Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. We're going to go
Speaker 1: to a really, really interesting panel right now.
Speaker 2: Raymond J.
Speaker 3: MacGuire, president of Lazard, one of the leading investment bank
Speaker 3: global investment banks, sitting down with us. We're going to
Speaker 3: listen in so Lazard, your partner Peter has set some
Speaker 3: big numbers for you guys.
Speaker 1: I want to talk about how you're going to get
Speaker 1: to those.
Speaker 3: But let's start with private equity overall and where it
Speaker 3: is today. I mean, it had glory days and then
Speaker 3: it really slowed down some, particularly when the interest rates
Speaker 3: got raised. Now it seems to be coming back to
Speaker 3: what extent is the fed industry it's actually affecting the
Speaker 3: rate of private equity deals at all? Or is it
Speaker 3: other factors?
Speaker 2: So let's define private equity. I would probably expand that
Speaker 2: to say asset management, of which private equity is one
Speaker 2: of the verticals with an asset management. Today we see
Speaker 2: the asset managers starting with the likes of black Rock
Speaker 2: with I don't know, ten trillion dollars or so. You
Speaker 2: see the other ones who are now getting close to,
Speaker 2: if not above, a trillion dollars. Private equity is a
Speaker 2: subset of the asset management world. So we see many
Speaker 2: of the institutional investors as well as the family offices
Speaker 2: investing in the asset managers. So their assets are growing
Speaker 2: and the expectations I don't continue to grow as investors
Speaker 2: are looking for returns that either meet or beat the.
Speaker 1: Capital markets.
Speaker 2: FED policy has slowed a little bit of the deployment
Speaker 2: of that capital, and until we see valuations come in line,
Speaker 2: my sense is that you're going to see, at least
Speaker 2: for the private equity side of it, different to how
Speaker 2: they're deploying other aspects of the overall portfolio. Private equity
Speaker 2: has slowed a little bit in the activity. In terms
Speaker 2: of private equities contribution to revenues on Wall Street thirty
Speaker 2: to forty percent and growing. Expect that to be them
Speaker 2: to be continue to be a large component what's taking
Speaker 2: place in the capital markets and be one of the drivers.
Speaker 3: It looks like there's a fair amount of capital out
Speaker 3: there to be deployed. Let's talk about the demand side,
Speaker 3: the need for it. It's took some big transformations. We're
Speaker 3: seeing such a we all talk about artificial intelligence all
Speaker 3: the time these days, and also you've got the energy transition.
Speaker 3: What are the things you're going to demand investment over
Speaker 3: the next five ten years.
Speaker 2: That's a much larger question, and that goes to kind
Speaker 2: of a macro opportunities that we have, and I would
Speaker 2: put them in five categories. One would be generative AI
Speaker 2: in the drop down box, there is the amount of
Speaker 2: capital that we're going to need deploy in order to
Speaker 2: support generative AI data centers as an example.
Speaker 1: Renewable energy or energy transition would.
Speaker 2: Be another of a macro trend, and the drop down
Speaker 2: box renewable energy and energy transition is how do we
Speaker 2: invest in the infrastructure that's going to allow us to
Speaker 2: remain competitive? And energy transition all also be effective in
Speaker 2: how we go about entergy transition. The other is this
Speaker 2: has taken on a different nomenclature dependent upon who's communicating.
Speaker 2: It's either ensuring cringsuring, deglobalization, or what I would call reglobalization,
Speaker 2: and the reglobalization means how do we invest in US manufacturing.
Speaker 2: Remember we peaked in US manufacturing in June of nineteen
Speaker 2: seventy nine, where one in five Americans worked in a
Speaker 2: factory in the manufacturing base said eight. It's probably one
Speaker 2: in twenty and much of the dependence that we have
Speaker 2: in the manufacturing world for all the things that we
Speaker 2: do or dependent upon the supply chain, So reglobalization, that's going.
