[SINGAPORE] The recent furore between US banking giants and private equity (PE) firms over the poaching of junior analysts from the banks has brought renewed focus to an ongoing practice. In Asia, the battle for talent is hotting up as PE managers are under pressure to deploy US$260 billion in dry powder.
In key Asian financial hubs such as Hong Kong and Singapore, the situation is less cut-throat, market participants say. Recruiters and executives at three of the biggest American private capital companies told The Business Times that while there are instances of PE firms hiring bankers, the circumstances are different for every market.
In particular, the making of future-dated offers to junior investment banking analysts and associates is not as common as in the US. The practice of PE companies extending offers to junior investment banking analysts – even those who have not started working at the banks – led to a backlash.
Citigroup, JPMorgan Chase and Goldman Sachs recently told their newly hired investment banking analysts to disclose if they had already accepted job offers from elsewhere.
Market players in Hong Kong and Singapore said there is less pressure to recruit junior staff en masse as the PE operations here are more compact. Given that PE firms are generally leaner than banks, their teams in Asian hubs are even smaller compared with those in the US, which is home to the world’s largest PE market.
For instance, Blackstone, the world’s biggest alternative asset manager, employed 4,895 staff globally as at 2024, compared with more than 300,000 at the largest US bank, JPMorgan.
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Of the three big US PE firms that BT spoke to, only one said it prefers to hire those with at least three to five years of investment banking experience, so they can hit the ground running.
All spoke on condition of anonymity, given the topic’s sensitivity in a tight-knit sector. Two of them say they prefer to hire directly from the top business schools and train new associates, with the focus on retention with attractive compensation and clear career paths.
“The bigger shops don’t have the time to train people up,” said an executive from a big US-listed PE firm. That is why investment banks could provide a good place for PE firms to hire, particularly for the larger funds in South-east Asia, because junior investment bankers or analysts would have already worked on a lot of financial modelling, considered grunt work at PE firms. It is a point that some recruiters concur with.
Standard Chartered is one bank seeing “strong market demand” for its staff, particularly in Hong Kong and Singapore.
“Undeniable global trend”
Nicholas Cheng, head of private markets at Standard Chartered Global Private Bank, said: “It’s an undeniable global trend that PE and other private market firms, with their often different compensation structures and work environments, have become very attractive to junior talent, especially analysts, from traditional investment banking and financial services.”
While StanChart’s overall retention rate is good, it views the “competitive talent landscape” as an industry-wide challenge. He added that StanChart is actively recruiting from top-tier universities, particularly graduates with strong analytical skills.
Banks have always had to work to keep their staff from being poached by PE firms. Transitioning to PE from investment banking “is seen as a natural progression due to the significant overlap in skills, like financial modelling and deal execution”, said Lim Chai Leng, general manager for banking and financial services at Randstad.
PE roles are particularly attractive, given the opportunities for new skills to conduct in-depth research, as well as long-term and greater strategic ownership over portfolio management. The more attractive compensation packages and better work flexibility also draw talent to PE, she added.
Data from Robert Walters shows that the total compensations for all positions in PE firms are generally higher than those at investment banks in Singapore.
An analyst at a PE firm could draw an annual salary of between S$90,000 and S$130,000, compared with S$80,000 to S$110,000 at an investment bank. When bonuses are included, the PE analyst could see total pay go up to as high as S$180,000, versus S$160,000 at a bank.
The gap widens for the more senior roles, with a managing director at a PE firm drawing more than S$1 million after factoring in bonuses. Being heavily performance-based, carry – or a share of profits when returns from the PE funds exceed a certain level – becomes more significant from the vice-president level.
“(The) banking-to-PE talent migration is a clear and ongoing trend throughout South-east Asia, with Singapore leading,” said Serena Fernando, senior consultant for banking and financial services at Robert Walters Singapore.
PE firms have been hiring a mix of junior and senior staff in South-east Asia, particularly this year, as a delay in the expected recovery in deal activity is creating extra pressure for the companies to deploy capital and deliver returns, said Fernando.
This makes having “effective deal teams – and strong talent – critical”, she added.
Pressure to deploy
Globally, the amount of dry powder available – referring to the capital that PE fund managers have raised but not yet deployed – is US$1.2 trillion, with about US$260 billion in the Asia-Pacific, figures from Bain & Co indicated.
With the pressure to hunt for deals and deploy the dry powder, Fernando said there is strong demand for senior bankers in PE.
“As deal complexity increases – especially in carve-outs, tech-driven transactions and public-to-private deals – PE firms are seeking experienced leaders who can drive executive and add strategic value.”
This could give investment bankers an edge for senior PE roles, as typically the executives at these levels would need to demonstrate not just dealmaking skills but also others, such as the ability to run portfolio companies.
Sixth Street, a San Francisco-based global investment firm with over US$60 billion in assets under management and committed capital, last month announced it hired Stuart Wrigley from Goldman Sachs to head its Asia-Pacific business. He will also lead its new Singapore office, which is slated to open in October 2025.
Another American PE firm, Carlyle Group, also made three senior hires globally so far this year from banks, one of whom is for the Asia-Pacific.
