Looking In, Not Out

Money Makes the World go Round

A few weeks ago, I wrote a blog called Foreign Relations. It described how a privately owned think tank group called the Council on Foreign Relations (CFR) creates and writes foreign policy for the U.S. The CFR was created one hundred years ago and is still "educating" our government today.

I thought you might find it interesting to learn about the man currently running the CFR think tank. His name is David Mark Rubenstein, and guess what? He is a billionaire. Most importantly, he also runs the second-largest private equity group in the world. More on this later. 

David came from humble beginnings, however. His father was a U.S. postal employee, and his mother was a homemaker. They created a stable life for David in Baltimore.

Top of the Class

The Rubenstein's knew that for David to be competitive in post-war America, he'd need a good education. Therefore, they sent him to the college preparatory high school Baltimore City College, an all-male school, and then to Duke University. 

David was elected to Phi Beta Kappa (meaning "wisdom is the guide of life") and graduated magna cum laude (meaning "with great praise," awarded to graduates in the top 5%, 10%, or 15% of their class) in 1970. Furthermore, he earned his J.D. (Doctor of Law) from the University of Chicago Law School in 1973, where he was an editor of the University of Chicago Law Review (Which is among the top five most-cited law reviews in the world).  

PE Time

As a result of David's education, he had a choice of law firms from which to pick. He chose to practice law in New York with Paul, Weiss, Rifkind, Wharton & Garrison (international corporate law). From 1975 to 1976, he served as chief counsel to the U.S. Senate Judiciary Committee's Subcommittee on Constitutional Amendments. Rubenstein also served as a deputy domestic policy advisor (creating the domestic policy agenda, from economic, racial equity, health care, and immigration) to President Jimmy Carter and worked in private practice in Washington, D.C. 

Meanwhile, David's career and connections lead him to yet greater heights. Leveraging his two partners, William E. Conway Jr. and Daniel A. D'Aniello, he built the Carlyle Group as one of the world's largest private equity firms. Today the global investment firm is worth $325 billion of assets under management, with more than 1,800 employees in 31 offices on six continents.

What is a private equity group, you may ask? To clarify, a PE is an alternative investment class consisting of capital not listed on a public exchange. Therefore, private equity comprises funds and investors that directly invest in private companies or engage in buyouts of public companies, resulting in the delisting of public equity.   

The books are Closed

For example, take a look at the blog I did on the Koch brothers. Private companies have a lot of autonomy. As a result, it is challenging to learn how they conduct business and just how much money they are making. So, the company has less risk or exposure than a public or traded company. 

The Carlye Group owns and sells hundreds of companies, but let's look at a few to get a sense of where the firm focuses its attention. First is ARINC, established in 1929, is a primary provider of transport communications and systems engineering solutions for eight industries: aviation, airports, defense, government, healthcare, networks, security, and transportation. Think computer data networks in police and railroad cars and maintain the standards for line-replaceable units restoring the mobile systems to service efficiently.

Second, AsiaSat is a commercial operator of communication spacecraft (satellite). A Chinese state-owned CITIC Limited and private equity fund, The Carlyle Group L.P., indirectly own. It had a market capitalization of $2 billion In 2018 before going private.   

Third, Avio, an Italian company founded in 1908, is a Prime Contractor for the new European launcher Vega and sub-contractor for the Ariane program, financed by the European Space Agency (ESA).

Let's Talk

Fourth, Le Figaro, a French daily morning newspaper founded in 1826 and published in Paris. It is the oldest national newspaper in France and one of the three French newspapers of record, along with Le Monde and Libération.

Fifth, NEP Group, Inc., is a Pittsburgh, Pennsylvania-based international production company that provides outsourced teleproduction services for major events worldwide.

Sixth, PanAmSat is a provider of communications satellites used by the entertainment industry, news agencies, internet service providers, government agencies, and telecommunication companies. Today the company is called Intelsat. It is the world's largest commercial satellite company, with 53 spacecraft serving over 200 countries.

Seventh, ProMedica Senior Care is a major provider in the United States of both short-term post-acute and long-term care. 2020, it had more than 300 skilled nursing and rehabilitation centers, assisted living facilities, hospice, and home health care offices.

A few More

Eighth, Qinetiq is a British multinational defense technology company headquartered in Farnborough, Hampshire, England. It is the world's 52nd-largest defense contractor and the sixth-largest in the United Kingdom.

Ninth, Syniverse is a telecommunications company based in the United States. The company's global headquarters is in Tampa, Florida, and its regional headquarters are in Costa Rica, Argentina, Dubai, Luxembourg, and Hong Kong.

Tenth, The Vinnell Corporation is an international private military company based in Herndon, Virginia, U.S., specializing in military training, logistics, and support in the form of weapon systems maintenance and management consultancy. Vinnell Corporation is a subsidiary of Northrop Grumman Corporation.

Finally, Vought, now known as Northrop Grumman, the successor to Northrop and Grumman, bought the Carlyle Group's Vought interest for $130 million in 1994. The purchase by Carlyle Group of the remainder of Northrop Grumman in 2000 would lead to the establishment of Vought Aircraft Industries, Inc. It is primarily an aerostructures subcontractor. Vought is heavily involved in the Boeing 747 Boeing 787 aircraft and supplying parts for the F-22 Raptor and F-35 Lightning II, and the V-22 Osprey.

Read all About It! 

My intention is not to go over every company that Carlyle has bought and sold over the years but to give you a sense of the scale that $325B can affect an organization. If you look at the examples above, many of their companies are focused on communications through radio, internet, satellite, or print. They also have many government or military contracts in the U.S. and abroad. The reach of Carlyle seems quite vast.  

Furthermore, I want to remind you that I started this blog by sharing that David M. Rubenstein is the leader of an influential Washington think tank called the Council on Foreign Relations (CFR). If you look at their website and preview their articles, you'll see common threads between what their focus is on and how the Carlyle group companies might be able to help.

For example, their defense and security tab has many articles discussing security and the Russian risk to the U.S. For instance, here is an article from June 15 called: The Risk of Russian Cyber Retaliation for the United States Sending Rockets to Ukraine. One of the companies the Carlyle Group owns is Veritas Technologies LLC. An American international data management and security company.     

The only Thing we have to Fear...

In summation, there are people who we have never heard about who own and control the majority of information we receive and the technology we use to consume it.  It is not incumbent on you to research every aspect of who and where you consume information.  However, you must understand that everyone is selling something. So if you get overwhelmed with stories of who is right and who is wrong, remember, there is probably a think tank out there trying to get your attention.

To clarify, go back to what you know. At the moment of now, are you healthy, safe, and with people you love? Good, now remember how powerful your thoughts are and focus on that.


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