Bullishness at Carlyle Group

Co-Founder Says Rebound in Private-Equity Deals Is on the Way

Carlyle Group co-founder David M. Rubenstein said at a conference on private equity on Thursday that he expects the reviving economy to help spur more private-equity deals but cautioned that returns will be more modest than in the past.

Rubenstein's bullishness came as he addressed fellow dealmakers at a private-equity conference in New York sponsored by Dow Jones, a News Corp. subsidiary.

"Private equity is back," said Rubenstein, according to a transcript of some of his remarks provided by the private-equity firm. "We're in pretty good shape and doing deals. Assets under management will begin to rise over the next couple of years."

Rubenstein, who founded the buyout company two decades ago with Daniel A. D'Aniello and William E. Conway Jr., predicted that "deals will be smaller, there will be more equity and less debt" but that "top funds . . . will still outperform the public markets."

Rubenstein said the firm is focusing its investment activities in the energy and financial services sectors, as well as in Asia and, in particular, China.

Rubenstein said Carlyle will probably do more deals in which it will become a minority partner with other firms, which will reduce the risk and the amount of capital that Carlyle will invest.

Carlyle also announced this week that it has agreed to a share-swap transaction between a Taiwanese cable television operator called Kbro and Taiwan Mobile, which signaled a pickup in deal activity in Asia, where Carlyle has been very active.

Carlyle Asia Partners will exchange its holdings in Kbro for a 15.5 percent stake in Taiwan Mobile, becoming the second-largest shareholder in the communications firm.

The private-equity industry has suffered from lower returns and lack of deals over the last two years, with capital markets drying up. One bright spot has been the battered banking sector, which Carlyle and other deep-pocketed investors have seen as a place to make good returns at reasonable risk.

Last September, District-based Carlyle invested $75 million in Boston Private Financial Holdings. Last month, it was part of a group that injected $900 million into Florida's BankUnited. Carlyle was part of a group looking to buy Atlanta-based Silverton Bank earlier this month, until regulators decided to liquidate the institution instead.

Meanwhile, Carlyle on Thursday discounted a report in the Financial Times this week that said the firm "has resumed deliberations about a possible public listing."

Asked if Carlyle plans to sell stock in the public markets, Rubenstein told Reuters: "We have no plans to go public," according to Carlyle spokesman Christopher Ullman.