Structured Finance: Graduate Area of Work
Structured finance is a branch of the banking and investment field that specialises in customising financing solutions that do not fit into the category of conventional business loans or financial market instruments for companies with unique financing needs.
This covers a comparatively extensive range of instruments such as debt and equity capital, and even mezzanine financing (a hybrid of debt and equity capital that resembles mortgage services, tailored to the needs of the borrower).
Essentially, structured finance works by creating liquidity and “safe” assets for a business organisation from risky instruments. This risk is then transferred to the different parties involved in the transaction in amounts that are acceptable to them – with proportionate returns for the amount of risk a stakeholder is willing to stomach.
In order to serve their clients, structured financiers start by finding out about the specific requirements of their clients’ transactions, assets, or projects. In particular, they need to be familiar with their clients’ risk appetite and business goals, which makes rigorous risk analysis a big part of the job of a structured financier.
It is only through knowing these factors that structured financiers are able to personalise a suitable combination of debt and other products that can help finance the clients’ business successfully.
This involves thorough examination of all the issues which might affect a transaction, as well as a complex modelling of its forecasted performance to see how external factors such as commodity prices might influence the profitability of a project.
Hiring managers looking to fill structured finance roles typically draft selected members who demonstrate an aptitude for this line of work from the organisation’s graduate trainee programmes. However, they do sometimes run recruitment drives to hire graduates directly into structured finance.
It is commonly expected for individuals to specialise in a particular area after some time working in the sector. Knowing this, some graduates may opt to do a specialised postgraduate degree before entering the field in order to gain a more solid understanding of their chosen business sector in advance.
You will usually be working in teams of five to 20 people, assembled ad hoc under the leadership of an experienced deal leader for a specific transaction.
Most of the time, the deal leader will opt to bring in an eclectic combination of specialists from different sub-sectors so as to get a variety of viewpoints on the issue at hand.
For instance, in the case of a telecommunication team, the team leader will want – among many others – specialists who understand the consumer market, experts on financing the building of communication infrastructure, and professionals well-versed in engineering developments within the sector and how they affect the industry.
Hiring managers in this line of work subscribe to the belief of hiring for attitude, but training for aptitude. Sector expertise and financial structuring knowledge can be learned.
Recruiters are much more interested in finding a hunger to win, as well as a drive to innovate and find interesting solutions to complex problems.
That being said, having good analytical skills is vital for a job in this field. You will need to be able to dissect a situation quickly and to catch any small details that may either lead you to a creative solution or jeopardise your risk analyses.
As your position will involve a lot of client-facing time and team-based work, you will need good communication skills – both verbal and written – as well.
Ups and downs
A key draw of this area of finance is that you can become sort of a recognised expert in a specific field or sub-sector.
This line of work may also be a plus for those who enjoy more creative thinking – having to tailor debt packages and other financing instruments to fit your clients’ specific needs means that there is a need for you to think out of the box instead of just following conventional financing schemes.
You will also get the chance to oversee deals from start to finish. As your small team will be responsible for the entirety of a particular deal, you are expected to contribute in all aspects, including managing individual processes and finding necessary experts from various areas in order to help close the project successfully.
Working hours may, however, be uncertain as this is a project-based line of work. As such, your working time will be dictated by the deadlines, peaks, and lulls of your projects and assignments more often than not.