Masters in Business LIVE: Carlyle Group CEO Harvey Schwartz

Podcast Information:

• Title: Masters in Business
• Host: Barry Ritholtz, Bloomberg Radio
• Episode: LIVE with Harvey Schwartz, CEO of the Carlyle Group
• Release Date: April 30, 2025
• Description: In this live episode, Barry Ritholtz engages in an insightful conversation with Harvey Schwartz, the CEO of the Carlyle Group. They delve into Schwartz's unconventional journey to Wall Street, the evolution of private markets, and the strategic growth of Carlyle in the modern financial landscape.

1. Introduction

Barry Ritholtz opens the episode with enthusiasm, setting the stage for an engaging discussion with Harvey Schwartz. He highlights Schwartz's unique path to becoming the CEO of Carlyle Group, emphasizing his humble beginnings and the pivotal moments that shaped his career.

Barry Ritholtz [01:14]: "Harvey Schwartz is a no holds barred, blunt speaker, truth teller, really, really interesting person."

2. Harvey Schwartz’s Background and Early Challenges

Harvey Schwartz recounts his early life in New Jersey, marked by personal struggles and academic challenges. He shares the impact of his parents' severe mental illnesses and the loss of his mother at a young age, which significantly affected his high school performance.

Harvey Schwartz [05:01]: "I did grow up in New Jersey. I had two parents who were quite educated, but they suffered from severe mental illness. My mother had bipolar disorder, and my father struggled with schizophrenia."

Despite these obstacles, Schwartz credits several "angelic" mentors who guided him towards higher education, ultimately leading him to Rutgers University against the odds.

Harvey Schwartz [07:07]: "Linda encouraged me to apply to Rutgers. She wasn't an influential person like you, Barry, but she played a crucial role in my journey."

3. Transition from Rutgers to Wall Street

Schwartz details his unplanned entry into the finance world, starting with a challenging role in a municipal bond firm where he faced significant setbacks, including the market crash of 1987.

Harvey Schwartz [10:15]: "I was uniquely bad at cold calling. My first day coming out of the training program was the day the stock market fell 508 points."

Facing financial instability and personal hardships, Schwartz secured a position at Citibank through the help of a friend, marking the beginning of his more stable career trajectory.

Harvey Schwartz [12:15]: "I was at a tough point, running out of money. A friend got me a position in the back office at Citibank, which was the first step on a more conventional track."

4. Rise Through Citibank and Goldman Sachs

At Citibank, Schwartz transitioned from a temporary back-office role to a full-time position, eventually moving to Goldman Sachs. His time at Goldman Sachs was instrumental in building his reputation and expertise in the financial sector.

Harvey Schwartz [14:56]: "Carlyle calling was luck. It was a random thing that led me here. My time at Goldman Sachs helped build the reputation that made this possible."

5. Joining and Leading the Carlyle Group

Schwartz explains his decision to join Carlyle Group, attracted by the firm's robust culture, seasoned leadership, and the expansive opportunities within private markets.

Harvey Schwartz [16:44]: "Carlyle was compelling because I knew the firm from Goldman Sachs. The founders, David, Bill, and Dan, are incredible people and leaders."

Under Schwartz's leadership, Carlyle has grown to manage approximately $450 billion in assets across various sectors, including private equity, real estate, infrastructure, credit insurance, and secondaries.

Harvey Schwartz [03:19]: "Carlyle today is about 450 billion of assets spread across private equity, real estate, infrastructure, credit insurance, and secondaries and Co-invest."

6. Evolution of Private Markets

Schwartz discusses the significant trends in private markets over the past few decades, highlighting the shift of companies remaining private longer due to the expanding availability of private capital.

Harvey Schwartz [20:43]: "The trend of public companies shrinking and private companies staying private longer has been in place for decades. The capital available has continued to grow, creating opportunities for companies to stay private."

