Private Equity Industry Titans' Views

Hear it first at SuperReturn International!

Henry Kravis, Founding Partner, Kohlberg Kravis Roberts & Co

Henry Kravis, Founding Partner, Kohlberg Kravis Roberts & Co. and Leon Black, Founding Partner, Apollo Management International, were just some of the high-powered buyout chiefs at the Super Return conference, where the talk focused largely on surviving the downturn rather than making megadeals.

“You have to accept the fact that transactions will be smaller and have far less leverage -- that's a fact," said Henry Kravis. "That means all of us have to adapt. We have to change the way we'll do business. If we don't, we'll be left out."

Henry Kravis said the firm was seeking alternative investment opportunities instead of buyouts, as it waits out the credit crisis, including distressed debt, mezzanine financing and infrastructure.

Leon Black, Founding Partner, Apollo Management International

Leon Black, who finished raising a $14.8 billion fund in December, expects to be buying debt for the next two years instead, with the focus on credit-oriented investments, particularly in large senior loans and distressed assets.

"When financing comes back we will be a classic buyout house again but not till then," Black said.
The economic and financial crisis is leading to a fundamental change in the business model of the buyout industry and the topics of conversation were a sea change from two years ago, when remarks were about achieving bumper returns and striking $50 billion deals.

Kravis said looking after the portfolio was his most important focus in 2009. "It's portfolio, portfolio, portfolio, it's our obligation," he said. "We will focus laser-like on the portfolio. Nothing is more important than managing that portfolio. Our investors demand it."

David Rubenstein, Founder and Managing Director of the Carlyle Group

There were discussions about why, despite what may be a private equity shakeout, there is reason to be optimistic. David Rubenstein, Founder and Managing Director of the Carlyle Group, had a list of 15 points that put a positive spin on the recent private equity conditions, varying from a return to more-normal patterns of investing with less frenzy and activity (and hence more time to focus on companies), higher demand for private equity capital and the chance that private equity’s image might improve.
Mr. Rubenstein said that private equity is not seen as one of the causes of the current financial contagion in the same way that banks and hedge funds are being singled out. He said “I don’t think generally that we’re seen as causers of potential systemic risk. I think as an industry we need to spend some time explaining why we don’t think we’re causers of systemic risk.”

Steve Pagliuca, Managing Director of Bain Capital

In his keynote address, Steve Pagliuca, managing director of Bain Capital, said that structures in the private equity business will change as a result of the downturn: “Going forward in the brave new world, profit improvement, better strategic positioning and sales growth are going to be the key levers. The private equity firms that are structured to enhance and support that are going to be the ones who succeed”

Some of the 250+ speakers in 2009 included

Henry Kravis Founding Partner KOHLBERG. KRAVIS, ROBERTS & CO	David Rubenstein Founder & Managing Director THE CARLYLE GROUP	William Macaulay Chairman & CEO FIRST RESERVE CORPORATION	Kenneth Shen Head of Strategic & Private Equity QATAR INVESTMENT AUTHORITY
Daniel Och CEO OCH-ZIF CAPITAL MANAGEMENT GROUP	Arif Naqvi Founder & Group CEO ABRAAJ CAPITAL LTD	Jon Moulton Managing Partner ALCHEMY PARTNERS	Leon Black Founding Partner APOLLO MANAGEMENT INTERNATIONAL
Jonny Maxwell Global Head, Private Equity Fund of Funds ALLIANZ PRIVATE EQUITY PARTNERS	Scott Sperling Co President THOMAS H LEE PARTNERS	Kurt Bjorklund Co-Mananging Partner PERMIRA	George Anson Managing Director HARBOURVEST PARTNERS (UK)
Philip Yea CEO 3i	Guy Hands CEO TERRA FIRMA CAPITAL PARTNERS	Dr. Kjell Nordstrom Author, Economist & Renowned Business Guru	Professor Josh Lerner Jacob H. Schiff Prof of Investment Banking HARVARD BUSINESS SCHOOL

Charles Baillie Global Co-Head Alternative Investments & Manager Selection (AIMS) GOLDMAN SACHS	Yahya Jalil Senior Executive Officer THE NATIONAL INVESTOR	Jonathan Nelson Founder & CEO PROVIDENCE EQUITY PARTNERS	Juan Delgado-Moreira Managing Director HAMILTON LANE
Ali Al Shihabi Founder & CEO RASMALA INVESTMENTS	HE Ford Fraker US Ambassador SAUDI ARABIA	Ahmed Heikal Chairman & Co-Founder CITADEL CAPITAL	Arif Naqvi Founder & Group CEO ABRAAJ CAPITAL LTD
Kurt Bjorklund Co-Mananging Partner PERMIRA	Scott Sperling Co President THOMAS H LEE PARTNERS	Kenneth Shen Head of Strategic & Private Equity QATAR INVESTMENT AUTHORITY	David Rubenstein Founder & Managing Director THE CARLYLE GROUP
Henry Kravis Founding Partner KOHLBERG. KRAVIS, ROBERTS & CO	Jon Moulton Managing Partner ALCHEMY PARTNERS	Daniel Och CEO OCH-ZIF CAPITAL MANAGEMENT GROUP	George Anson Managing Director HARBOURVEST PARTNERS (UK)