Carlyle Group co-founder David Rubenstein said on Thursday that he sees potential for more IPOs from Carlyle's portfolio companies and said leverage for new deals is returning.
Carlyle, one of the largest private equity firms in the world, with more than $86.1 billion under management, has investments in companies such as fast food chain Dunkin' Donuts, semiconductor firm Freescale Semiconductor and pharmacy chain Alliance Boots.
The private equity industry has been struggling to keep portfolio companies, many of which have high debt loads, healthy amid the recession. The industry has also suffered a lack of cheap financing for new deals and lack of an IPO market to exit investments.
There's no doubt that the IPO markets open and close with very little notice, he said. The IPO market was basically shut for a few years ... now it's coming back.
He said Carlyle will probably have as many IPOs outside the United States as inside, citing two Carlyle companies that recently filed in China.
The companies we're likely to take public will be in areas growing well in the economy, so we'll have to see how the economy grows, he said on the sidelines of a Dow Jones conference on private equity. Right now we have a lot of good companies, we'll have to assess whether it makes sense to take them public in the next year or so.
Rubenstein said that leverage for new deals is also improving, although it isn't possible to borrow as much now as it was during the boom, and borrowing remains more expensive. He sees investment opportunities still in financial services, alternative energy and China.
Rubenstein was bullish about prospects for the industry.
In the end I think the private equity industry will survive this far better than other parts of the financial services industry, Rubenstein said.
He predicted the industry will begin growing assets under management again in a couple of years and that fundraising will probably come back in a year or so.
The industry, I think, is poised to come back and I like to say, in fact, we're back.
He said the industry is reinventing itself and predicted more minority-stake transactions and an increase in deals done outside the United States.
Asked if Carlyle itself is planning an IPO, he told Reuters: We don't have a timetable, and we're not even committed to going public.
Rubenstein said Carlyle would just look at the facts and see what our competitors are doing and see what our investors think is a smart thing to do, but right now our focus is on making sure that the money we've invested gets back to our investors with a reasonable return.
The Financial Times reported on Wednesday that Carlyle has resumed deliberations about a possible public listing, citing people familiar with the matter. Carlyle immediately denied it, saying in an emailed statement on Wednesday that it had no plans to go public and if we ever do go public it will be a long way off.
(Editing by Gary Hill)