He elaborates on how Carlyle has adapted to these trends, including recent successful IPOs and the strategic importance of private markets in the current economic climate.

Harvey Schwartz [21:07]: "We took three companies public in the past six months, including the largest private equity held IPO in India, Hexaware."

7. Private Credit as a Growth Driver

Private credit emerges as a significant growth area for Carlyle. Schwartz explains the resilience and strategic importance of private credit, especially in a fluctuating interest rate environment.

Harvey Schwartz [27:14]: "Carlyle insurance credit platform is the largest part of the business today, almost 200 billion in assets. We're the largest CLO manager, with about 50 billion in assets."

He addresses common misconceptions about private credit being systemically risky, arguing that diversification across various capital providers actually mitigates such risks.

Harvey Schwartz [28:15]: "Private credit has been quite durable. The distribution of capital across private credit, banks, and other providers is systemically reducing risk."

8. Impact of Federal Reserve Policies and Economic Insights

Schwartz provides valuable insights into how Carlyle leverages its extensive portfolio data to understand and anticipate economic trends. He reflects on the Federal Reserve's rate policies and their implications for private markets.

Harvey Schwartz [30:35]: "Jason Thomas at Carlyle was one of the few who predicted the Fed would keep rates where they are. Our portfolio data gives us a unique perspective on the economy."

Despite the initial unpredictability of Fed policies, Schwartz emphasizes the importance of long-term strategic planning over short-term market fluctuations.

Harvey Schwartz [34:42]: "We're in the early days of a transformative capital shift. The space will continue to grow, driven by wealth and the efficient deployment of capital."

9. Future Outlook and Growth Prospects

Looking ahead, Schwartz envisions substantial growth for private markets, potentially reaching up to $10 trillion over the next decade. He underscores the necessity for scale, sourcing opportunities, reputation, and technological advancements, particularly in AI, to sustain this growth.

Harvey Schwartz [35:16]: "The space will continue to grow. We're looking at numbers as big as 10 trillion over the next 10 years. Technology, especially AI, will play a crucial role."

10. Conclusion

The conversation wraps up with Ritholtz expressing his appreciation for Schwartz's candid insights and the strategic direction of Carlyle Group. He teases a forthcoming full interview and encourages listeners to explore more episodes of "Masters in Business" for deeper knowledge.

Barry Ritholtz [36:52]: "It was really fun chatting with him. I learned a lot about him and about Carlyle. There are a whole bunch more questions I'm really excited to ask him."

Key Takeaways

• Harvey Schwartz’s Resilience: Overcoming personal and academic challenges to build a successful career in finance.
• Carlyle Group’s Growth: Expansion into diverse asset classes with a strong emphasis on private credit and strategic global investments.
• Private Markets Evolution: Increasing trend of companies staying private longer due to expanding private capital availability.
• Private Credit’s Role: Essential growth driver for Carlyle, demonstrating resilience and strategic importance in various economic climates.
• Economic Insights: Leveraging portfolio data for informed decision-making amidst Federal Reserve policies and economic uncertainties.
• Future Growth: Anticipated significant expansion of private markets, driven by technological advancements and capital deployment efficiency.

Notable Quotes

• Harvey Schwartz [05:01]: "I ended up really creating a career for myself. Not only at firms like Goldman Sachs, but eventually getting tapped to become CEO at Carlyle."
• Harvey Schwartz [16:44]: "Carlyle was compelling because I knew the firm. They had been my client when I was at Goldman Sachs."
• Harvey Schwartz [27:14]: "Private credit has been quite durable. The distribution of capital across private credit, banks, and other providers is systemically reducing risk."
• Harvey Schwartz [35:16]: "Technology, especially AI, will play a crucial role in the continued growth of private markets."

This episode offers a comprehensive look into the strategic vision and personal journey of Harvey Schwartz, providing valuable insights into the dynamics of private markets and the pivotal role of private credit in today's financial landscape.