it's always been the year of credit, but what we're saying is that now everybody is like realizing.
SPEAKER_07But are you suggesting that I just keep saying it every year and then now maybe it's true?
SPEAKER_00No, it's I I feel that it just is, right? For these projects, it's just always has to be the year of credit if if they need if if they happen, right? If they're gonna happen, but everyone's just like flocking to it. So I'm interested to see how that impacts you know, recruitment and like if they are more selective, right? For candidates. I mean, I think that the uh clients are becoming more selective now um for candidates. So maybe they're more selective, or like gee, how you said they're just looking for alternatives in left thin. But I think that that um is interesting because I guess these generalists would probably who are coming into infra credit are probably open to generalist credit people.
SPEAKER_07There we go. So we've agreed it. This is finally the year of credit after many years of saying it. Um good. Well, uh look, I I want to wrap this up. Uh, we were accused of having podcasts that were too long uh um a couple of years ago. And um, yeah, for most people's attention span these days, this is probably way too long anyway. Uh, but uh an hour. Um, but I want to thank the team for getting on the podcast. It's great to get you all together again and reboot. Hopefully, we're gonna have a few more podcasts on different uh topics coming up. Um, please follow up in London. Uh Namisha Sharma, Megan Howard, Mercedes Perez. Uh totally diverse team in London. Sadly, here on the in the States, we're not quite diverse because we've got uh uh G and Benny and then me spoiling things. Um, but hey, look, we get we we we crack on. Great to see you all. And um, yeah. Till next time.
SPEAKER_02Till next time. Bye.