Billionaire Leon Black has said that President Donald Trump’s plans to cut regulation and corporate taxes will “turbocharge” the economy and that private equity is also set to benefit from the overall boost.
Addressing an audience at SuperReturn, private equity’s global conference in Berlin, Mr Black said that, given eight years of growth, the “probabilities would say another down cycle is imminent” but added: “I’m not sure that’s the case”.
Mr Black, whose private equity group Apollo Global Management manages $192bn of assets, also said that debt terms to businesses were “similar” to those handed out in 2007 and that “we’re probably in a bit of a credit bubble”.
The Apollo chief executive said: “We’ve gone through four cycles so when we talk [about] the longevity of this recovery, we had many cycles where an average time for a recovery is 5 or 6 years – we are already entering the eighth year of this recovery. The probabilities would say that another down cycle is imminent but I am not sure that’s really the case.”
“With the new administration in the US they are talking about some very powerful stimulus of monetary and fiscal actions.. and if, and that’s a real if, they are able to pull off the lowering of corporate and personal rates and hold back a lot of the excessive regulatory environment that we have been living with for the last eight years …and create more jobs… those type of actions would [counter] a cyclical downturn. And we’ll have another few years of recovery.. a few years of [a] turbocharged, stimulative environment.”
President Trump said in January that he planned to make “massive” tax cuts for corporations and the middle classes in America as well as cutting back on regulations to help boost the economy, but has not yet provided details of the plans.
Commenting on Apollo’s involvement with the debt-burdened Caesars Entertainment, after the private equity firm participated in a $30bn leveraged buyout for the casino group in 2008, Mr Black said: “It has always been a firm where covering the downside was all important. We hate losing money. Occasionally over the years we strayed.”
The firm no longer pays nine or ten times the value of a company like Caesars, he said. “You never see those prices paid [now],” he explained.Asked if he was planning to retire, having just turned 65, Mr Black said: “I like very much what I do and my wife wouldn’t want me at home everyday.”