>> is a $2.5 billion industry, and i'm just in kelly. --ason kelly. we talked with some of those investors about what's on their mind during the first 100 days of the trump presidency and a world awash with money that may make dealmaking more difficult going forward. withirst conversation is

david rubenstein, the cofounder and co-ceo of carlyle group, when the most important voices in the private equity industry. i started by asking him about the effect president trump has had on his business. >> clearly the public equity market enjoys with the president is doing or talking about, so the market is very high. i do think anyone anticipated this of the day of election, but a lot of stocks -- financial service areas are up. i think private equity is benefited from that because when public equity goes up by a amount, valuations of private equity go up as well. if you are buying things, it makes it more expensive. indicates this private equity is fairly bullish about the economy. is the president said was that he's going to do that makes people so enthusiastic? >> people from all over the world are here and they are not affected by what happens to united states completely. united states is dominant and what the private equity world does. i think the reason people are excited about is the field there will be less regulation of

private equity in some ways, the have for some people private equities might not be there. i think some people don't like private equity or they think private equity people don't do great things and therefore they feel that was some feeling we are just good as we think we are. but the admin's reach is going to be focusing on other things and not beating up on private equity nothing the previous it must ration did, and private equity is welcome. deregulation coming out of washington 80 lower taxes will be favorable. >> blue shield for the president from private equity. >> very bullish. i haven't seen anything quite as bullish. >> one of the topics that came up is infrastructure. suddenly is everywhere. this $1istic is trillion figure he's talking about from your estimation?

unlikely will quickly go into effect come it takes a long time to build infrastructure and takes a long time for congress to authorize it and you have to figure out where the money is going to come from. it's possible the money comes back from u.s. companies overseas that could be repatriated in use for infrastructure. billion, ily be $200 get $1 trillion and at the lot. i do think there's going to be some private partnerships, our firm is one that is involved in infrastructure. i think there is money. interesting thing is in the old days, infrastructure was called porkbarrel and we are building -- building bridges and dams, now we recognize we need these things, and it's called in for structure editor structures or the government he likes. >> the enthusiasm here in berlin is not just for the current administration, but overall for the industry, fundraising is

hitting new record levels, dealmaking seems robust, how sustainable is that? >> you never know you are at the peak of the cycle until the cycle has peaked and you are in the bubble having burst. i do think that people feel there's a lot of good returns, private equity returns have drifted down, we are still about 800 basis points over public equity returns on average. as long as those averages say 800 basis point differential, they're going to put money in private equity and private equity people out a lot more value. they really add value. i really do think the industry's bliss nature is justified. >> given the perennial overhang of capital, all of this dry powder, how quickly can managers like yourself put it to work. is there a lot of pressure? >> to take the stock markets around the world, it's $85 trillion. private equity is maybe a 3 billion -- $3 trillion or $4 trillion money is still

relatively small percentage of the dollars that are available from the overall markets. the money can be invested, but if you have five years or six years to invest, it can be invested. >> is money still very easy to raise around the world all the time? grexit was that easy, i wouldn't be around the world all the time. you can't just call it in. i could call people up and say send me the money, but i have to show up. people want to put money in private equity because they inc. are likely to be higher than any other asset class and they think the risk reward is better than anything else. evil arecoming in and saying we want to be the first closures of your fun because we don't want to get shut out. used to be people wait to the end, now people want to come in and make sure they get their fair allocation. it's a good time to raise money. >> that was david rubenstein. one of the consistent themes was the amount of money pouring into the private equity industry.

i asked the global head of private equity what that means for dealmaking going forward. >> fundraising continue to be strong, returns are up and very strong as well. dealmaking has been very difficult because of germans the high prices but continued to persist in the industry, really providing a lot of headwind for to putrs try to get my to work that lp would like to see them put to work. >> that's what we're hearing. let's talk about fundraising for a second. especially for the mega buyout funds, $5 billion plus funds raised since 2008, really since the crisis. how long can this go on? >> is going to get tougher. we call this the elephant and the snake problem. in 2006 andmounts 2007 have been monetizing over the last four years. as lps and have their coffers filled with tremendous amounts of cash, they want to put money back into the industry because returns have been better than

people feared. as the fundraising markets have been very strong, putting the market back into the market, we've seen the elephant passed through the snake, they will be fewer distributions going forward and i think everybody is thinking it's a bit late in the day in economic expansion at some point we may have a macro shot of some type that may drive returns down. we may find a perfect storm in the future of less cash loans lps and returns being compressed by adverse macroeconomic conditions and actively to potentially tougher fundraising environments down the road. >> you mentioned a challenging deal making environment as well, valuations seem to be extraordinarily high. we had a huge robin u.s. stock market. what is the outlook there for the rest of the year? will be tough,g prices are going to be high. with a amounts of dry powder in the industry, we have a tremendous amount of shadow ,apital, institutional money

for this cosponsorship with also there. it adds another 15% to 20% to the dry powder already in the market space. the amount of equity chasing deals, the number of companies to buy is not growing at that rate. the amount of cheap debt is level. prices remain very high into the future and it just makes it tough to pencil in the kind of returns that they expect. >> one of the areas you pointed out is technology and just a huge amount of money chasing those deals, deals getting done. what's behind that? >> seven of the largest transactions were in the tax base in the software and the hardware side. any technology offers a couple of different ways to add value. one ipartular on the software side in the service ide,t has the kind of growth rateny o in mathe subsectors that will support the kind of these assets.uy i have a double-digit growth rate uncommon it is going to continue into the future, it makes me feel better.