Speaker 1: To be another factor. The other factor that I would
Speaker 1: look to is the.
Speaker 2: Largest growing population that exists in North America's sixty five
Speaker 2: years and older. And so how we drop down box,
Speaker 2: how do we engage in healthcare for that demographic, how
Speaker 2: do we manage the transfer of wealth or not in
Speaker 2: the last of cybersecurity macro themes, and the investment that
Speaker 2: we will have to make from the private sector is
Speaker 2: investment that we also today see being led by what's
Speaker 2: taking place in Washington, the IRA as an example of
Speaker 2: the Chips Act, fundamental to how we compete going.
Speaker 3: Forward, just where I wanted to go, which is the
Speaker 3: role of private versus public in some of that fancying
Speaker 3: because you mentioned the Chips Act, which obviously has a
Speaker 3: lot to do with generative AI government is a big
Speaker 3: player in that and also energy transition. Goodness knows, with
Speaker 3: the IRA government big player as we go forward. As
Speaker 3: you look at from your point of view at Lazard,
Speaker 3: what it's the right role for the government, what's the
Speaker 3: right role for the private sector in supplying the capital
Speaker 3: that's needed.
Speaker 2: It's going to have to be a partnership, especially for
Speaker 2: the elements of the macro transit. In order for us
Speaker 2: to compete, it's going to have to be public private partnerships,
Speaker 2: which were in many ways I think with the IRA
Speaker 2: and with the Chips Act, and look at a number
Speaker 2: of private enterprises that are involved in that with the
Speaker 2: support of the government.
Speaker 1: So there's those partnerships.
Speaker 2: And each one of these macro themes is going to
Speaker 2: have to be public private partnerships. As we reglobalize, how
Speaker 2: do we invest in the elements of that reglobalization. The
Speaker 2: way that we do that is through we need government
Speaker 2: policy that's going to be supportive, and then we need
Speaker 2: private enterprise to partner.
Speaker 1: And across the spectrum.
Speaker 2: You're going to see public private partnerships that lead our
Speaker 2: ability to remain competitive.
Speaker 3: Where how does that apply cross national boundaries you talk
Speaker 3: about reglobalization, there certainly has been a readjustment, I think
Speaker 3: it's fair to say when it comes to supply chains,
Speaker 3: and we even have a competition perhaps going on with
Speaker 3: the United States and the European Union right now in
Speaker 3: some of these areas to what extent. Does this inhibit
Speaker 3: cross border transactions or does it enhance them?
Speaker 2: Well, what you're going to see is the friendshuring to
Speaker 2: which I referred. If you look at today, ninety percent
Speaker 2: of the manufacturing needs of this country are supplied by China,
Speaker 2: So friendshuring. If I look at auto manufacturing in our
Speaker 2: relationship with Mexico as an example, you look at biofarm
Speaker 2: and our relationship with India as an example, if you
Speaker 2: look at batteries in our relationship with Poland as an example,
Speaker 2: We're going to have to cross boundaries. We're going to
Speaker 2: have to rely on those relationships that have historically been
Speaker 2: friends of the United States. As the global North and
Speaker 2: the global South at some point come together, We're going
Speaker 2: to have to make certain that we have relationships with
Speaker 2: our allies in order for us to.
Speaker 1: Remain in the lead.
Speaker 2: And we are in many fundamental ways in the lead,
Speaker 2: but where we are exposed from a supply chain standpoint,
Speaker 2: we need to be able to rely on our partners
Speaker 2: to reduce that gap.
Speaker 3: There's a lot of talk about industrial policy and big
Speaker 3: investments for the US government and some money.
Speaker 1: Goodness news has been appropriate a fair amount of money.
Speaker 3: I'm not sure how much we've actually seen as we
Speaker 3: would stand in the business up on the screen. Yet
Speaker 3: I mean, talk to me, for example, about the Gateway project,
Speaker 3: which has been on the table here in the New
Speaker 3: York area for a good long time and still I'm
Speaker 3: not sure how much progress I've seen made. Is that
Speaker 3: a warning to us about the ability to actually get
Speaker 3: it done rather than plan it and even spend money
Speaker 3: on it.
