Speaker 1: Face is Bloomberg Business Week with Carol Messer and Jason
Speaker 1: Kelly from Bloomberg Radio. Welcome to the Bloomberg Business Week
Speaker 1: Extra podcast. Carol, This week I caught up in Berlin
Speaker 1: with David Rubinstein. You've heard of him, Yeah, I have, right,
Speaker 1: this is a great name. You want to hear what
Speaker 1: he has to say about the environment, and certainly a
Speaker 1: really well named known and certainly a really well known
Speaker 1: name to the world of private equity. He certainly is
Speaker 1: we should mention, of course, he is the host of
Speaker 1: the David Rubinstein Show on Bloomberg Televisions. We get to
Speaker 1: know him that way as well. He mentions his show
Speaker 1: in passing Take a listen. So this is mecca for
Speaker 1: private equity every year, Berlin, of all places. What are
Speaker 1: you learning, if anything, kind of as you walk around
Speaker 1: and talk to people, Well, I'm learning how much I've
Speaker 1: aged because I've seen seeing some of these same people
Speaker 1: for twenty years, and they look younger and I look older.
Speaker 1: So I've recognized that if you go to these conferences
Speaker 1: long enough, you actually actually get to see people in
Speaker 1: a different light. Seen these people when they were young,
Speaker 1: now they're middleways, now they're older. But to be very serious, Uh,
Speaker 1: private equity seems to be in pretty good shape. There's
Speaker 1: no real concern about the global economy here. People think
Speaker 1: that fundraising is a pretty good shape. It's pretty easy
Speaker 1: to raise money. Now you have to put the time
Speaker 1: into it. Put the money is available. People want to
Speaker 1: give money to private equity firms, and there are a
Speaker 1: lot of new private equity firms and are raising money
Speaker 1: with modest track records. So right now, I think the
Speaker 1: industry is feeling pretty good about itself. Well, and let's
Speaker 1: talk about that, because there is a very sort of
Speaker 1: good warm feeling here in Berlin. The weather it's nice out.
Speaker 1: Maybe that's helping contribute to it. But you know, in
Speaker 1: the meantime, you have President Trump and Kim over in Vietnam,
Speaker 1: you know, trying to sort out their differences. You've got
Speaker 1: Theresa May and Parliament, you know, trying to convince people
Speaker 1: that she has the right deal for Brexit, numerous other
Speaker 1: things happening around the globe. Is private equally a new
Speaker 1: or ignorant or what's going on? Well, I wouldn't say
Speaker 1: immune or ignorant. I would say obviously this kind of
Speaker 1: setting is a bit of a bubble because people are
Speaker 1: here to sell things, people here to buy things. But
Speaker 1: private equity does reflect the global economy and does reflect
Speaker 1: some of the concerns that we all have. But I
Speaker 1: think right now people feel fairly a bulliant about their returns,
Speaker 1: fairly good about their ability to raise new money. And
Speaker 1: remember we're not in a recession anywhere in the world really,
Speaker 1: and as a result, people are numbers look pretty good.
Speaker 1: So if the economy were to go down, then people
Speaker 1: won't feel so good. I contrast this a little bit
Speaker 1: with Davos. Davos UH this year, people were a little downbeat.
Speaker 1: They thought that economy was going to head down. The
Speaker 1: American government official didn't show up. That put a little
Speaker 1: bit of a damper on some of the evact events
Speaker 1: that there. But generally Davos was probably not as a
Speaker 1: bulliant as this place is today. It was only a
Speaker 1: month ago. Did something change in the world fantastic character. Well,
Speaker 1: the people here are folks on private equity. There at Davosh,
Speaker 1: you've got government leaders who worry about different issues. That's
Speaker 1: a different kind of setting. But I would say when
Speaker 1: you meet these people here today in private equity UH Mecca,
Speaker 1: which is what some people would call it. It's really
Speaker 1: a fairly happy place. People think that there's a lot
Speaker 1: of money to be made and a lot of good
Speaker 1: deals out there because one of the things that makes
Speaker 1: them happy is they've got happy investors. At this point,
Speaker 1: a lot of money is going back to the big institutions,
Speaker 1: the sovereign wealth funds. You talk to those guys all
Speaker 1: the time. Why do they continue to pour money. Is
Speaker 1: it just for the returns or is there something else
Speaker 1: going well? There's no doubt that private equity has yielded
Speaker 1: very good returns, and the sovereign wealth investors have so
Speaker 1: much money they have to put it out with firms
Speaker 1: that are able to consume that money and get good returns.
