Bloomberg hosts exclusive Future of Finance round table with David Rubenstein

Bloomberg hosted an exclusive virtual round table last week with over 30 senior global executives coming together to discuss the future of finance in the COVID-19 world with David Rubenstein, Founder and Co-executive Chairman, The Carlyle Group. The financier and philanthropist was at his candid best, sharing his views on the US economy, relocation of global supply chains away from China, and how COVID-19 is changing the way businesses as well as private equity firms function.

Mr. Rubenstein felt that the economic impact of the pandemic will be felt deeply around the world, and that the US is unlikely to see a quick recovery. He also felt that the current optimism in the US markets is misplaced as it will likely take longer than three years for the economy to recover from this current crisis.

Relocation of global supply chains

As the world braces itself for a new normal it seems inevitable that global supply chains will start shifting away from China, especially against the backdrop of the upcoming presidential elections in the US. Elaborating the changing geopolitical dynamic, Mr. Rubenstein said, “Nobody has ever lost any votes in the US by bashing China; both candidates are going to do whatever they can to win, and the easiest target is China, so I think there is going to be a lot of anti-China rhetoric from both sides. I also think that Congress will pass legislation that will say that in certain areas, the supply chain can’t be so dependent on any one country, which is really just a euphemism for China”.

Emerging markets losing sheen

Looking forward at the post-COVID world, the economic impact of the pandemic will be felt the hardest by the so-called emerging markets, felt Mr. Rubenstein. “I think the bloom is off the rose on ‘emerging markets’ because the growth rates, opportunities to invest and rates of return have not been as high as people thought they would be,” he said, while adding that oil producing nations would also face significant issues.

Lessons for the private equity world

Speaking about how private equity firms should deal with the crisis, Mr. Rubenstein advised them to hang on to their assets, put in more equity if needed and even buy their debt back at a discount if possible.

Moreover, he foresees a paradigm shift in the way private equity firms invest. Historically, PE firms did not invest in a company unless they met the CEO and they did due diligence in person. But now, as that’s not realistic, large sums of money are being invested without in-person due diligence, as more people warm up to the idea of making investment decisions after online presentations.

Sectors for the future

In keeping with the theme of businesses relying on online interactions, Mr. Rubenstein sees telemedicine, online education and e-sports as important industries to watch out for in the future. He also feels that healthy food or lifestyle related companies will be more successful.

The Bloomberg Future of Finance series features in-depth conversations with global thought leaders on investing, policy, economics and technology.

David Rubenstein also hosts The David Rubenstein Show: Peer to peer conversations on Bloomberg TV and Leadership Live with David Rubenstein, a Bloomberg Media Digital Series where he interviews the world’s top political and business leaders.