Speaker 2: So Gateway is a great example, as you all know,
Speaker 2: probably the largest allocation of capital by the US government
Speaker 2: where you going to see prime examples of public private partnerships.
Speaker 2: Why do I say that Gateway, as you all know,
Speaker 2: is a sixteen billion dollar project with seventy two thousand jobs,
Speaker 2: and so what that's going to require is one the
Speaker 2: training of a workforce to fill those seventy two thousand jobs, from.
Speaker 1: Engineers to day laborers.
Speaker 2: And we're also are going to need to make certain
Speaker 2: that from a manufacturing standpoint, that we have the industries
Speaker 2: that can supply the equipment necessary for us to go
Speaker 2: and drill.
Speaker 1: Gateway is a great example of that.
Speaker 2: In my expectations that you're going to have private enterprise
Speaker 2: that are also partnering with the government, and what the
Speaker 2: leadership of Gateway now is doing. With Chris colorI and
Speaker 2: his leadership, I think they've done an extraordinary job bipartisanship
Speaker 2: coming together recognizing.
Speaker 1: That in order for the trade that takes.
Speaker 2: Place domestically continue to be facilitated, that the Gateway project
Speaker 2: is one that is a high priority. If you also
Speaker 2: look at the implications on healthcare, Gateway in many of
Speaker 2: the communities that have not benefited so much or have
Speaker 2: suffered because of the emissions have taken place across some
Speaker 2: of the bridges and tunnels that it alleviates that. So
Speaker 2: Gateway is a great example of how the US government
Speaker 2: has come in and supported infrastructure development. This necessary for
Speaker 2: US to continue to increase our growth in our overall economy.
Speaker 3: Let me pick up on one of the things you've mentioned
Speaker 3: a couple of times is workers, the number of workers
Speaker 3: trained workers, because I think train workers want to grow
Speaker 3: as an economy, you need more laborers. In the recent past,
Speaker 3: it appears that we've been sustained to some extent by
Speaker 3: legal immigration, actually legal migrants being added as a workforce.
Speaker 3: What's the role of immigration in terms of the growth
Speaker 3: of this economy. It's as you look at some of
Speaker 3: those huge projects where you need the workers and also
Speaker 3: the trained workers.
Speaker 2: Well, apart from the political implication that first of all,
Speaker 2: we need to make certain that the workforce that we
Speaker 2: currently have as a workforce that is trained to be
Speaker 2: able to address the huge opportunities the demand for labor.
Speaker 2: In my sense is that as you think about the IRA,
Speaker 2: and you think about projects flight Gateway, and you think
Speaker 2: about the organizations today that train the labor, that there's
Speaker 2: a tremendous opportunity for us to continue to invest in
Speaker 2: a unions as an example, how do we invest in
Speaker 2: that and how do we make sure that the union
Speaker 2: is supportive so they can go train the workforce, reducing
Speaker 2: the requirements that you have a college degree in order
Speaker 2: to do some of the work that's going to be necessary.
Speaker 2: So workforce training is critical. By the same token, workforce
Speaker 2: housing is going to be critical. So for seventy two
Speaker 2: thousand people commuting into this geography, where do you house them?
Speaker 2: That's going to be part of the overall thought process
Speaker 2: and part of the overall architecture is we think about
Speaker 2: projects like Gateway, and as I think about what gateways,
Speaker 2: the implications of Gateway profound and exciting in a reflection
Speaker 2: of what we can do when we decide to invest
Speaker 2: in this country and invest in the most important part
Speaker 2: of the country, which is the talent.
