Private capital firms have been expanding over the past year, with the majority adding to their headcount from 2016 to 2017. This trend looks set to continue: two-thirds intend to increase their staff in 2018, a fifth by more than 10 per cent.
Deal team members are most sought after, while junior, mid-level and senior staff are all being targeted by private capital recruiters. In order to attract top talent, private capital firms are raising their salaries. Almost four out of five firms increased their base salaries between 2016 and 2017, and 68 per cent intend to raise them from 2017 to 2018.
Significantly, a fifth of firms in 2017 raised them by more than 10 per cent, and a tenth of firms may do the same in 2018. The majority of staff at all seniority levels saw salary increases in 2017, while no junior or senior staff and just 2 per cent of mid-level staff saw their salaries decrease.
Sixty-one per cent of private capital firms added to their headcounts in 2017, while 8 per cent reduced their staff numbers.
Almost two-thirds (65 per cent) of firms expect to add staff in 2018. Among them, 21 per cent expect to increase their headcounts by more than 10 per cent.
From a hiring/retention standpoint, 72 per cent of firms cited deals team members as most key, while 10 per cent cited corporate operations, 9 per cent cited portfolio operations, and 6 per cent investor relations staff.
Forty per cent of firms are targeting junior staff, while a third will look to hire or retain mid-level staff, and a fifth are seeking senior staff.
Over three-quarters (78 per cent) of firms increased their base salaries from 2016 to 2017, with 19 per cent increasing them by more than 10 per cent. A fifth of firms made no changes, while just 2 per cent decreased them.
The majority of staff at all seniority levels saw their salaries increase, with the exception of executive management. Two per cent of mid-level staff saw their salaries cut, but no junior or senior staff saw reductions.
Looking ahead, 68 per cent of firms expect to increase base salaries from 2017 to 2018. Among that proportion are 11 per cent that expect to raise them by more than 10 per cent, while 31 per cent of firms expect to make no changes.
Selina Sy (pictured), Editor of the 2018 Preqin Private Capital Compensation and Employment Review, says: “The private capital industry is seeing a record-breaking period of expansion, with fundraising accelerating, assets under management growing, and more investors than ever becoming active. In order to keep pace with this growth, many private capital firms are seeking to increase their staff headcounts to better enable them to expand their operations, make deals and attract investor capital. It is notable that in a widely competitive deal making environment, it is investment teams that most firms cited as being the most important role from a hiring standpoint.”
“In an environment where attracting and retaining top talent is key, private capital firms may look to their compensation practices as an enticement. The majority of firms have raised their base salaries in the past year, and many expect to do so again within the next 12 months, some at levels far above inflation. While other elements of compensation, such as carried interest practices, may become more important among senior staff, many junior private capital employees receive little or no compensation beyond their salaries, so this metric is key in attracting new talent.”
