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Carlyle’s David Rubenstein Sees Buyout Firms Shifting Focus to Credit

Carlyle's Rubenstein Says Investors Are Okay With Slightly Lower Returns

Private credit could one day surpass the private equity industry in terms of assets under management, Carlyle Group LP Co-Founder David Rubenstein said.

While the private credit market currently manages just over one-fifth of the amount of assets that are overseen by the private equity industry, those holdings are likely to surge as traditional firms diversify into other strategies, Rubenstein said Wednesday in an interview at the SuperReturn International conference in Berlin. Credit provides attractive yield-based income for liability-driven investors seeking more private-markets exposure.

It’s a notable assertion coming from one of the buyout industry’s founding fathers. Private equity firms, especially publicly traded ones like Carlyle, have steadily expanded beyond LBOs by adding assets in strategies such as credit, real estate, hedge funds and infrastructure.

Washington-based Carlyle has made credit a top priority, building out its team under the oversight of global head Mark Jenkins. The group managed about $33 billion as of Dec. 31 across strategies including collateralized-loan obligations, business development companies, structured debt and opportunistic credit. The firm hired Jenkins last year from Canada Pension Plan Investment Board to build out the debt business globally.

“The private credit market today appears strikingly similar to where private equity was approximately 20 years ago,” Carlyle Co-CEO Kewsong Lee said during a call with analysts on Feb. 7. “We have considerable white space to launch new products and expand the investment mandates.”

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