The hot new finance job that’s actually really old

There aren’t many hotter firms to work at than private equity giants Apollo Global Management.  Within Apollo, the biggest division is in credit management and within that, the growth area is in “direct lending”.  In terms of closeness to the cutting edge of modern finance, then, you aren’t going to do much better than Dan Zarkowsky, who just moved from Goldman Sachs’ mid-market financing Cross Markets Group to become a partner at Apollo and run a new direct lending business with Tiffany Gallo, formerly of Bank of America.

What does this group actually do, though?  It … makes loans … to companies.  Didn’t that used to be called “banking”?  According to the profile in Business Insider, Mr Zarkowsky’s job is to take control of a $12bn fund, then go out and find companies which need a loan of about $1bn.  Make sure that they are going to be able to pay it back, then lend them the money and collect the interest payments.  It’s not necessarily an easy job – it’s almost certainly very hard work – but somehow, it doesn’t feel like machine learning or high frequency quant trading.  Just like the old man who was amazed to discover he’d been speaking in prose all his life, if making huge loans to shipping companies is what it takes to be a direct lending portfolio manager, then there are middle aged burghers in Düsseldorf who are doing it every time they park their Audi.

What’s going on here is that “direct lending” is indeed the same thing that used to be called (big ticket) bank lending, but banks stopped doing it.  If you are going to be taking credit risk in billion dollar units, then the general consensus of regulators over the last fifty years is that they would rather you did it with the investment capital of qualified investors, not with insured deposits.  As capital requirements went up and large exposure limits went down, then the kind of swashbuckling lending officer who was capable of signing off nine- and ten-figure deals on his own say-so went the way of the brown mohair suit and the three martini lunch.

But everything that’s good comes back into fashion eventually, and that’s where Mr Zarkowsky and Ms Gallo come in.  The needs of the borrowers didn’t change, and while most companies don’t mind going to the bond market, or getting their funding from a big syndicate, some of them are prepared to pay up for the personal service, a quick decision and an ongoing relationship in case things get tough.  Apollo is far from the first fund to spot this opportunity, and when the financial industry worked out a way to serve those customers again, people with the right skill set suddenly ended up back in the sweet spot.  So if you want to be a master of the universe in twenty years’ time, maybe the right thing to do is to start looking round right now for something that used to be huge, but which all the big banks feel is just a bit too much hassle.

Daniel Davies –


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