Carlyle Founder Sees Banks’ Exit From Private Equity

Feb 11 2010 | 8:11am ET

Wall Street’s banks are likely to cut back or abandon their private equity operations, and private equity firms will face new regulation in the U.S., the head of the Carlyle Group predicted yesterday.

David Rubenstein said he’s not sure that the so-called Volcker Rule would bar banks from owning, investing in or sponsoring hedge funds and private equity funds. But whether or not it would, banks are likely to back away from p.e., both out of fear of the legislation and of possible criticism.

“I think what you’ll see—whether or not the legislation is adopted—is the sale of a number of captive private equity organizations of large banks and the sale of hedge fund-related operations,” Rubenstein told a private equity conference in Berlin.

More likely than the Volcker Rule becoming law—a near certainty, in fact, according to Rubenstein—is some form of p.e. regulation, which the Carlyle co-founder acknowledged the industry had so far avoided. Compulsory registration with the Securities and Exchange Commission was probable, Rubenstein offered.

Rubenstein also painted a relatively bleak picture for the private equity industry over the next several years, despite a boost last year.

“Returns from many pre-recession deals in funds will likely be modest at best,” he said. “Most deals I am aware of in 2009 were done at distressed prices and are probably going to be among the best deals done in the last 10 years or so.” But investors should expect lower returns and lower deal volume for the next two to four years.

The Carlyle Group is one of the world’s largest private equity firms with $87.9 billion under management and current investments in more than 200 companies.


In Depth

Fundraising for Mid-Sized PE Funds: Should You Use a Registered B/D?

Dec 6 2016 | 7:18pm ET

When does a fund sponsor need to use a registered broker/dealer when raising capital...

Lifestyle

Trump Attends 'Villains and Heroes' Costume Party Dressed As...Himself

Dec 5 2016 | 11:16pm ET

U.S. President-elect Donald Trump attended a "Villains and Heroes" costume party...

Guest Contributor

Nowhere to Hide: Why the Future of Asset Management Depends on Innovation

Nov 15 2016 | 6:55pm ET

Information technology has reshaped the asset management industry’s periphery,...

 

From the current issue of

Since the inception of Modern Trader, a core editorial theme has centered on the wisdom and power of crowds. Editorial emphasis has focused on companies and projects engaged in the collection and analysis of information. 

AVAILABLE NOW at BARNES & NOBLE

NEWSTAND LOCATOR