Rubenstein predicts $100bn buyout in two years

Carlyle co-founder David Rubenstein has predicted a $100 billion ($75.3 billion) buyout in two years and has dismissed the idea of a private equity bubble.

David Rubenstein, the co-founder of US private equity firm Carlyle, said there could be a $100 billion buyout deal within the next two years.

Rubenstein: sees a $100 billion buyout deal by 2008

Rubenstein told the Financial Times that a $100 billion deal could be signed by 2008 and we could see a $50 billion buyout by next year.

The comments follow increasingly large deals in the private equity industry, including Blackstone’s $36 billion acquisition of commercial real estate business Equity Office Properties last month, which broke records as the biggest private equity deal in history.

The growing trend towards such large deals has sparked debate over a possible private equity bubble but Rubenstein told the Financial Times that he does not share those concerns.

Rubenstein said: “There’s no doubt there’s a lot of money going into private equity – there’s no doubt people are paying high prices on certain deals but I don’t think it’s a bubble.  What’s happening now is people are beginning to use a different investment technique and this adds real value to the economy and real value to the companies that [private equity] works with.”

I don’t think it’s a bubble…people are beginning to use a different investment technique and this adds real value to the economy

David Rubenstein, co-founder, Carlyle

Last month the Financial Services Authority published a report identifying potential risk areas for private equity.  The report, Private equity: a discussion of risk and regulatory engagement, highlighted excessive leverage, the unclear ownership of economic risk, the reduction in overall capital market efficiency and conflicts of interest and market abuse as causes for concern.  However, only the last two were deemed by the FSA to be of high risk.

Last week Rubenstein called for better communication from the private equity industry.  Speaking at the Emerging Markets Private Equity Forum co-hosted by PEO’s sister title Private Equity International and trade association EMPEA, he said emerging markets managers were united in their need to change the way their activity was perceived.  He also said emerging markets managers needed to overcome prejudice and to demonstrate real commercial returns where possible.