SABEW18 – Rubenstein expects private equity investors to look to emerging markets

By Brian Baker
Medill News Service

Private equity investors are likely to focus more on opportunities in emerging markets as countries like China and India increase their share of the global economy, said David Rubenstein, co-founder and co-executive chairman of private equity giant The Carlyle Group.

“If the emerging markets are 55 percent of world’s GDP, but they’re only getting 17 percent of the dollars, obviously something’s going to change,” he said.

Rubenstein spoke Friday at the Society for Advancing Business Editing and Writing’s spring conference in Washington D.C.

David Rubenstein, left, speaks with former Bloomberg Businessweek editor Megan Murphy on Friday at the Society of Advancing Business Editing and Writing’s spring conference. Rubenstein spoke about investment opportunities in the private equity industry.

Developed markets face several challenges, including aging populations, issues with entitlement programs and too much debt, Rubenstein said.

“Right now, 83 percent of all investment dollars in private equity go to the developed markets,” he said.

Similarly, companies that don’t have a strategy involving China and other emerging markets, artificial intelligence and technology will be challenged in the future, Rubenstein said.

Carlyle manages $195 billion in assets across 317 different investment vehicles, according to its website.

Private equity firms are raising record amounts of money even though deal prices are high, Rubenstein said. In the past, private equity firms aimed for annual net returns of about 20 percent until recently.

“People have been willing to take lower rates of return” of between 13-15 percent, he said, simply because there are few attractive alternatives in a low interest-rate environment.

Some of the money raised has not yet been invested, and Rubenstein expects a portion will be invested at higher rates of return during the next economic downturn.

“At some point, there will be a slowdown. It’s just inevitable,” he said. “I just don’t know when it will occur.”

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