Tuesday, January 14, 2014

Carlyle Group's Rubenstein Gives PEUpdate

Carlyle Group co-founder David Rubenstein made numerous news stories early this week.  The famous private equity underwriter (PEU) was:

1.  Appointed to the new advisory board at Duke Kunshan University.  The new university will open in Fall 2014 and is a partnership Duke, Wuhan University and the city of Kunshan.

2.  Named a headline speaker at The Venture Capital/Private Equity Underwriter Club, a student club at Harvard Business School, will hold its 20th Annual VC/PEU Conference February 9, 2014, on the Harvard Business School campus in Boston.

3.  Had a message for all the young people on Wall Street concerned about burning out on long hours.  "If you love what you do, it's not 'work'" - Carlyle's David Rubenstein, on banking interns' workload.  Did he later add? "If it's not work, then pay becomes a non-issue." 

4.  Said on CNBC's "Squawk Box", "Things are not cheap. Right before the recession in 2007 and 2008, the average EBITA [earnings before interest, taxes and amortization] multiple for a buyout was 9.7 times.  It went as low as maybe six or seven times a couple of years after the recession.  Today, the average EBITA multiple for a buyout is back at 9.7 times.  You have to be very judicious looking for things that you can find ways to make 20 percent to 30 percent rates of return."  Rubenstein said activity is accelerating a bit because "financing is readily available ... on attractive terms." That's also a marker of the heady PEU days before the 2008 financial crisis.

5.  Is part of an industry with over $1 trillion in dry powder.  PEU's raised $431 billion globally in 2013.   Large players, like Rubenstein's Carlyle Group, are expected to prevail in 2014.

6.  The Carlyle Group has more than $185 billion in assets under management from 1,550 investors in 74 countries.  Assets per investor = $120 million

7.  "Talked about indicators to watch for in 2014. Rubenstein said after seven years of a recession, the US economy is finally picking up steam, growing about 3%. The US is still the best place to invest, although China remains attractive. He likes the energy and financial sectors in particular. Europe, especially northern Europe is doing reasonably well. Rubenstein expects Janet Yellen to continue Chairman Ben Bernanke's policies when she takes the helm at the Federal Reserve next month as it is the only game in town. He added, the Fed will not taper in large amounts to harm the economy. Finally, Rubenstein said Congress needs to pass the appropriations bill to help the economy grow."

Consider this your Rubenstein PEUpdate for 1-14-14.