Mega-buyout revival to take time: Rubenstein

Boca Raton, Florida (Reuters) - The age of the mega-buyout isn't over, but it may take a number of years for it to return, the head of one of the world's top leveraged buyout firms firms said on Wednesday.

David Rubenstein, co-founder of the $81 billion Carlyle Group, said a resurgence of large buyout activity of the kind that occurred in recent years is contingent on banks selling inventories of loans used to finance previous deals.

In an interview following a speech at a buyouts conference in Florida, Rubenstein said he believes banks will have sold most of the loans by year end.

He also said Carlyle, along with most other large buyout firms, have been buying the so-called leveraged loans from banks, including loans used to finance deals that Carlyle was involved in.

"You can do deals, but in the smaller sizes, of the $1 billion to $3 billion to $5 billion range," said Rubenstein of the current environment. "By the end of the year, most of the banks will have sold most of the loans on their books."

Rubenstein, however, also said that banks' ability to syndicate loans is also key to any restarting in large buyout activity which virtually collapsed in the wake of the Wall Street credit crisis of the past year.

Mega-buyouts are typically deals anywhere above $20 billion in value. There have been no such deals this year by financial sponsors, also called leveraged buyout firms.

But Rubenstein also said it will be "a number of years" for institutional buyers to return to the market for collateralized debt obligations and other vehicles used to finance deals, whose values dropped in the wake of the credit crisis.

"You won't see that for quite some time," he said.

Speaking at the SuperReturn conference in Boca Raton, Florida, Rubenstein also said he expects more consolidation among buyout firms, many of which now call themselves "alternative asset managers."

"You will see a lot of acquisitions," Rubenstein told hundreds of executives in a presentation, by firms looking to expand their strategies to include hedge fund trading, distressed debt funds, venture investing and others.

The aim, he said, is to be "a one-stop shop for people who want to be in alternatives," an asset class that typically includes buyout, venture, real estate, hedge and other strategies.

(Reporting by Dane Hamilton, editing by Dave Zimmerman)