Investment bankers in Singapore and Hong Kong have pocketed their bonus and some are now contemplating a potential move into private equity.
As banking bonuses have fallen and the PE sector has expanded in Asia over the past five years, investment bankers in the region have generally become more interested in PE roles. And while unlike in the West PE is still a developing industry in Asia, the compensation potential is perceived to be stronger than it is in investment banking (once you’re eligible for carried interest).
If you’re a junior or mid-level investment banker in Asia, however, it’s extremely tough to get through the PE interview process and actually land a job. Despite the small size of the sector here, PE firms first interview plenty of people and then brutally reduce their initial list. You will therefore face a lot of competition from other bankers looking for private equity jobs in Asia. The large global PE firms in Singapore and Hong Kong hire only occasionally but still interview upwards of 30 candidates for each junior to mid-level role. The regional Asian PE houses tend to interview between 15 and 30 professionals for similar positions (although this number can easily be higher depending on the level of interest in the job).
However, on average about 60% to 80% of applicants get culled in the first round alone and by the time you get to the final round only about 5% to 10% remain. And despite all the rigour of the interview rounds, the PE firm may decide not to hire anyone if they can’t spot a near-perfect candidate by the end of the process. Making the right hire is far more important than simply making a hire to fill a headcount requirement.
If you’re fortunate enough to land a PE interview in Asia, here’s what you need to do to avoid being axed after one interview.
How to prepare for a private equity interview in Asia
Get the timing right
Allow yourself enough time to prepare for the interview. If the firm wants to schedule it within 48 hours, you may want to push back – ideally you want at least three days (preferably including the weekend) to get ready. Once the interview date is set, don’t make the common mistake of assuming that it will only last an hour. The small size of most Asian PE firms (which often have only six to 10 front-office professionals) means that another team member may unexpectedly pop in for a quick follow-on meeting if the interview goes well. So give yourself at least a 90-minute window to complete the interview, preferably longer.
Detail you deals
When preparing for your interview remember that any deal or project on your CV is fair game for (very) in-depth questioning. Most bankers I’ve dealt with wrongly assume they can recollect all the relevant parts of all their deals. But the PE interviewer is looking for higher-level details than can be found via a Google search. They want to hear about your personal contribution to the deal, what challenges you faced and how you displayed lateral thinking to resolve them and take the transaction closer to completion. They want you to show real-life deal-execution experience and an understanding of M&A dynamics.
Model up
The next stage is to prepare yourself for questions about your fundamental technical skills. PE deal teams in Asia are lean, so regardless of whether you are going for an analyst, associate or VP role, you will at some point need to delve into the bowels of a byzantine financial model. Most likely you will need to sit a four-hour financial modelling test at the firm’s offices. The model will probably be a highly intricate operating model where you need to link up three financial statements and then do a discounted cash-flow valuation. Some firms also test candidates on LBO modelling skills, although this is less common in Asia.
Know what you want
You must also practice succinctly and coherently explaining why you want to move into the buy side in the first place. Too many people assume that their very presence at the interview explains their desire and that bank-to-buy-side moves are simply a standard transition involving similar skill sets. In additional, PE firms don’t like it when you mention improving work-life balance, or say that you want to get more deal experience (you could get this by staying in banking).
Acceptable motivations include: wanting to invest as opposed to simply do deals for the sake of it; wanting to assist with the management of the investment (sitting on boards etc); wanting to do more meaningful deal-related work as opposed to pitching ideas to clients. Your explanation of why you want the role should also extend to the specific PE firm and its track record in Asia. And while there are many shared skills between IB and PE, it’s important to demonstrate a keen understanding of the differences between the two roles and your willingness to learn more about them.
Prepare to meet them all
In Asian PE you may well met everyone in the office during the interview process, so try to familiarise yourself in advance with as many of the team as you can. Don’t just do this via online profiles, speak to your own contacts – and if you’re applying via a recruiter, ask them detailed questions about the personalities of the people at the firm.
Remember that each interviewer you meet will have a say in the final outcome – ‘consensus hiring’ in Asian private equity is virtually a must due to small team sizes. Do not assume that subsequent interviewers will have been fully briefed by the previous person – be prepared to repeat your story and reiterate your commitment to the role to everyone.
Jay Abeyasinghe, manager, banking and financial services, Morgan McKinley Singapore.