Speaker 3: When we talk about things like generative AI as well
Speaker 3: as the energy transition, it's hard to have that discussion
Speaker 3: without talking about China somehow, because China has really put
Speaker 3: a lot of investment into those There's obviously national security
Speaker 3: issues of the China. At the same time, how can
Speaker 3: we get along if I can put it that way
Speaker 3: with China in terms of economies, so that we both
Speaker 3: get the best of it without conceding or compromising our
Speaker 3: national security.
Speaker 2: So I would say when it comes to generative AI
Speaker 2: that we are ahead in the actual general of AI,
Speaker 2: the technology of generative AI, and if you look at
Speaker 2: who are the architects of that, they reside in this country.
Speaker 2: So I take confidence in that when it comes to
Speaker 2: the energy sources that are necessary for energy transition. As
Speaker 2: an example, seventy to ninety percent of the raw materials
Speaker 2: necessary for renewable energy energy transition is refined by China,
Speaker 2: and so as we think think about that, we'll have
Speaker 2: to reduce our exposure to the supply chain and invest more,
Speaker 2: which is why I come back to what we're doing
Speaker 2: with the Chips Act and the public private partnerships that
Speaker 2: reside there. Exists there and other examples out there. So
Speaker 2: I would say there is a reliance today that we
Speaker 2: have to reduce our exposure. But that comes to not China,
Speaker 2: but China plus many, not China plus one. And I
Speaker 2: spoke about Mexico or India or Poland, or if I
Speaker 2: look at the global South coming from Tierra del Fuego
Speaker 2: up and the natural resources that exist there in the
Speaker 2: relationships that we are developing there to generate or to
Speaker 2: get our exposure increased to raw materials, the minerals, that's increasing,
Speaker 2: and I think there's an acknowledgement that we need to
Speaker 2: increase that. Another example would be the continent of Africa
Speaker 2: fifty four to fifty five countries, depending upon how you
Speaker 2: decide on one country. We have not invested there. That's
Speaker 2: where many of their raw materials come from. They exist there.
Speaker 2: The two challenges that we have when we think about
Speaker 2: the continent, there are two threshold challenges. One is the
Speaker 2: rule of law, the other's currency. We ought to be
Speaker 2: able to come with a structure that allows for us
Speaker 2: to invest private capital to invest on the continent in
Speaker 2: friendly relationships there so that we can access the material.
Speaker 1: How do we go about doing that?
Speaker 2: So you have to solve those two threshold challenges in
Speaker 2: order to attract private investment into those markets.
Speaker 3: Ray, what does ZE mean for Lazard? What does it
Speaker 3: mean for Lazard? Because as I say, Peter and you
Speaker 3: have set some pretty aggressive goals in terms of growth,
Speaker 3: What are the opportunities all of what you just said
Speaker 3: presents to Lazard? And for that matter, what are the
Speaker 3: challenges as well?
Speaker 2: So for the opportunity, I think there are probably more
Speaker 2: opportunities than there are challenges. As you all know, we've
Speaker 2: been around now this is one hundred and seventy six year.
Speaker 2: We pride ourselves on being the trusted advisor to the
Speaker 2: most sophisticated corporate and sovereign leaders. If you think about
Speaker 2: much of what's taking place in sovereign restructuring, we have
Speaker 2: been in the lead of that. If you think about
Speaker 2: what's taking place today and renewables, and you saw announced
Speaker 2: transaction between Rear Beyond and Volkswagen, we led that. And
Speaker 2: there are numerous examples historically and today where we have
Speaker 2: been out front both on behalf of senior managements and
Speaker 2: boards and also on behalf of necessary important sophisticated sovereigns.
Speaker 1: So we have played a leading we're on.
Speaker 2: The expectations going forward will continue to play a leading role.
Speaker 2: We're onboarding talent to add to the existing galaxy of
Speaker 2: stellar talent that we have and it's exciting to be
Speaker 2: if I want to be anywhere, and I've chosen you
Speaker 2: want to be anywhere you want to be at Lizard
Speaker 2: because we're at the forefront of a lot of what's
Speaker 2: taking place in the world.
