Carlyle founders leave parting thoughts on PE

As liquidity grows and the search for returns intensifies, demand for private investment will increase, David Rubenstein said on the firm's earnings call on Tuesday.

On the firm’s third-quarter earnings call Tuesday, Carlyle co-founders David Rubenstein, Bill Conway and Dan D’Aniello bid farewell to analysts and journalists as they prepare to hand over to a new generation.

“We thank you for working as hard as you have to learn our company. We know that Carlyle is complex and may not always be as easy to comprehend as might be desired. We appreciate your efforts to understand the firm,” Rubenstein said, adding that while the founders “are disappearing from these calls, we’re not disappearing from the firm”.

Last week Carlyle announced Rubenstein and Conway will step aside from their roles of co-chief executives and be replaced by president and chief operating officer Glenn Youngkin and corporate private equity deputy chief investment officer Kewsong Lee, effective 1 January. Rubenstein and Conway will become co-executive chairmen of the board and remain on the firm’s executive group.

Chairman D’Aniello will become chairman emeritus and will also remain on Carlyle’s executive group. Deputy chief investment officer Peter Clare will become co-chief investment officer alongside Conway.

Rubenstein said as it was the last of such calls that he and Conway would lead, he would provide “a few parting thoughts” about the private investment industry, the firm, their successors and their ongoing roles.

As liquidity grows and the search for returns intensifies, demand for private investment will increase, Rubenstein predicted; firms, small and large, will attract both significant capital and the talent to manage it.   

“Among the principal beneficiaries of this phenomenon will likely be the large, global, multi-product and publicly traded firms, for they are best positioned to attract capital and talent and as a result to consistently achieve the returns desired by investors,” Rubenstein said, adding that Carlyle was a case in point.

“We feel that at no point in Carlyle’s 30-year history has the firm been financially stronger, more highly-regarded, or better-equipped to be a leading private investment firm in the future. For these reasons, we think this is the right time to have a leadership change.”

Rubenstein said while there’s “a natural human tendency” to want to stay when things are going well, that is also the best time to bring in new leadership. He stressed that he and his fellow co-founders “are not going away, nor are we slowing down.”

“We’re still as committed as ever to this firm. We’re still deeply involved in the investment process.”

The leadership change will allow Conway – who now shares the CIO role with Peter Clare – to spend more time on investing, while Rubenstein himself will “remain involved as a public presence for the firm and in the fundraising process”.

Rubenstein, Conway and D’Aniello are the firm’s largest unitholders and largest individual fund investors, and will remain “sizeable” unitholders and fund investors.

“[We] are now finalising major new commitments to our flagship buyout funds,” Rubenstein said.