Sunday, February 7, 2016

Rubenstein Missed Davos 2016: Why?

Carlyle Group co-founder David Rubenstein was not on the attendance list of the recent World Economic Forum meeting in Davos, Switzerland.  The global elite gather annually in the Alps to strategize on how to maintain their hegemonic power and grow their massive fortunes.   

Quartz reported Rubenstein as a no show, among a group of mostly former CEOs.:

David M. Rubenstein, the co-founder and co-CEO of publicly traded private equity firm The Carlyle Group, is another no-show. But Carlyle executive Volkert Doeksen is expected to attend.
Private equity has been front and center at the annual WEF meeting for decades.  For 2016 Blackstone's Stephen Schwarzman served on a panel focused on "Future Proofing Financial Markets."

Private equity underwriters love Davos for two reasons.  It's where deals get done and it can serve as a place for recruiting new investors.  Apparently Rubenstein didn't need the World Economic Forum to sell new investment opportunities.

Bloomberg reported in late December 2015:

KKR & Co. founder Henry Kravis, Blackstone Group LP Chairman Stephen Schwarzman and Carlyle Group co-founder David Rubenstein were among the guests when Kazakhstan President Nursultan Nazarbayev hosted a dinner in New York.

Apart from the dining at the Four Seasons Hotel, there was access to a possible $93 billion on the table as Nazarbayev, who presides over Central Asia’s biggest energy exporter, seeks to boost returns on the country’s wealth funds. The $64 billion National Fund has struggled to achieve an average of 2 percent annually for the past five years.
Washington Business Journal reported in early February 2016:

D.C.-based private equity giant The Carlyle Group (NASDAQ: CG) has raised $2.4 billion to purchase stakes in mid-sized companies.

The Carlyle Equity Opportunity Fund II will focus on equity investments ranging from $20 million to $200 million and serves as a follow-up to a previous fund, 

The new fund has already made investments in marine transportation company Seacor Holdings Inc. (NYSE: CKH), merchandising solutions firm Array Canada Inc. and in the McLean-based legal tech company LDiscovery LLC.
What makes Rubenstein's absence more puzzling was his being in London on January 18-19 for the London School of Economics Alternative Investment Conference focused on hedge funds and private equity.  Rubenstein and fellow PEU David Bonderman of TPG served as keynote speakers for the event.

Last year Mr. Rubenstein was effusive about investing in oil.  Carlyle's deal with Seacor came in November 2015, roughly two months before publicly announcing the new fund:

SEACOR Marine Holdings Inc. ("SMH"), entered into an agreement to issue $175 million in convertible notes to investment funds managed and controlled by The Carlyle Group ("Carlyle"). It is expected that the notes will be issued on December 1, 2015.  

The transaction contemplates the eventual separation of SMH from SEACOR Holdings' other business lines, potentially via a spin-off of SMH or via a spin-off of SEACOR Holdings' other business lines.
Gulf News reported on private equity's moves in the oil shipping space:

Private equity and distressed debt specialist groups — including Blackstone, Carlyle, Centerbridge Partners, KKR, Oaktree Capital Management and WL Ross — have rushed to fill the void, by offering rescue finance, buying up debt at a discount and turning it into equity, or buying new and secondhand vessels. So far, their results have been mixed, hindsight shows that some groups ventured into the sector too early.
Shipping U.S. oil to Europe is one reason Rubenstein might've wanted to attend Davos 2016:  On January 20th Seeking Alpha reported:

The first export of U.S. crude oil in four decades arrived in Europe early today, reaching the French port of Marseille before sunrise after leaving from Texas nearly three weeks ago, Financial Times reports. 

Oil trader Vitol is expected to unload the shipment - a mix of ultralight oil from the Texas Eagle Ford shale formation produced by ConocoPhillips (NYSE:COP) - which will then travel by pipeline to one of two refineries the company operates in Europe under a joint venture with the Carlyle Group (NASDAQ:CG).
January 20th was the opening day for the World Economic Forum.

Was Mr. Rubenstein at Vitol's Swiss Cressier refinery celebrating the first import of U.S oil?  If so he wasn't far away from Davos.

Cressier is one of only two refineries in Switzerland and accounts for approximately 25 percent, by volume, of all refined products sold nationally.
Some may recall Texas landowners sued Carlyle over failure to meet commitments in the Barnett Shale.

Another topic near and dear to Mr. Rubenstein is high on the WEF agenda, Arctic development.   In December 2015 the forum released a report titled:

"Arctic Investment Protocol:  Guidelines for Responsible Investment in the Arctic"
Mrs. Rubenstein, also known as Alice Rogoff, and her husband have spent many years proposing Arctic development.  Both wish to profit from it.

With such compelling topics what could have kept Carlyle consummate salesman away?  Might it be investors fleeing Carlyle's hedge funds, Claren Road and Vermillion Asset Management?   It's not a good time to ask for new money when existing investors can't get their money back.