Deal Talk: Interviews with Private Equity Leaders
By Moonfare
Subject to eligibility, capital at risk.
Deal Talk: Interviews with Private Equity LeadersFeb 08, 2024
Carlyle's David Rubenstein on democratisation of PE and the future of the asset class
The iconic private equity leader was the guest of our first Deal Talk in 2024, hosted by Steffen Pauls, Moonfare’s co-CEO and Founder.
David Rubenstein is the Co-Founder and Co-Chairman of Carlyle, one of the world’s largest and most successful private investment firms. Established in 1987, Carlyle now manages $382 billion from 28 offices around the world.
Rubenstein's career spans law, government service and finance. Before co-founding Carlyle, he practised law in New York and served as a domestic policy advisor to President Jimmy Carter.
In a conversation with Steffen Pauls, the iconic investor shared his thoughts on a wide range of topics, from private equity’s outlook to evergreen investing principles and leadership traits. Here are some of the highlights:
Private equity in today’s economy. “It’s harder to get loans than it used to be because of the interest rates. It’s also harder for buyers and sellers to agree on a price — there’s been a mismatch of 10 to 20% in terms of valuations. But I think buyers and sellers will come closer this year as interest rates come down. I also think you’ll see more deal activity.”
The future of the asset class. “As a general rule of thumb, if you go with good private equity people, you are likely to outperform public equity. This trend will likely continue. There’s also going to be more private equity in the emerging markets such as Latin America, Middle East, Africa and Asia. You’ll see more private equity there over the next 10 years and therefore more opportunities for people to make private equity returns.”
Democratisation of private equity. “You're going to see people invest a certain amount of money in private equity through 401(k)s, IRA or equivalent retirement accounts in Europe and elsewhere. These won’t be large amounts and likely won’t do poorly. In the next 10 years, almost everyone will have the ability to invest in private equity if they want to. But democratisation is not easy to achieve and it takes time.”
Key investing principles. “Most important principles are diversification and having realistic expectations about rates of returns — don’t believe they will be as high as someone might tell you. If you expect a 50% internal rate of return, it’s more likely to get a zero rate of return. Also, rely on good money managers. These managers have reasonable fees, are transparent, have a track record, reputation for integrity and are able to retain good people. Examine the people you’re investing with but give money to good ones to manage.”
Skills for success. “Specialisation is very important. If you really want to make a mark in private equity, take a small area and make it your own, become an expert in it. In addition, treat your investors with respect through good and bad times, don’t be arrogant with them when you’re doing well. Be humble and make sure to give them information all the time.”
Powerful leadership traits. “Persistence is everything. If you fail, pick yourself up and get back in the game. You typically need to have communication skills — to talk well, write well or to lead by example. Great leaders also know how to get things done. And they persist, persist, persist.”Important notice: This content is for informational purposes only. The opinions expressed by the interviewee are their own. They do not purport to reflect the opinions or views of Moonfare. Moonfare does not provide investment advice. You should not construe any information or other material provided as legal, tax, investment, financial, or other advice. If you are unsure about anything, you should seek financial advice from an authorised advisor. Past performance is not a reliable guide to future returns. Don’t invest unless you’re prepared to lose all the money you invest. Private equity is a high-risk investment and you are unlikely to be protected if something goes wrong. Subject to eligibility. Please see https://www.moonfare.com/disclaimers.
KKR Global Institute's General David Petraeus on current geopolitical frictions, economic uncertainty and AI
In conversation with Moonfare, General David Petraeus, the former Director of the CIA and decorated US Army leader (Ret.), spoke about current geopolitical frictions, economic uncertainty, the implications of artificial intelligence and more.
Now serving as a Partner at KKR and Chairman of the KKR Global Institute, General Petraeus recently joined us for a macro-themed episode of our Deal Talk series, hosted by Steffen Pauls, the Founder and co-CEO of Moonfare.
The pair discussed current geopolitical developments, their broader context and the impact these have on economic stability and private markets. The main highlights of this fascinating conversation include:
The success of Europe in easing economic woes. “In the case of war in Ukraine, there were worries of significant [economic] ramifications — in Germany, in particular, given its dependence on natural gas pipelines from Russia. The country had to go through a considerable effort to reduce this dependency. And has done that very impressively, cushioning the blow of higher costs of electricity for citizens and sought to do the same for major manufacturers. (...) By and large, Europe has done quite an impressive job responding to the sudden change to Russian energy exports.”
Making NATO great again. “Truth is that Putin set out to make Russia great again. But he made NATO great again by pushing historically neutral countries into seeking NATO membership, one already in Finland, the other one [Sweden] on the threshold of that membership.”
