Curious as to how much modelling work is done by PF bankers in different banks. I know that some build models from scratch for most deals, some only do it when they're the MLAs. For PF bankers currently on the job, what's your bank's approach to each deal/project?
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Balance sheet lender here - we typically get baked deals with a complete model provided by the advisors and run sensitivities.
75% sure this is SMBC or one of those international banks lol. Not to hijack the thread - but past a certain point, how repetitive and unintellectual does it get if you're just running sensitivities on pre-baked models?
Hahaha yeah one of those international ones - we still get mandates in an advisory capacity albeit it isn't our main source of profitability. On these, we do modelling ourselves (juniors)...they aren't that hard once you get the hang of it - also note that PF mandates have a longer timeline than M&A.
Depends what you view intellectual capacity as...advisors take an equity perspective (trying to provide as much upside) whilst lenders take a risk perspective (understanding the flaws of a deal). I think that obviously the learning curve as an advisor is much steeper given you are delivering and producing material related to the financial and commercial aspects of a deal whilst lenders only really need to be focused on evaluating these parts.
From my perspective, the credit process is repetitive but still mentally stimulating as you need to understand the structure and mechanics of the deal to determine whether or not the deal is worth the risk. Its not a simple matter of saying "Oh, its a Windfarm, lets finance this because its the trend". You have to consistently think when reading contracts, reports and documents behind what terms or clauses could cause detriment to the deal which is something I find interesting. And then even after that, each bank has their own credit process meaning you'll have to justify why you want to put millions of $$$ into the deal to other people - which also means that you're not only thinking about the deal but how to market it as a safe investment.
Obviously you'll earn less compared to an Advisory/IB role (same base but probably half their bonus - which is still bloody good) but your WLB and pressures you have to deal with are so much better.
I honestly see the upside going into a pure advisory role but you shouldn't count out working at a lender (only for PF).
You said that this was "typically" the case. When is it not, and do your friends/peers at other banks have a similar setup in place?
any chance you can shoot me a message ? Looking to get into PF banking.
On deals where we are the Coordinating Lead Arranger, we will typically add a couple debt sizing and sensitivity tabs to the borrower's project model. Those tabs are based on a template that we use for each deal. Depending on the type of project there may be some variability in certain revenue and opex line items, but generally pretty similar deal to deal.
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