Carlyle Group co-founder warns of private equity’s future
Posted by: in Private Industry NewsFiled under: The Carlyle Group, Private equity industry
Carlyle Group co-founder David Rubenstein spoke at a Washington symposium on the private equity industry, and his predictions for the future aren’t too rosy.
According to TheDeal.com, he said that “I think the golden era of private equity is probably behind us, and we’re in a new era and need to adapt.”
Among the challenges are a tightening of the credit industry (duh), and a political climate that’s becoming increasingly hostile to the industry.
Addressing the image problem, he opined that “It’s very good for people like Carlyle to state we have great rates of return, but now that isn’t enough. We’ve to explain to people why it’s a good thing for the economy and go to members of Congress and the government and the press. If you ignore this function, you won’t be a very successful private equity professional, in my view. We can’t run away from our critics.’”
Much of the industry’s image problem can be related to the greed of Steve Schwarzman. His Blackstone (NYSE: BX) has lost around 40% of its value since it closed trading on the day of its IPO. The public offering was widely seen as an attempt by Schwarzman to cash out part of his holdings at the height of a bubble of sorts, at the expense of minority shareholders.
But Rubenstein is right. The industry can fix its image problem if it makes a concerted effort. The benefits of buyouts are many, but tiny understood by most people because the only people bothering to address the issue publicly have been special interest groups opposed to buyouts.
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