particularly on the hardware side. growthasonable revenue with the potential for cost improvement because the go-go years of growth are gone and we haven't really focused on the cost structure. now it's time to get more efficient and focus on the cost and the tech sector has been very attractive from those two perspectives. >> lsu macarthur. without as a backdrop, i asked the managing partner how that changes his pitch to investors in berlin? >> of any hearing too much dry powder for the past 20 years. but it's true. it's even more true today because in some respects, we are returning capital, that the case -- at the pace we planned and we returned capital almost three times that.

as a result got is a lot of capital of people want their allocations and private equity. , and what allo do the lps and the most important partners are here and i talked about is really stick to our knitting and stick to our strategy. for us, it's clear. we invest heavily in sector tears, we spent years thinking about not trends, but teams -- and we canhe sectors deploy resources against and create an ecosystem around not only find opportunities that are differentiated but oftentimes even in this world, proprietary and then companies that we can grow once we on those companies. long-term sector driven investors, i think we are growth investors. spent those years looking for the company, looking for the management team and once we own a business, we are the chief investor and we are going to keep growing it until we trade something that is really special. >> to deal making it harder with all that money? >> it really speaks to the

obstacle your gut. is a constant tension between what's interesting and was actionable. the actual is the investment bank companies that goes to 10 or 12 of your closest friends, .ou get a chaperone dinner we are not very good at the actionable without a perspective. it's interesting. even if we have to put 15 things in the water to get two that turn into ims, some of the deals that i've been involved with, for us, it's worth that. an environment like this, it's more important that you figure out what your strategy is an invest in your ecosystem and you curate that ecosystem. and then you take your time finding things and the deals we filled out and played with over the past couple of years have been consistent with what they tried to do.

>> one area that's been competitive is technology. seven of the 10 biggest deals in tech, it's a space you played in. can you be competitive given the money that's there? >> i think we can be very competitive. we have an excellent team. , thinking ofy cybersecurity, identity is being stolen and computers being it's becoming more top of mind. we been focusing on that for years. -- we have a series of smaller investors for the growth fund that helped us understand with the landscape is and after years of knocking at the door, we have now taken mcafee in partnership with the parent company intel. what was essentially a

preparatory -- proprietary dialogue. we have ecosystem for any specific plan. it wasn't a competitive process. our investment in ca ultimately investments in cirque du soleil, the result of years of working in different segments of technology, where we can have approach for differentiate angles. >> coming up after the break, who is buying and who is selling? here for more voices in berlin. we didn't just the u.s. election, we didn't guess brexit, i don't think we can guess anything else in the short term. we just need to stay calm and stay focused.

♪ jason: welcome back. i am jason kelly here in berlin at the superreturn international conference. on stage and in the halls, there has been a mood of cautious optimism, and part ofhe caution comes from concerns about regulation that may be headed for private equity in europe and back in the united states. i asked pam hendrickson, the coo of riverside what that might mean for her investments and firm going forward. pam: when you think about some of the things that need to happen or that might happen, it is really hard to get things done. things do not move quickly. no government in the world short of a dictatorship can really move things along quickly. so let's talk about border tax. that came out and now there is a deluge of people going wait a

minute, you can't do that. mary barra of general motors going, if i import the parts from china and assemble the car in detroit, what does that do to me? on deductibility of interest, you have really a lot of small businesses going, wait, this is how i have financed the creation of my company. so the fact is to lower tax rates, you need to pay for it. the pay for it either needs to be interest deductibility or border tax. they have to get that done. or little r reform, tax policy doesn't adjust that much. my suspicion is we get little r reform, not big r reform. jason: you have gone to capitol hill as an advocate for the industry.