Speaker 3: Onboarding talent is that one of the key gateways for you.
Speaker 3: How hard is it to find the right talent for
Speaker 3: what you need to do to grow?
Speaker 2: Well, we're looking for eight players, so you know, wherever
Speaker 2: we can find them, we're looking. We're looking aggressively to
Speaker 2: help build on the tradition. I think if you think
Speaker 2: about storied brands and transactions and sovereigns around the world
Speaker 2: and who's been involved in that, we've been involved in that,
Speaker 2: and we are looking for talent. We've onboard a number
Speaker 2: of talent today. We've had talent that's covering the sovereign
Speaker 2: wealth funds, covering the sponsors it's covering many of the
Speaker 2: large and sumer products companies, covering the healthcare space. So
Speaker 2: the largest spaces out there are technology, healthcare, and industrials,
Speaker 2: and we're onboarding amongst the best talent that exist on
Speaker 2: the street. That's a high priority as we go forward
Speaker 2: and achieve Peter's vision of twenty thirty.
Speaker 3: Ray you mentioned you don't want to tell with the
Speaker 3: politics of immigration, so this is not a political question,
Speaker 3: but it does get to that we have an election
Speaker 3: coming with November, So what extent does that really take
Speaker 3: some of the wind out of the sales of companies.
Speaker 3: Likelyis right, because companies are saying, let's just sit in
Speaker 3: our hands right now, so we figure out what happens.
Speaker 2: You know, I think companies are trying to trying to
Speaker 2: decide where they fit geopolitically and geoeconomically. Strategy, the strategy
Speaker 2: sessions are now in full force. The elections will have
Speaker 2: some impact as people digest the results of the election,
Speaker 2: but I'm not certain that history is demonstrated that's going
Speaker 2: to have such a material impact.
Speaker 1: Now.
Speaker 2: The policies that are going to be necessary to address
Speaker 2: some of the micro challenges are clear. Micro I would
Speaker 2: say policies to address education, policies to address notwithstanding the
Speaker 2: fact that we have some of the lowest historical unemployment
Speaker 2: rates in many of our communities, you've got pretty high
Speaker 2: unemployment rates, policies to address healthcare. So those policies will
Speaker 2: have an impact at a local level, and we need
Speaker 2: to address those. So the administrations, whichever administration is is
Speaker 2: is it.
Speaker 1: And since you at that point, will have to address those.
Speaker 3: Finally, we tend to focus on the United States and
Speaker 3: New York here when we're situated here, which is often
Speaker 3: a mistake. You're a global firm, You're dealing with global clients.
Speaker 3: What about the level of geopolitical uncertainty? It goes well
Speaker 3: beyond the elections here, and we've got elections coming up
Speaker 3: ovi see in France, in the UK, there's so many elections,
Speaker 3: a lot of which were surprising, particularly for incumbents. How
Speaker 3: is that affecting deal making?
Speaker 1: Is to say, there's.
Speaker 3: Just more of a geopolitical risk that you have to
Speaker 3: take into account than you did before.
Speaker 2: You know, we have a geopolitical risk team and they
Speaker 2: are in demand in a large part because of what
Speaker 2: you've said. Corporations and sovereigns are trying to digest the
Speaker 2: implications of the fifty semi election that are taking place
Speaker 2: around the world.
Speaker 1: We see the pauses taking place in France. Now we
Speaker 1: see the.
Speaker 2: Scenario plane, and that's taking place in the US. Having
Speaker 2: said this, as we go through all the geopolitical uncertainty,
Speaker 2: which today is a country to which the world continues
Speaker 2: to look as the United States of America. So if
Speaker 2: I look at that, and I look at some of
Speaker 2: the policies that are being implemented in the allocation of
Speaker 2: capital to the future, I couldn't be more excited about
Speaker 2: what's in front of us and what's ahead of us.