Morning Coffee: The private credit guys on zero salaries and $200m bonuses. Managerial bankers' meagre pay
If there were any remaining doubt about the appeal of private credit jobs, the recent 8k filing from Ares Corporation concerning the compensation of its most senior staff should put them to rest: private credit pays very, very well indeed, just not in terms of salary.
While CEOs of investment banks limp along on their ever-declining $29m packages, Ares' CEO Mike Arougheti and its credit head Kipp deVeer are being given restricted stock units worth $200m each, vesting in equal installments annually between 2026 and 2029. If things go well, there might be another $100m each, or more, available, before the time is up.
This is a significant increase from last year, when Bloomberg notes that the two men received $17.5m and $21m, while collecting no salary.
Ares announces its full year results later this week. Last time we looked compensation per head for the rank and file was on track to reach an average of annualized $713k in 2023...
It helps that private credit is a growth industry. Arougheti is predicting it will double in size in five years. There are, however, clouds on the horizon, including stubbornly high interest rates and JPMorgan's interest in trading private credit loans, which could crystallize losses and force funds to mark to market.
Separately, Financial News reports that senior bankers have been taking one for the team in the recent bonus round. With bonuses at most banks challenged, FN quotes one Citi banker who says "some bankers [are] getting paid more than their managers," and that,"I’ve rarely seen that happen here before.” Sources tell us that the pool has been skewed in favour of junior staff, who have been paid even while senior bankers have been squeezed.
Carlyle has tightened up many non-compete agreements to make them more restrictive for senior employees if they chose to defect to rivals. (Financial Times)
Citadel has hired Sam Finkelstein, who previously worked at Goldman Sachs Asset Management, as a senior portfolio manager to lead a new development program for its fixed income and macro business. (Reuters)
Citadel has hired Vadim Tsipenyuk, a former partner at Pelham Capital, and Ashley Stuart and James Wyatt from Egerton Capital. They're all joining the equities business. (Bloomberg)
Ben Thorpe, who has led Goldman’s healthcare investment banking team in Europe, the Middle East and Africa for the past decade, is joining Guggenheim. (Financial News)
Scott Lebovitz, a partner and global co-head of infrastructure at Goldman Sachs, is joining TPG. (Bloomberg)
Ward Jones, a building products banker who left Credit Suisse last year, is joining Deutsche Bank. (Bloomberg)
Jefferies hired Michael Bluhm from Morgan Stanley as global head of real estate, gaming and lodging banking. (Bloomberg)
Barclays says its ECM business is thriving because it has consistent employees.
Citadel’s multistrategy flagship Wellington fund climbed 1.9% in January, following a 15.3% gain last year. Citadel's tactical trading fund gained 2.6% for the month, while its equities fund, which uses a long/short strategy, returned 2.1%. Its global fixed income fund returned 1.7%. (CNBC)
CMC Markets to cut nearly a fifth of its workforce Shares in spread betting group rise 13% on plan to save £21mn by 2025. (Financial Times)
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