Monday 11 October 2021 9:12 am

Private equity salaries swell by 52 per cent to £152k as war for talent with banks intensifies

Private equity firms are prepared to pay junior staff with less than two years experience an average salary of more than £152,000, a jump of 52 per cent compared to two years ago.

In 2019, private equity professionals across Europe with only two years in the industry were paid, on average, just under £100,000 in salary and bonus, according to data from headhunters firm Heidrick & Struggles.

For those with two to four years of experience, an salary of around £181,000 has become the sector’s average, a jump of 42 per cent over the past two years.

For the most senior finance professionals, Heidrick & Struggles found that private equity firms fork out, on average, more than £512,000, an increase of 21 per cent.

Having said that, senior buyout professionals often make even more through carried interest or a stake of the firm’s profits.

Nearly 70 per cent of all UK private equity firms had hiked salaries over the 2019-2020 period, while a further 34 per cent also said they did that last year, the headhunter found.

War on talent

The significant jump underscores the intensifying war on talent in the financial services space, with banks, private equity firms and hedge funds vying for the best and brightest.

In the banking space, Goldman Sachs now offers its first-year analysts salaries of around £70,000 with a range of boutique firms paying salaries in a similar range. Bonuses are now around 100 per cent of the annual salary.

Banks have no choice but to offer more pay as severe workloads are contributing to mass burnout among junior bankers recently, prompting many of them to quit their job.

Up to 70 per cent of analysts and associate teams left their role at banks and financial institutions in recent months, despite firms stepping up their efforts to retain young talent.

Firms have offered wage top ups of up to 20 per cent and one-off bonuses of almost £40,000. But, this is having little impact on junior staffers’ decision to leave.

“Banks are haemorrhaging junior bankers,” said a specialist recruiter, who works with banks on analyst and VP hires. “People are quitting for better banks, they’re quitting the City or they’re jumping into private equity.”

‘Complete failure’

Current turnover rates are around 30 percentage points higher at some firms. The exodus is likely being driven by longer hours since the onset of Covid and intense recruitment tactics from rivals, experts said.

“It’s a complete failure by HR not to see this coming,” said one associate at a European bank. “There’s no urgency to replace people.”

Junior bankers’ working hours have come under intense scrutiny of late after a group of 13 Goldman Sachs employees leaked a presentation highlighting they had regularly been working 80-hour weeks.

The group also said they routinely clock in over 100-hour weeks during fruitful deal periods, putting strain on their mental health and leaving them on the verge of quitting.