Re: What is private equity?
David M. Rubenstein is a Co-Founder and Managing Director of The Carlyle Group, one of the world’s largest private equity firms. Mr. Rubenstein co-founded the firm in 1987. Since then, Carlyle has grown into a firm managing more than $85 billion from 29 offices around the world. Prior to co-founding Carlyle in 1987, Mr. Rubenstein practiced law in New York, with the firm of Paul, Weiss, Rifkind, Wharton & Garrison; served as deputy assistant to the president for domestic policy in the Carter administration; and practiced law in Washington, D.C., with the firm of Shaw, Pittman, Potts & Trowbridge. Mr. Rubenstein is a member of the Board of Directors of The Council on Foreign Relations, the Institute for International Economics and Freedom House; the Board of Trustees of Johns Hopkins University, Duke University, Cold Spring Harbor Laboratory, the Kennedy Center for the Performing Arts, the Lincoln Center for the Performing Arts, the Center for Strategic and International Studies and the Dance Theatre of Harlem; and a member of the Visiting Committee of the Kennedy School of Government at Harvard and the National Advisory Committee of J.P. Morgan Chase. He is based in Washington, DC.
Transcript:My job at Carlyle has been to largely raise the money; make sure the investors are pleased with what we . . . what we do; to help recruit people to run our various funds; and to try to think of how the firm can be positioned and grow; and how we can make the firm a leading organization in the world in which we operate. One of my other partners spends time overseeing the investment. Another one takes care of a lot of the administrative issues and problems that we inevitably have as an organization gets growing. The three of us have worked together quite well. And when you have three people working together for 20 years, that’s very unusual but also very good when you can get it to be done that way. Private equity is essentially this: It’s the effort by individuals to take a company where you might control it or you might have a stake in it; put capital into it and help improve it; make it more efficient; make it more productive; help it grow; make it more profitable; and ultimately sell your stake so that on behalf of the investors you have, you can realize a return of 25 percent to 30 percent a year. Investors who give us money recognize that what we do is a bit risky. And therefore they want very good rates of return for taking that risk. Historically 25 percent to 30 percent a year return are what investors that we have are seeking. And that’s the kind of thing we do. But in the end private equity is all about creating new jobs, making companies better, making companies more productive, and making our economy more efficient.
The private market is more efficient, says Rubinstein.
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