On the US relationship with China. “We continue to compete where we have to and strive to deter. Deterrence is the function of two elements — the potential adversary’s assessment of your capabilities on the one hand, and your willingness to employ them on the other. We have to ensure there is no question of that in the minds of decision-makers in Beijing. Not that we’re looking for a fight, we want to avoid a fight or conflict.”
The transformative nature of AI. “By and large, artificial intelligence (AI) will be transformative. We’ve gone through various exercises at KKR where we looked at every sector in which we invest. [...] AI will have transformative effects in many of these. It will dramatically improve productivity and efficiency and literally how we do everything, not just in our work but also in our daily lives. But it's going to take time, it will be uneven and it’s not always as predictable as one might think.”
The importance of information for investors. “We’re in an era that can be described as renewed great power rivalries. Barriers are going back up. There are great economic concerns and geopolitical risks. Globalisation has become “slowbalisation” and regionalisation. In this world, you have to have a very informed view of different trends and how they affect investment opportunities.”
Important notice: This content is for informational purposes only. The opinions expressed by the interviewee are their own. They do not purport to reflect the opinions or views of Moonfare. Moonfare does not provide investment advice. You should not construe any information or other material provided as legal, tax, investment, financial, or other advice. If you are unsure about anything, you should seek financial advice from an authorised advisor. Past performance is not a reliable guide to future returns. Don’t invest unless you’re prepared to lose all the money you invest. Private equity is a high-risk investment and you are unlikely to be protected if something goes wrong. Subject to eligibility. Please see https://www.moonfare.com/disclaimers.
CVC's Søren Vestergaard-Poulsen on superiority of the PE ownership model
Søren Vestergaard-Poulsen was the guest of our 12th edition of the Deal Talk series, in which Moonfare’s CEO and founder, Steffen Pauls, talks to some of the world’s most prominent names in private equity dealmaking.
Søren, who joined CVC in 1998, is a managing partner and co-chairs CVC's private equity board and oversees private equity activities in Greece and the Nordics. He plays a pivotal role in managing a firm with 25 local offices and €161 billion of assets under management.
In their conversation, Steffen and Søren discussed a wide range of topics, from CVC’s approach to sustainability to its distinct organisational culture. Here are some of the highlights:
CVC’s investment playbook
“We’re trying to find investments that are robust and where we have a clear value creation program to make these businesses better. If we can do that, we’re more than likely to make a good investment.”
The superiority of the PE ownership model
“The alignment of interest with management, the long-term approach to value creation, and the drive from the board level to create value are much better in private equity than in any other ownership model. Compared to when I joined, not much has changed either. It continues to be a superior ownership model and will stay that way in the years to come.”
Immediate outlook
“I think we’ll see a pick-up in 2024. We are already seeing the divergence in price expectations between buyers and sellers narrowing. And in terms of financing, banks are coming back to the market. We’re starting to see improvements.”
What you need for success in private equity
“It comes down to whether managers making investments know what they’re doing. If you are a sector fund, you need deep expertise in the sector. If you are a generalist fund, you need to be able to source the right deals and generate the value creation plan again and again.”
Important Notice: This content is for informational purposes only. Moonfare does not provide investment advice. You should not construe any information or other material provided as legal, tax, investment, financial, or other advice. If you are unsure about anything, you should seek financial advice from an authorised advisor. Opinions in this interview are not Moonfare's and Moonfare do not take responsibility for this. Past performance is not a reliable guide to future returns. Your capital is at risk.
Francisco Partners' Dipanjan ‘DJ’ Deb on investing in PE and taking a long term view
Dipanjan ‘DJ’ Deb, Co-Founder and CEO at Francisco Partners, joined Moonfare’s Co-CEO, Lorenz Jüngling, for the latest episode of the Deal Talk series — our regular fireside chats with leading global private equity dealmakers.
Based in San Francisco, Dipanjan ‘DJ’ Deb leads one of the most active and largest technology-focused investment firms in the world. To date, Francisco Partners has invested in or acquired over 400 technology companies.
In a conversation with Jüngling, ‘DJ’ Deb discussed lessons learned as a top dealmaker, provided his insights on technology investing and offered advice for first-time investors in private equity.
Complexity arbitrage: “Our strategy is straightforward — it's complexity arbitrage. We buy confusion, hopefully at a discount, and sell clarity, hopefully at a premium. This involves acquiring solid technology companies with strong customer bases that are not yet optimised. A common scenario in technology is companies losing focus on their core strengths and pursuing growth at any cost. We try to arbitrage this.”
