Managing partners and partners at secondaries firms in Europe received the highest compensation in 2018 compared with other strategies, according to a survey from executive search firm Heidrick & Struggles.
Annual compensation – which comprises base salary, bonus and carried interest – for managing partners and partners at secondaries firms in the region averaged €8.4 million annually, exceeding that of counterparts at buyout firms by €1.5 million, the report found. The figure is more than double the previous year’s €3.8 million.
“Secondaries is a growing asset class. Those individuals with proven skills and track records in secondaries are in demand and this is driving their remuneration,” said Tom Thackeray, a principal at Heidrick & Struggles.
It is unclear how many of the 440 survey participants were managing partners/partner and whether founding partners were included.
Secondaries market volume hit $42 billion in the first half, a 56 percent increase on the same period of last year and more than the full-year total of $37 billion recorded in 2016, according to investment bank Greenhill’s Global Secondary Market Trends & Outlook report.
This year, 35 percent of respondents across strategies reported an increase in their base compared with 2018, and 39 percent received a higher bonus.
A majority of respondents – 87 percent – said they received a sizeable base increase in 2019, including 52 percent whose raise was between 11-20 percent and 35 percent in the 21-40 percent range.
Associates enjoyed the highest growth in base and bonus and, as a result, the highest compound annual growth rate at 13 percent. Managing partners/partners had a 3 percent CAGR and principals 6 percent.
Demand for private capital professionals in Europe is outstripping supply, with fewer candidates interested in moving compared with a few years ago. As a result, those willing to move are able to find multiple offers, the report noted.
Other trends include European firms hiring and building teams focused on impact investing due to increased pressure from investors about sustainability, as well as strengthening their operating partner teams. Demand for such professionals has boosted their cash compensation and significantly boosted their carry across all funds, the report found.
European firms are also increasingly creating roles for senior-level human capital professionals to oversee talent across the firm and its portfolio companies, according to the report.
Heidrick & Struggles gathered compensation data from 2017, 2018 and 2019 between June to September 2019.