VIEW FROM THE TOP: PRIVATE EQUITY INVESTOR RELATIONS, RECONSIDERED
An Investor Relations team is responsible for the life-blood of its respective fund. Simply put, without commitments to invest, there can be no firm. A large number of advisory professionals, who are looking to make the move onto the buyside, are quick to dismiss a career in Investor Relations/Fundraising, in favour of an investment role. Why is this?
A large part of the problem, in my opinion, is that many don’t truly understand what the role entails. A common misconception is that IR is the fluffy, administrative role adopted by those who don’t have the intellectual capacity, technical ability, or indeed, the interest in a “real” private equity position, when, of course, this is a far cry from the truth. The sheer number of investment professionals now considering careers in Investor Relations/Fundraising is a clear indication of the respect increasingly accredited to the field. It is diverse, intensely challenging and, in my mind, offers the perfect marriage of client contact and intellectual stimulation.
If we look at some of the core areas that are usually considered when looking at a change in role: compensation, work-life balance, and exposure, the IR/Fundraising field certainly holds its own. Granted, one can expect to take a slight haircut with regards to base salary, when moving across from an advisory role, but this can be said (in some cases) for both investor relations and investment roles. Indeed, if we look at the compensation statistics for PE fundraising roles within private fund groups, for example, the base salary is very much in line with those of their M&A counterparts. Furthermore, the culture and lifestyle of a role in PE IR, where the hours are cyclical and dependent on the current status of fundraising, offsets any gap in compensation. For those who are of the opinion that capital-raising roles are lacking in intellectual depth, something that is offered in the form of an investment role, fear not! In an increasingly competitive LP landscape, many private equity funds are broadening their product offering across the alternatives spectrum and, as a result, there is a much higher benchmark when it comes to investor relations. Some may argue the fundraising industry has matured and is a great deal more sophisticated than it once was, when IR professionals were seen more as a support function for the Partner leading the fundraise. Now, an IR professional typically works alongside a Partner, and whilst, in this role, it is unlikely to find yourself with your head buried in a byzantine financial model for hours of your working day – and beyond – a comprehensive knowledge of these models, and the technical details surrounding them, is obligatory. The increased competition and demands from Limited Partners make it so. In light of this, should investment bankers, seeking to develop into a new area, be looking to Investor Relations within Private Equity as a viable career move, rather than simply resigning themselves to the more obvious pursuit of a pure investment position?
For further information on Altus Partners and our Investor Relations practice, please reach out to Harriet Gibson at email@example.com