On technology: “People always ask me if they have too much exposure to technology. And I tell them they don’t have enough exposure. Tech is horizontal, whether it’s in the government space, aerospace, fintech, healthtech or consumer, tech is pervasive and will displace anything that was done by hand before.”
Investing in private equity: “If you're going to invest in private equity make sure to take a long term view and don’t panic. The worst people can do is invest money at the top and take it out when things hit the bottom. There will be fits and starts along the way but I think equities are still the best asset class long term and I think technology is the best asset class within equity.”
Important notice: This content is for informational purposes only. The opinions expressed by the interviewee are their own. They do not purport to reflect the opinions or views of Moonfare. Moonfare does not provide investment advice. You should not construe any information or other material provided as legal, tax, investment, financial, or other advice. If you are unsure about anything, you should seek financial advice from an authorised advisor. Past performance is not a reliable guide to future returns. Don’t invest unless you’re prepared to lose all the money you invest. Private equity is a high-risk investment and you are unlikely to be protected if something goes wrong. Subject to eligibility. Please see https://www.moonfare.com/disclaimers.
KKR’s Henry Kravis on investing in downturns, lessons learned from past crisis and times of uncertainty
Moonfare’s founder and CEO, Steffen Pauls, hosted Henry Kravis, Co-Founder and Co-Executive Chairman of KKR and one of the most influential people in the private equity industry. Kravis talked about the power of curiosity, showing courage in the face of uncertainty, lessons learned from past crises, his views on investing in the current economic climate and much more.
Motive Partners’ Blythe Masters on the impact of generative AI on fintech
How has Motive’s founding partner managed the transition from blockchain entrepreneur to signing off equity cheques for fintech investments? And what impact does she think high interest rates and trends such as AI will have on the space?
Subject to eligibility, capital at risk.
Carlyle’s Jason Thomas on the fallout from SVB’s collapse, shifting focus and opportunities for private investors
In the wake of SVB’s sudden fall, how does Carlyle’s Head of Global Research assess its impact on the private equity industry? What is the focus now for companies in an environment of rising rates, and what opportunities could this create for patient investors?
Subject to eligibility, capital at risk.
Insight’s Jeff Lieberman on software’s fundamental role in growth
How does data analytics impact the Insight Partners’ managing director’s decision-making process, and in his eyes, what makes for a good entrepreneur? This episode was recorded on 9 November 2022.
Subject to eligibility, capital at risk.
Hg’s Justin Von Simson on the key to successful businesses in private equity
What does the Hg CEO think is the key function when it comes to tech investing? What does he make of the current macro environment? And how can outside parties evaluate PE funds? This episode was recorded on October 21, 2022.
Subject to eligibility, capital at risk.
General Catalyst’s David Fialkow on the need for patience in VC investing
Why does the Co-Founder of General Catalyst think his firm’s scale will help it during the tough VC market? And why is sticking with companies for longer vital when it comes to value creation? This episode was recorded on 29 September 2022.
Subject to eligibility, capital at risk.
Vinod Khosla on taking risks to hunt the biggest rewards in VC
Why is the Khosla Ventures founder unphased by taking on a larger probability of failure with some of his investments? And what are the ‘unfair advantages’ he seeks out in potential portfolio companies? This episode was recorded on 15 September 2021.
Subject to eligibility, capital at risk.
Permira’s Kurt Björklund on shifting private equity’s investing mindset
Why does Permira’s managing partner think private markets investors need to shift from risk-aversion behaviour to an upside-optionality mindset? And how does the private company governance model hold the edge over public ones when it comes to value creation? This episode was recorded on 18 May 2021.
Subject to eligibility, capital at risk.
Founders Fund’s Lauren Gross on how to identify the next wave of unicorn entrepreneurs
How does the Founders Fund partner and COO think that the firm’s agnostic approach has helped its success? And how does concentrating capital into specific investments such as SpaceX and Stripe feed into that? This episode was recorded on April 22, 2021.
Subject to elibility, capital at risk.
EQT’s Marcus Brennecke on why making mistakes is the making of a good investor
Why does the EQT Partner and CO-Head of EQT Group Private Equity Advisory team count listening to a diverse range of opinions as a key for success? And how does he manage investing across different economic cycles? This episode was recorded on 25 March 2021.
Subject to eligibility, capital at risk.
KKR’s Johannes Huth on why private markets private equity’s ability to create its own opportunities
Why does KKR’s Head of EMEA think private markets can outperform its peers in the event of market dislocation? And what is the implication of the huge amount of dry power investors have to deploy? This episode was recorded on 25 February 2021.
Subject to eligibility, capital at risk.