How to Break Into Investment Banking and Private Equity in Singapore
Most of the time it is really, really, really hard to break into emerging markets if you’re a foreigner with no experience in the country and no language skills.
Singapore itself is not an “emerging market,” but when you work there you will be exposed to all the fast-growing economies of Southeast Asia.
And while it has become known as “The Billionaire’s Paradise” the world over (hello, Eduardo Saverin), there’s a lot more to the country than $26,000 cocktails with diamonds inside and an overwhelming sense of order.
Our interviewee today went from barely participating in formal recruiting to winning IB and PE offers in Singapore, using the most unconventional strategy we’ve seen on this site: showing up in the front lobby and asking to speak with the person in charge.
In this interview, he’ll walk you through how he did all of that – plus how and why Singapore is different from other markets in Asia.
Just make sure you grab your own $26,000 cocktail first:
A Real “Elevator Pitch”
Q: So you know how this works. Your background, how you got interested in finance, the whole 9 yards (meters?).
A: Sure. About 5-6 years ago, I started getting interested in commodities and natural resources investing and doubled my money in a few months, thinking that I was a “good investor” because of one success story.
My next few investments, of course, didn’t perform that well – but the experience made me interested in the finance industry.
At university, I did a corporate finance internship at a conglomerate in my 2nd year, and I got to work on a bond issuance and a revolving credit facility they were setting up.
I also saw how they used FX and fuel hedging and interest rate swaps, and I became more interested in the structuring process.
I wanted to get into IB after that, but I completely missed recruiting because I was away for family / personal reasons and a study abroad program, so I had to try my luck at cold calling boutique and middle-market firms and networking my way in.
Banks, of course, only want students who are going into the summer of their penultimate year, so most large firms turned me down.
But I found one boutique with an alumnus from my university (after a lot of Googling random firms and trying different email address combinations), and he was happy to help me out.
After that boutique IB internship, I started getting a lot more interested in private equity and in going there directly instead of joining a bank full-time.
A lot of funds were just starting to set up offices in Singapore, and I thought there was more opportunity than at an established bank.
So I looked up every single PE fund in Singapore I could find on Capital IQ, used the information to create a separate cover letter for each fund, and spun my experience into sounding as relevant as possible.
I was very aggressive with networking, and I actually went to the front lobby of any firm I could find to pitch myself in-person.
Most firms, of course, still turned me down or ignored me – but I found one that was receptive, and I eventually won an offer there.
The Finance Industry
Q: I think this is the first (firsthand) story I’ve ever heard of someone taking that approach to networking.
We’ll come back to your story in a bit, but maybe you can start by telling us what’s different about IB and PE in Singapore, since you’ve had experience working in both industries there.
A: Sure. I’ll start with the IB side since that is more well-established.
Banks with strong Balance Sheets tend to dominate deals – you see HSBC and DBS (a local bank) bidding on a lot of deals, as well as Standard Chartered, Citi, and so on.
There are very, very few mega-deals here because most companies are not that big.
If you do see a mega-deal, almost every single bank will be involved – on some larger M&A deals, you’ll see GS, CS, JPM, DB, Citi, DBS, and more, all listed as advisers.
Most companies worth over $300 million USD here are family-owned or state-owned, and most families do not want to divest their companies – so M&A activity above that level is limited (and there are even fewer $1 billion+ USD deals in a given year).
As a result, many bulge bracket banks aim for deals that are “below the bar” and you’ll see the likes of GS competing with HSBC for middle-market deals, which would be unheard of in the US.
Palm oil is huge in Malaysia, while Indonesia is more about coal. Other countries may specialize in rubber, sugar, and other commodities.
Singapore is a hub for cross-border deals, partially because of the security and stability offered by the government, and partially because of its location.
If you work at a boutique firm here, as I did, there will be even less modeling than at a boutique in the US or UK.
It’s a very sales-oriented job with a ton of pitch books, and boutiques are at a major disadvantage since the bulge brackets tend to be strongest in the debt and equity deals that are the most common here.
Q: So is it safe to say that most companies do deals in Singapore because of the safety and stability over all else?
A: Yes – the rest of Southeast Asia is perceived as “risky,” since you never know when the government will collapse, seize all property, or otherwise do something crazy, but Singapore is all about law and order.
Companies that list here do so because they want stable stock prices; the main downside is that there’s far less liquidity than in Hong Kong, so some choose to list there instead.
In line with this, there’s relatively little in the way of junk bonds, high-yield debt, and so on. That has been changing recently and some companies are now targeting Singapore for issuances that are too small for USD investors, but the volume is still low compared to other countries.
Q: You mentioned before how there are lots of cross-border deals there – does that explain why you don’t see the same language requirements you do in Hong Kong?
A: Sort of, but not really – it’s a little misleading to think that you will be working on tons of cross-border deals if you work here.
Each country here speaks a different language (Indonesian Bahasa vs. Malaysian Bahasa vs. Thai vs. Vietnamese vs. Tagalog…) and most bankers will focus on 1-2 countries because no one can possibly use 5-10 different languages at a professional level.
There isn’t a strict language requirement, but you still do gain a big advantage by knowing the local language – some companies’ filings and documents will be in the local language as well.
Q: Thanks for explaining that. What about on the private equity / venture capital / hedge fund side?
You mentioned that those industries are all relatively new in Singapore.
A: Yeah, I doubt there are even 50 “real” buy-side firms here (NOTE: Our lists show around ~100 firms, but some of those may not be traditional PE funds / HFs).
Various reasons explain this:
- For hedge funds, the market here is too “stable” and doesn’t offer the liquidity and volatility that many funds need to make money – so you’ll see more of them in Hong Kong.
