Pay levels appear to be soaring in the UK’s PE and Infrastructure fund management industries
April 19, 2022
MM&K is currently conducting a short pulse survey to provide us, and our clients, with an indication of what is happening to pay levels, in particular for the investment professionals, in the private equity and infrastructure fund management industries in the UK.
There has been much commentary in the press recently about how the starting salaries for new graduates joining investment banks and magic circle law firms in London have been increasing so dramatically in the last few months. One recent article says that one such law firm has increased the salaries of its newly qualified (“NQ”) solicitors to £107,500 (from £100,000) – and this marks the third time in a year that the firm has increased NQ salaries. This compares with the typical starting annual base salary of a new hire MBA graduate into the PE industry (according to our 2021 PE Compensation Survey), of £105,000.
One is hearing similar stories in the accountancy profession as well as in investment banking firms and the strategy consultants. These are all businesses which the private equity and infrastructure industry relies on and to a certain extent competes with, for talent.
One client recently told us that his firm were having to significantly increase salaries and bonuses for their more junior investment professionals, particularly their associates, just to prevent them from being tempted into the investment banking world which is actively recruiting, including from private equity firms.
All of this is supported by the initial findings of our pulse survey which is telling us that the average increase in base salary for associates and analysts, at the latest review date (for most firms this was at 1 January 2022), was 9%. This is considerably higher than the 2021 figure which was nearer to 4%.
Another interesting, but again not surprising given the comments above, statistic coming out of the pulse survey so far is that 80% of firms increased the bonus levels of their investment professionals (below partner level) for the 2021 performance year, and no firm actually reduced their bonus levels for these roles. The average increase in bonuses paid to investment professionals (below partner level) for 2021 performance is around 30%, based on the data we have received so far. While 2021 was a pretty good year for the private equity industry, it was not that much better than 2020.
Our pulse survey is still ongoing, with the final submission date next Monday (the 25th of April). Only those firms that submit a completed pulse survey questionnaire will be eligible to receive the full detailed report of the results from this survey (which will be complimentary for participating firms). So, for those firms that are interested in this, please submit your questionnaires by then.
As always, responses will be treated in the strictest confidence. They will be held securely and anonymised before being made available.
The Pulse Survey should take no more than 10 minutes to complete. The questions are as follows:
• Indicate the types of active funds your firm manages
• Identify your firm’s changes in salary levels for 2022
• Indicate how your firm’s bonus levels have changed for your most recent performance year
• When determining bonuses for the last performance year, did you need to focus on any particular group of staff?
If you would like to talk to us about how we can help, please telephone us on +44 (0)20 7283 7200 or email Nigel Mills.