Private Equity at Davos: What they’re saying…

The grand masters of private equity converged on Davos, Switzerland for the Alpine talk blizzard otherwise known as the World Economic Forum. Here’s what they had to say about the state of the industry and the outlook for the economy.

Carlyle’s David Rubenstein, appearing on CNBC, discussed the outlook for private equity now versus two years ago:

“The environment is night and day from two years ago. Then, people were fairly downbeat about the economy and private equity. Now, you’re seeing private equity deals get done, they’re getting financed, IPOs are occurring. And it’s not just the U.S. and Europe, but around the world, and particularly in emerging markets. Emerging markets have become the epicenter of private equity to some extent. So China, India and Brazil are all seeing much more money than ever before, and a fair number of exits as well.”

Blackstone’s John Studzinski, appearing on Reuters Insider, predicted a strong flow of funds into U.S. equities and debt that should continue through mid-year:

“The funding environment in the U.S. both in the equity and debt markets is robust. It will certainly continue to May and June, and then the market will pause and see… It is going to be a continued flow into North America as people are rebalancing from emerging markets into North American equities.”

Donald Gogel of Clayton, Dubilier & Rice, appearing on Bloomberg TV, said he was more sanguine about the economic recovery. As far as IPOs were concerned, however, private equity firms seem to think the window is open:

“There’s no doubt that we and others are going to take companies that we have invested, built slowly, and built management teams and market share, those that are ready for the IPOs you’re going to see that the window is open, and that private equity firms are always inclined to hit it when it’s open.”

Silver Lake’s Glenn Hutchins, appearing on CNBC, discussed private equity’s outperformance over other investments in the wake of the recent financial crisis:

“Private equity proved to be a stabilizing force. It stuck to the ribs… Investments people made in private equity over the last couple of years have been generating very good returns… It’s proven to have been one of the best places to have your capital.”

Blackstone’s Steve Schwarzman, appearing on CNBC, said his firm is upbeat about real estate, particularly hotels:

“We’re putting money continually in the hotel business where we’re seeing a big pick up not just in the United States but literally everywhere in the world. So the travel business has picked up a lot, hotels have picked up… So, there’s a lot of opportunity not just to buy the equity, but a number of these properties really need to be financed, so buying the debt and converting that to equity or participating in a restructuring has still very good returns.”