Filed under: The Carlyle Group, Private equity industry

This week, the co-founder of the Carlyle Group, David Rubenstein, paid $21.3 million for a copy of the Magna Carta. In an offbeat way, is this a sign of optimism for the private equity space?

Well, today Rubenstein gave an interview with CNBC. Basically, he thinks there are some compelling investment opportunities - especially in energy, healthcare, and financial services. What’s more, he’s bullish on emerging markets. He’s not only excited about China but even Africa and the Middle East. For example, in Africa, Rubenstein thinks there are opportunities for mining and minerals, financial services, and telecom.

Even though things might be remain somewhat slow in terms of deal activity, at least in the U.S., Rubenstein thinks sellers may be in denial on valuations. Also, to get deals done, private equity funds will probably need to pony up more equity. But, with the massive amounts of capital in these funds, that shouldn’t be hard to do.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates DealProfiles.com.

Share This

Share This

Filed under: Private equity industry

A Financial News survey of 700 hedge fund managers found that the majority expect lower returns in 2008. Huge buyout firms are expected to be hurt the most relative to 2007.

This really shouldn’t come as a surprise, given the explosion of huge buyouts in 2006 and early 2007. But in a discussion of the survey over at Deal Journal, some survey participants cautioned against taking too negative a view. For one thing, negative expectations can be self-fulfilling. As one respondent put it in a comment to Deal Journal, “Leveraged buyout investors will get spooked by a ’sky is falling’ mentality . . .”

Another important issue is the general health of the private equity industry. Despite the broken mega-deals and the increasing cost of debt, private equity is still in good shape, with enormous reserves of capital to invest. Arthur Stewart, the head of a British hedge fund, summarized it this way: “Yes, the ability of the very largest buyout houses to finish mega-buyouts will be significantly reduced by inability to find large amounts of acquisition finance on acceptable terms . . . But the industry as a whole is in good health. Firms are raising funds and increasing their activity in a variety of sectors and geographical regions, especially emerging markets.”

So while returns will most likely be lower in 2008, the global economy offers plenty of opportunities.

Share This

Share This