- With that said, there are still some top-performing hedge funds here, including a well-known Singaporean quant fund… since you don’t have to trade the local market necessarily.
- Most of the companies here are too small for the mega-funds to be interested, though that’s starting to change.
- Some PE firms have focused on only a specific sector, so they wouldn’t necessarily want to bring in a team of generalists.
On the other hand, Singapore is a great country in terms of light taxes and regulations, and tons of wealthy individuals are moving here – so I think you’ll see more fund activity in the future.
Southeast Asia has a good growth story, but it’s not as good as the China or India growth story; there are also more cultural and language barriers since you’re dealing with multiple different high-growth countries instead of just one.
Q: So do you think it’s easier for foreigners to find work in Singapore compared to other Asian countries?
A: Well, it’s definitely easier to get a job here than in China – as your numerous interviewees in China have pointed out in the past.
There isn’t a strict language requirement and it’s much more multicultural, so they’re not going to turn you away for “not being Chinese enough.”
With that said, it’s still tough to come here and simply network your way into a job. You’d have a better chance by going through headhunters or transferring internally.
Most firms here still prefer local candidates, especially those from the top 3 universities, but people who studied abroad at top schools and then come back here find work as well.
Similar to the system in Mexico, many firms will put you through an extended “probation period” where they see how you perform as an intern for a long time before giving you a real full-time offer.
So you have to be prepared for that if you’re coming here as a fresh graduate with no work experience.
Networking Your Way In From the Lobby
Q: Thanks for sharing all that information about Singapore. You mentioned earlier that you looked up firms’ locations, showed up in their lobbies, and asked to speak with someone there.
I’m shocked that a) You did it and that b) It worked at all.
A: Yeah, that would never work at large banks or at any firms with official security. But most buy-side firms are small, so sometimes you can get lucky.
Reactions ranged from people being outright shocked to being a bit surprised.
I would introduce myself briefly and ask for the lowest-ranked person there, such as an associate or VP. If that person wasn’t there, I would go one level up and ask for that person instead.
I said, “I’m [Name], I attended [University Name], and I’ve done these internships in corporate finance and IB – I know you’re busy, but I can help with any deal work or technical analysis that’s required and I already know how to do what you’re looking for.”
Most people just applauded me for my efforts but said they didn’t have any positions available – one firm was more receptive, though, and I happened to catch the right person at the right time. He was having a slow day and his firm happened to be looking for interns (though they weren’t publicly advertising it).
He liked what he heard about my background, and they called me back in for a more formal interview where they asked about my previous internships and a few basic technical questions.
Q: And then…
A: Two weeks later, they called me in for the first round of in-person interviews, which were pretty much all “fit”-based.
The next round happened 2 weeks later and they asked more of those types of questions, how I would react to various situations on the job, and so on.
They did give me a case study but it was very simple – nothing like the in-depth private equity case studies you’ve described before.
They just asked me to project cash flows for a company based on certain assumptions, calculate a few key metrics, and then describe my findings.
The only real “trick” was that many PE funds here prefer to use cash-on-cash multiples rather than IRR – so I focused on those in my analysis.
On the Job in Singapore Private Equity
Q: OK, so it sounds like a fairly standard interview process even though you won the interviews in a very non-standard way.
What has the job been like so far?
A: The work isn’t that much different from what you do in other geographies, but we operate more like a growth equity firm and don’t use debt quite as much; most of the companies we look at are in the middle-market space as well.
Since I’ve been here, around 50% of the deals I’ve analyzed have gone through to due diligence and around 10% of the deals I’ve worked on have closed.
There are a ton of deals in the pipeline here, but as with PE in Western markets, you may look at hundreds of deals each year and only do a small handful of them.
One of the best parts of the job is that I spend very little time on sourcing – deal flow here is so high that junior associates and interns don’t need to cold call. And since it is a small team, you also get much more exposure than you would at a bigger firm.
Around 50% of the deals I’ve worked on have been energy or commodities-related, 30% were in technology, and 20% were in education.
Companies here often generate cash flows that are less stable than what most PE firms like to see – so a big part of the job is “business development support,” where we take on more of an operational role and help firms grow their businesses through partnerships and sales expansion.
Q: And I’m assuming that’s also part of the reason why debt is less common?
A: One of the reasons, yes. Another issue is that many companies are family-owned and the owners are averse to levering up – they prefer equity injections if they need additional funding.
Debt in some countries in Southeast Asia is also more expensive than it is in other regions – in Indonesia, for example, rates on 10-year government bonds might be 3-4% (or more) higher than rates on 10-year US Treasuries.
Q: So what are the most common exit strategies? You said M&A was not that common, so…
A: Yeah, IPOs are the ideal exit strategy, but liquidity isn’t great so not that many companies actually want to list here.
Our most common exit strategy, actually, is the “secondary sale to another PE firm.”
More and more large-cap firms are setting up shop here and looking for opportunities, so this is the path of least resistance in many cases.
Q: Yeah, I suppose that is your best option if IPOs are difficult and strategic M&A is minimal.
What about the culture?
A: It’s much better than I expected.
It’s not at all like investment banking culture where people are running around stressed out with last-minute deadlines and client requests all the time; it is still somewhat stressful, but that’s mostly because of your responsibilities rather than external requests.
Since it’s so small, I get tasked with everything imaginable and sometimes it’s just not possible to deliver everything on-time.
Overall, though, people are quite nice and are not the typical banker types you might imagine. I’ve never been yelled at despite screwing up many times.
After I watched your web series, I thought my firm would be just like that – but I’ve been pleasantly surprised.
There are no “David” characters here!
Q: I’m good at setting low expectations.
I’m glad you liked the series, though, and thanks for taking the time out to do this interview!
A: Sure thing, my pleasure.
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