Private Markets Set For Trillion-Dollar Growth, Carlyle's CEO Says

In Brief:

Bloomberg's Sonali Basak interviewed Carlyle CEO Harvey Schwartz at Bloomberg Invest about the firm's growth strategy and market outlook. Schwartz provided a candid assessment of how geopolitical economic tensions are creating unprecedented uncertainty while emphasizing that private capital formation remains a durable long-term trend.

Big Picture Drivers:

• Geopolitical economic tension: First time in Schwartz's lifetime we're entering a period of significant geopolitical economic tension after decades of favorable trends

• Market uncertainty: Recent tariff discussions have shifted markets from certainty to uncertainty, causing risk reduction

• Inflation concerns: Tariffs create complicated outlook with potential for one-time price increases or sustained inflationary pressure

• Private capital growth: Private markets continuing secular growth trend, projected to reach $25-26 trillion "before we blink"

Key Topics Covered:

• Tariff impacts: Distinction between economic policy tariffs and politically motivated tariffs, with varying inflationary effects

• Investment approach: Carlyle focuses on "pricing risk correctly" rather than avoiding it during uncertain times

• Economic outlook: Current economy remains stable with solid growth, earnings, and resilient consumer despite uncertainties

• Rate expectations: Market has shifted dramatically from expecting one rate cut to three, reflecting tariff concerns

Key Insights:

• Portfolio adjustments: Carlyle is factoring uncertainty into valuation models, impacting what they're willing to pay for assets

• Inventory signals: Carlyle's data showed purchasing managers increasing inventory months ago in anticipation of tariffs

• Defensive growth: Defense sector set for secular growth regardless of tariffs due to global conflicts

• Wealth transition: Movement of wealth portfolios into private capital represents massive growth opportunity globally

By The Numbers:

• $440 billion: Carlyle's total assets under management across private equity, real estate, credit, and insurance

• Nearly 1 million: Employees within Carlyle's portfolio companies globally

• $10 trillion: How much larger US GDP is compared to EU, up from equal levels in mid-1990s

• $5 billion: Value increase in Carlyle's portfolios in recent months

Memorable Quotes:

• "We don't seek to avoid risk, we seek to price it correctly" - Harvey Schwartz

• "I wouldn't bet against America" - Harvey Schwartz

• "The only thing that gets in the way of the industry and the growth of this is the industry" - Harvey Schwartz

The Wrap:

As private markets continue their inexorable growth, accessing this opportunity has become increasingly crucial for wealth clients and institutional investors alike. Schwartz believes the private capital industry can maintain its growth trajectory if it focuses on consistent performance rather than racing to develop products. Despite current market uncertainties driven by tariff concerns, Carlyle remains positioned to capitalize on global opportunities while navigating the new normal of expanded geopolitical economic risks.