The cautionary tale of the private equity firm that cut investment staff by 50%
It's private equity recruitment season in America. Tales are already being told of early morning chats at the likes of Blackstone, Apollo and KKR. If the big firms are hiring, it's likely that the smaller ones will soon follow. But as young bankers prepare to interview all night and to disregard banks' commands to inform them if they receive an offer, it's worth remembering that all is not entirely well in private equity land.
As the Wall Street Journal noted late last year, a dearth of investment exits means funds are less able to pay carried interest. It's become a lot harder to raise new funds. There are repeated suggestions that the industry will shrink once the reality of higher interest rates is fully digested.
Shrinkage is already apparent at one ex-industry darling. Circa 2018, SoftBank's Vision Fund was the place to be in London and was hiring junior bankers from the likes of JPMorgan and Goldman Sachs (alongside its senior traders from Deutsche Bank). By 2022, however, it was cutting jobs. And it's kept doing so ever since.
SB Investment Advisors (UK) Limited has just filed accounts for the year ending March 2025. It now has 34 front office investment professionals in London. At its peak in 2021, it had 67.
The chart below shows the evolution of employment, wages and long term incentive awards (carried interest paid to senior staff) at SB Investment Advisors (UK) Limited over the past six years. Aside from the enormous payout to senior staff in 2024, it doesn't suggest that private equity is a one-way route to career edification.
Things may, of course, improve. Profits at SB Investment Advisors (UK) Ltd. fell from $17m to $10m during the last financial year, but the fund notes that AI is "at the core" of its investment strategy and that AI has been demonstrating "strong resilience despite macroeconomic headwinds from inflation and high interest rates."
One person who will not care is Rajeev Misra, the former Deutsche Bank trader and ex-CEO of SoftBank Advisors. Misra, who is also known for his bare feet and private jet flights, left in late 2024. His wife, a successful interior designer, has since been working on a lavish "farmhouse" owned by the couple in Delhi.
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