Competition for Talent in the UK Private Equity Industry is as keen as ever
There is no doubt that the Private Equity and Venture Capital landscape is becoming even more crowded, with new funds successfully being raised and an almost unbelievable level of “dry powder” available to be invested worldwide. Apparently, the global figure has recently reached $2.5trn.
Geographically, the majority of dry powder is still targeting North America, although that proportion has been declining in recent years. However, a steadily increasing proportion of available capital is focused on Asia. Europe-focused dry powder, meanwhile, has remained consistent, accounting for around a quarter of total available capital. Nonetheless, the amount available in Europe is at a staggeringly high level. There seems little doubt that the big corporate investors are more attracted to the private ownership model than the listed one in today’s heavily bureaucratic environment.
From MM&K’s own direct experience, we have seen a healthy number of new clients in London, who are choosing to deploy some of their capital into UK and Continental European markets. This has involved them deciding to set up brand new offices in London and they are now looking to recruit whole new investment and back office teams from the London market place.
MM&K conducted a pulse survey earlier this year, seeking to identify what the latest trends were in UK PE and VC compensation levels. The results indicated that the typical level of increase in salary for investment professionals below Partner level at the most recent pay round (i.e. mainly January 2019) was above 10%. We see this as an amazingly high figure.
PE firms that are looking to invest large amounts of money into European deals need to ensure they have a happy and committed workforce, particularly in their front offices. The last thing they need is to be worrying about investment staff being tempted to look elsewhere by large new salary and bonus offers.
We are currently marketing our 2019 PE and VC Compensation Survey and are pleased with the high levels of interest we are seeing from participating houses this year. We have no doubt that firms are recognising the need to know what is happening to PE pay levels right now.
There seems little doubt that the PE, VC, Infrastructure and Real Estate sectors are entering into a new boom time period in the UK. A small part of this may be to do with the low value of the £ at the moment making investing in the UK even more attractive, counteracting the uncertainty being caused by the debacle of the Brexit process. But we are sure the larger part is just simply to do with the wall of money out there just waiting to be invested. Retaining and keeping motivated the best talent among one’s investment professionals has probably never been quite so important as it is today.