Speaker 1: I think generally people are happy, think, but their biggest
Speaker 1: concern is they're getting money back more rapidly than they
Speaker 1: know what to do with it, so they have to
Speaker 1: deploy it more quickly than they thought they were going to.
Speaker 1: This is not a place, though, that people are that
Speaker 1: worried today about economy falling apart or something in the
Speaker 1: next year or so. Right now, people are feeling pretty
Speaker 1: good about things. So let's talk about that money flow. Because,
Speaker 1: as you say, a lot of money is going back
Speaker 1: to limited partners. That means they're trying to put more
Speaker 1: and more money to work. How much do you worry
Speaker 1: about the overhang the dry powder? I mean approaching two
Speaker 1: trillion dollars at this point, there's no out there. There's
Speaker 1: more dry path than there's ever been. But remember I
Speaker 1: I tell people, you don't go to jail if you
Speaker 1: don't invest the money. People are not gonna put money
Speaker 1: out and bad deals because you typically have your own
Speaker 1: money at risk with this, and you recognize that, and
Speaker 1: you can hurt your track record if you put money
Speaker 1: out when it's not good to do so. So if
Speaker 1: you have a fund, then you have to invest only
Speaker 1: seventy five of it. It's not terrible not to invest
Speaker 1: the whole fund if you can't find good deals. So
Speaker 1: people are worried about uh not you know, wasting money.
Speaker 1: It's right for it, but I don't think it's been
Speaker 1: a big issue in the industry right now. So let's
Speaker 1: talk about what you're up to these days. You uh
Speaker 1: seated as it were, the CEO job, the co CEO
Speaker 1: job to Q suddenly and Glenn Young can they're running
Speaker 1: the firm day to day Yet as you pointed out
Speaker 1: to me earlier, you're still one of the largest shareholders,
Speaker 1: maybe the largest shareholder. A lot of the economics still
Speaker 1: uh come to you. So you have no lack of influence.
Speaker 1: But what does your world look like at this point? Well, um,
Speaker 1: we thought Bill Comma and Dan Daniello and I that
Speaker 1: when we turned in our late sixty these are close
Speaker 1: to seventy would be a good idea. I'll have younger
Speaker 1: people running it. I think that is a good idea.
Speaker 1: So we asked two people, Glenn Yonkan and Cus On
Speaker 1: the lead a running day today. So we are now
Speaker 1: Phil Connie and I are the co executive chairs. We
Speaker 1: are the biggest shareholders. We have some influence. Of course
Speaker 1: I'm You're a big shareholder, and Bill is still a
Speaker 1: co c I O and I spend a lot of
Speaker 1: time with investors, but I do spend time with other things.
Speaker 1: I have set up a family office to invest my
Speaker 1: money outside of Carlisle and heels deals with one conflict
Speaker 1: with Carlisle. I am the chairman of the Kenny Center
Speaker 1: in Washington' the chairman of the Smithsonian, chairman of the
Speaker 1: Library of Congress Board, and I'm chairman of the council
Speaker 1: and form relations. That takes some time. And I'm also
Speaker 1: on the Harvard Corporation, which takes some time. And I,
Speaker 1: you know, generally have a TV show that you may
Speaker 1: know on a very very good network. I think maybe
Speaker 1: the best network. I think it's the best network absolutely.
Speaker 1: Uh So, what have you learned and in sort of
Speaker 1: this new role it's not that different from what you
Speaker 1: were doing before, but especially as an investor in a
Speaker 1: family office, how are you going about that? What's the
Speaker 1: what's the ethos of that? Well, in the family office,
Speaker 1: I'm kind of doing some of the things I did
Speaker 1: twenty years ago at Carli. I'm spending more time on
Speaker 1: some of the investments, more time directly with UH with
Speaker 1: a younger investment professionals, and I enjoy it. I have
Speaker 1: one of my daughters works in the family office. We
Speaker 1: have a very good team of people. So I'm reliving
Speaker 1: my youth. Maybe I'll live longer. What's the what's been
Speaker 1: the biggest surprise investing your own money all over again.
Speaker 1: You've always been doing it to some extent, but this
Speaker 1: is really yours, in your family's money. My surprise is
Speaker 1: really that there are a lot of people out there
Speaker 1: who don't think I'm too old to want to put
Speaker 1: their money with me or have me be an investor
Speaker 1: with them. You know, I don't think I'm gonna live
Speaker 1: for another thirty or forty years, but people are willing
Speaker 1: to have my money and willing to have me engage
Speaker 1: with them, so that makes me feel good. I'd be
Speaker 1: interested in your thoughts on sort of wealth right now
Speaker 1: because we're in such an interesting political time print. You've
Speaker 1: been very involved in the Giving Pledge. You uh, you
Speaker 1: are part of a cohort of philanthropists who give a
Speaker 1: lot of to this. What political moment are we at
Speaker 1: right now? Well, clearly in the United States right now,
Speaker 1: there is a feeling that the wealth um disparity is
Speaker 1: so great that the government needs to do something about it,
Speaker 1: and you can see in the Democratic primaries a lot
Speaker 1: of talk about wealth redistribution. I don't really think that's
Speaker 1: likely to happen anytime soon. It's not that easy to do.
