This article has been corrected: the details appear at the end of the story.

Bill Conway has a huge wad of cash burning a hole in his pocket. The man who calls the shots at Carlyle Group, one of the world’s leading private equity investors, says he would like to spend $5 billion (£3 billion) next year buying stakes in businesses across the globe. Unfortunately, not a lot of the money will be heading to Britain and Europe and he is not betting on huge returns.

Asia is the best place to invest, he thinks, with China and India offering the most opportunities. Then comes America, which he says is “resilient” — but Europe is a poor third.

Carve up the world economy into three — with America taking one quarter, Europe another quarter and the rest of the world accounting for half — what proportion of his capital would he allocate to Europe?

“I wouldn’t put a quarter of my money into Europe” is his answer. Carlyle has a European fund, launched in 2007 with €5.3 billion (£4.7 billion), but only 30 per cent of it has been invested.

It’s not for lack of trying and recently there has been a pick-up in deal flow. It is widely thought that the firm is among those preparing a bid for Shanks, the UK waste-management group.

Carlyle has had European successes: in Britain it owns Talaris, a banking technology business, Britax, the car seat maker, and Ensus, which is building a bioethanol plant on Teesside. But there have also been disappointments, notably IMO, the UK car wash business, Zodiac, the French pool-equipment company, and Stahl, the Dutch leather coatings business at which Carlyle faces a big writedown.

Mr Conway is one of Carlyle’s founders, and as chief investment officer he decides whether or not to write the cheque for each buyout proposal. “My job used to be to say — No,” he quips. “Ten years ago, people knew what to do: business was about growing, building brands and market share. Then it changed and for two years people knew what to do: it was about survival, cutting costs and paying down debt. We are through the worst, the panic is over and the question is, what do we do now? The answer is, I don’t know.”

The Carlyle boss has an avuncular and jokey style but the sleet falling from a leaden sky over Berkeley Square, where Carlyle has its London headquarters, seems to affect his mood. His prognosis of the immediate future is grim: “Rates of return are going to come down on all asset classes, including private equity.”

Interest rates will remain low. There will be more unwinding of debt, in particular at the banks, and that will keep a lid on asset prices. Investors will need patience, he thinks. “It’s too soon to be an aggressive investor. This is a time of great, great uncertainty.”

The unwinding is taking longer in Europe, where the financing of deals is much tougher, values remain high and the banks have been more reluctant to write down loans. After the crash, Carlyle purchased about $3 billion of debt owed by companies in which it is invested, but in Europe the figure was only $250 million, which he says is a reflection of the different approach taken by European banks.

“Self-delusion is a powerful aphrodisiac,” says Mr Conway. One priority is for Europe’s banks to recapitalise, and for the UK it is a serious burden. “The recapitalisation of British banks will consume a lot of resources. The Government needs to get its share in the banks down, but who will invest as long as government is in control?”

He favours more regulation of the exotic businesses of the big banks. “When I was a banker, you bought money and sold loans and did some services on the side. The banking industry does not look like that any more. Who can understand it?”

Almost three years ago, he anticipated the world’s current predicament in remarks he made at an investor conference, when he warned that the end of the cheap debt cycle would be “bad for everybody”. While deal valuations would fall, “getting to the nirvana of cheap prices — that is going to be a miserable time for everyone.”

But there is one place where investors are not having a miserable time and that is China. Mr Conway enthuses about the People’s Republic and it is easy to see why. This week, China Pacific Group, a life insurer in which Carlyle invested five years ago, raised funds in a Hong Kong public offering. Based on the reported pricing, Carlyle’s investment of $800 million has increased to $4.7 billion.

Not every emerging market attracts Mr Conway. The firm made two separate attempts to build a position in Russia but both ended in reversal. “In Russia, we never found out what the rules were. As long as I am at Carlyle, we are not going back a third time.”

C.V.

Age 60

Education Dartmouth College and the University of Chicago Business School

Career Early career in banking, spending ten years with First National Bank of Chicago. From 1981 to 1984, chief financial officer of MCI, the telecoms group, arranging fundraisings of several billion dollars. With Stephen Norris and David Rubinstein, helped to set up Carlyle Group in 1987. It has since invested $57 billion in 932 buyouts and currently has $87 billion under management in 65 funds.

Correction: earlier versions of this article suggested Carlyle has already made a formal takeover bid for Shanks.