how do you play out how those things -- especially something like deductibility of interest, how does that affect your business going forward? pam: private equity people, we been doing this a long time and investing through multiple cycles. we will amend our structures to deal with whatever things get done to us in washington. as long as the interest rates stay low, probably doesn't impact us terribly much. i think you heard this morning, capital structures largely won't change that much because interest is still a cheaper form of financing than equity. if interest rates go really, really high, that could change. we will figure it out. jason: where do you see corporate tax rates going? are they going to move meaningfully down in your estimation from what you hear? pam: i think there will be significant effort to bring them down, but to do it through

budget reconciliation, you've got to have a pay for. and there is so much conflict around the pay force is that what i see most likely happening is you get a holiday on repatriation of profits. that's the kind of thing you see happen more than an overall reduction in rate. jason: when you think about the general geopolitical landscape right now, how is it affecting your dealmaking? pam: i said this the other day, we owned a italian gelato ingredients company. we own taste cookies in the united states. people will probably eat gelato or taste cookies regardless of who is in power. we find ourselves as a very micro firm looking for great companies that are going to do well through many different environments.

i think where we are probably more cautious is on issues where the supply chain is reliant on another country, particularly china and mexico, or where the growth strategy is reliant on being able to sell into some of those countries where there is talk about what is going to happen. jason: the stock market has gone pretty robustly up certainly since the u.s. election. what affect has that had on valuations and your ability to do deals? pam: valuations are incredibly g. period. we have for a couple of years been modeling a lower exit and entry multiple. we just don't think we can make money on the buy. once in private equity you could do that, now it's about having a well articulated and well executed growth strategy. we heard somebody this morning say it's really about controlling the factors you can control and only investing when you know you can control those factors.

that is the way to think about it. jason: politics is a topic that pervaded every conversation here in berlin. elections in the netherlands, france and germany are on the minds of everyone in europe. i asked roberto quarta what this means for him in terms of navigating his field. roberto: i think we are to have to get used to uncertainty. uncertainty seems to be the order of the day. last year, we were worried about latin america, columbia, the u.s. election. here we are now with what you describe, the trump effect in the u.s. and what's going to happen here in europe. private equity has been very good in the past to be able to adapt to changes. frankly, i think we have to step up to the plate. i think we have to have a degree of caution and thoughtfulness relative to where we should be

investing, but the opportunities will be there. but the challenges will be even greater in this sort of environment. jason: you mentioned the trump effect, how much is that bleeding over into europe in terms of dealmaking and exits and all of that? roberto: i think we are more focused on europe. we are more focused with what's happening with brexit. that is just beginning to show the effect. the elections in germany and the elections in france are being watched very carefully. the focus for those of us in europe is primarily europe. although we do acquire companies that are global. they may be headquartered in europe, but may have a strg presence in the u.s. one has to keep an eye on both sides. first and foremost, we are looking in our backyard.

and taking different views, and perhaps we are taking more cautious views until we see the outcome of those elections and we begin to see a bit more of what this brexit is going to look like and what the implications of brexit are going to be for us as investors. jason: despite all this political uncertainty, valuations still seem to be very high. stock markets are going up. how does thst play through to your investment strategy right now, both as a buyer and a seller? roberto: i think those who follow private equity, we have had golden years relative to exit. you will see more and more exits given the high valuations. especially for companies that are in public markets. i think from a buying perspective, obviously that is something we need to think about. jason: obviously there are a lot of big dealmakers here, a lot of big voices in berlin. what has really struck you, anything surprising or any key themes you would point out? roberto: first of all, i heard this morning as i came in that this is the best attended

superreturn in 10 years time. so what does that tell you? it tells you that the private equity is thriving. it's facing the challenges we discussed before. certainly, it is focused on some of the issues that are being discussed here. the themes of lots of capital, lots of dry powder, everyone will tell you that. the challenges will be in deployment, given what we talked about earlier. high valuations. we need to be selective and focused. jason: another one of the themes we heard a lot about and even in the halls is regulation and taxation and policy that may or may not change business. how do you think about that? you are a privately held firm. you have been in business a long time and you've been there for more than a decade.

roberto: there is lots of speculation but does anybody really have the answer? the best thing is to stay cool and watch and see how it develops. if you are talking about deductibility of interest, obviously it is a big issue for this industry. we will have to see how that plays out. i mean, the implications of that as you know would be far-reaching, not just for our industry, but elsewhere. so i think it's a wait and see. lots of moving parts. i think the surprises are not over. probably lots more surprises coming up. we did not guess the u.s. election, we did not guess brexit. i do not think we can guess anything else in the short-term. we need to stay calm and stay focused. jason: thanks for joining us for this special program from berlin at the super return international conference. i am jason kelly, and until next time, so long. ♪

♪ david: so, what did your family think? did they say that there's something wrong with this young man. he just wants to do computers? >> it was considered a little strange. david: have you thought how much better your life would be if you got your harvard degree? bill: i am a real dropout because i take college courses all the time. david: what about steve jobs in those days? what was your relationship with him? bill: we were both there at the very beginning. david: you are the wealthiest men in the world for 20 years or more. is that more of a burden than a pleasure, to be the wealthiest men in the world? >> would you fix your tie, please? david: people wouldn't recognize me if my tie was fixed. let's leave it this way. all right.