Speaker 1: You can't just tax all the people in the forks
Speaker 1: more hundred and solve all your problems. But I do
Speaker 1: think there's gonna be more concerned about it. I do
Speaker 1: think politically this probably helps the Republicans Because more and
Speaker 1: more that people talk about wealth taxes and higher state
Speaker 1: taxes and higher taxes on people of certain incomes, you're
Speaker 1: probably gonna get a lot of people saying, well, I
Speaker 1: don't think I can support that party. So to some
Speaker 1: extent you have to wonder whether some people in the
Speaker 1: Democratic Party that talk about this are really plans by
Speaker 1: the Republican Party to get more attention to the fact that, uh,
Speaker 1: the Democrats that they got control of some of these
Speaker 1: things would not be good for some people are wealthy. Now,
Speaker 1: obviously that's tongue in cheek, but there's no doubt that
Speaker 1: some people who are very visible on the on the
Speaker 1: wealth changing situation are probably people that actually help Republicans.
Speaker 1: And so where does that end in your estimation? We're
Speaker 1: in a very different political environment post mid terms than
Speaker 1: we were. Uh what do you think? Well, right now,
Speaker 1: I don't think there's gonna be any tax bill between
Speaker 1: now and the next presidential election. I think that's done.
Speaker 1: There's nothing that the Senate that's control by the republic
Speaker 1: is going to pass that the House would pass. But
Speaker 1: if the next presidential election were to be won by
Speaker 1: President Trump, I don't think you'll see a lot of
Speaker 1: change in this area. If one of the Democratic candidates
Speaker 1: that is talking about this were to win, then obviously
Speaker 1: there will be some change in this areas just Matchell,
Speaker 1: So more regulation not coming at the moment for private
Speaker 1: equity carried interests, you know, always comes back into the conversation.
Speaker 1: I know you've been asked about this recently. Do you
Speaker 1: think there are any gonna be any changes that would
Speaker 1: materially affect private equity anytime soon? Well, I think private
Speaker 1: equity is generally regarded as being doing a pretty good job,
Speaker 1: so I don't see a lot of regulatory push on it.
Speaker 1: On care interest right now, I don't see that the
Speaker 1: House of Representatives passing a major tax bill that the
Speaker 1: Senate will also pass, and therefore I think there's not
Speaker 1: likely to be anything until after the next presidential election.
Speaker 1: So macro economically, what's your biggest concern for the balance
Speaker 1: of en Well, the biggest concern for the last couple
Speaker 1: of years is can the economy continue growing at a
Speaker 1: rate that escapes the recession. We haven't had a recession
Speaker 1: in about ten years, and at some point the economy
Speaker 1: will slow down. I don't see it happening now. Another
Speaker 1: concern is the amount of debt. We have twenty two
Speaker 1: trillion dollars of federal debt. We're having one point three
Speaker 1: trillion this year of additional deficit, which will add to
Speaker 1: the debt. That's a concern of some people. Uh. One
Speaker 1: of your former colleagues, I believe, is the German of
Speaker 1: the Federal Reserve. You've interviewed him, J Powell. Uh, what
Speaker 1: do you make of the job he's doing so far,
Speaker 1: especially given you know, pretty dramatic change over the last
Speaker 1: few months in terms of interest rates. He had a
Speaker 1: very difficult situation. Whoever was in his position would probably
Speaker 1: happen normalized interest rates a bit, and he's done that.
Speaker 1: But the economy is in still pretty good shape. So
Speaker 1: I don't think he's should be criticized because actually he
Speaker 1: managed to get some increases of interest rates off the
Speaker 1: ground which were necessary, without actually hurting the economy. So, Carol,
Speaker 1: that was my conversation with David Rubinstein, always a character
Speaker 1: wide ranging, of course, gotta talk little politics, gotta talk
Speaker 1: a little bit about what he's doing these days, because
Speaker 1: he doesn't have exactly the same day job anymore. No,
Speaker 1: it's very different and always good to get his perspective.
Speaker 1: All right, That is the Bloomberg Business Week Extra Podcast.
Speaker 1: I'm Carol Masser along with Jason Kelly, and this is
Speaker 1: Bloomberg