RITHOLTZ: So really a period of transition and . To me, this world is normal, not abnormal, with, you know, positive real interest rates. Thank you, Joe, for being so generous with your time. BARATTA: In November of 2001, when I moved over , BARATTA: The industry wasnt called private equity; it was called venture capital and it wasnt . So, clearly, that was a great time to pull back in mid-2021. The first deal we looked at was in France. Two years ago, Joe Baratta couldnt figure out what Blackstone, the private equity giant he worked for, should do for its next move in media and entertainment. at the top of the firm, you know, Steve, John, a few others of us who are on the management committee are really able to push down into the organization like what were seeing and to change investment behaviors. And the fact that financing costs are higher, kind of its neither here nor there because our returns are not predicated really on the cost of financing. Joseph Baratta | Year Up India is very attractive. The most active insiders traders include James Breyer, Hamilton E James, and International Group Incaig . Whats it like trying to manage a rapidly growing private business, with eventually the currencies became more or less uniform, but different languages, different customs, different culture, different ways of doing business? And they introduced me to and I wont name names, hes a wonderful guy. The first job for Morgan Stanley was McCown De Leeuw. For a brief while, we had an office in Hamburg. BARATTA: I had agreed to go before September 11th happened. RITHOLTZ: So eventually you leave Morgan Stanley, you ended up at Tinicum Incorporated and McCown De Leeuw & Company. Over that 25-year period or even the past decade where youve tripled in size, its more than just quantitative. What sort of new markets are you guys considering? BARATTA: Yeah. And so I didnt know, you know, what finance was all about. RITHOLTZ: What about geographies? Joseph Baratta - Wikipedia And the whole firm was maybe 200 total employees , BARATTA: not just investment people, total staff. RITHOLTZ: So how much of this is a function of a trend we sort of began in the 1990s? And so, thats what we were able to do to a large degree, is to become more conservative, to become more cautious on valuations, you know, as we started seeing evidence of inflation, and thinking that rates were probably going to go up at some point. Privacy Policy So one of our first hires, now, the man who runs our business in Europe, we hired this guy, Lionel Assant, whos French, and we hired Germans. and Merlin Entertainments Group. First Eagle Investment Management, you mentioned Medline earlier, Ancestry.com is probably things people are familiar with. stonco lighting catalog. RITHOLTZ: Thats quite interesting. Theres definitely been proof of concept for large scale institutional investors and even retail investors, that we can produce sustainable, predictable, above public market returns. Scrutiny, Apple Drops Lawsuit Against Former Chip Executive Over IP Theft, Coinbase CEOs Pay Shrinks as Stock Slides. So thats been a really important book Ive read recently, and I think hes great. And so, corporate carve-outs, public to private, you know, the last few deals weve done, a bit of large corporate carve-out from a large important American corporate, Emerson. Talk about linear TV , BARATTA: there were two games, one at 10:00, one at 1:00, and the Cowboys playing in the NFC East. The dot-com had just imploded. But, in financing acquisitions and capital needs of these middle market companies, the private credit market has played an important role in that. RITHOLTZ: And so you guys are expanding in the 2000s in Europe. RITHOLTZ: To say nothing of two people separated by a common language, right? Im assuming you guys . I think Id been to London Im not even sure Id been to London. And we did we became more cautious. Disclosures I know there are lots of different funds. All Rights Reserved. You could consume Saturdays with kids running around. And so we sort of followed our real estate colleagues, where they went and establish a toehold, became successful. Blackstone, as a brand name, was becoming more known just everywhere, but in particular in Europe, because we werent particularly well known at that time. And, you know, I needed to earn some money and I was adept in finance. And then it evolved. RITHOLTZ: First of all, how did you first get involved with them? RITHOLTZ: firms or private equity firms? Am I exaggerating that at all or . But were seeing solid demand. I mean, it was certainly not expected. We bought their Climate Technologies business called Copeland. But were not seeing it. My friend and former Morgan Stanley analyst, colleague, Chad Pike, ran our European real estate stuff. BARATTA: Yeah. The estimated Net Worth of Joseph Baratta is at least $181 Million dollars as of 1 April 2023. And I was like, geez, okay, well . Follow all of the fine family of Bloomberg podcasts on Twitter @podcast. And then we started seeing significant signs in inflation, particularly in our real estate business, with rents going up significantly, wages going up across our private equity portfolio, beginning to see pricing power for many of our companies that they hadnt had in a long time. To view recent press releases,click here. And heres this like schmuck from Sacramento, like, you know, 30 years old, like pitching him on why wed be a good partner for him. BARATTA: even though they lost in that 81 thing. We back them with capital and support, and we let them run the businesses. Be sure to check out ourMasters in Business next week with Brian Hamburger, founder of MarketCounsel and Hamburger Law Firm. RITHOLTZ: How important was it finding a local partner to, you know, hook up with them and be able to participate in deals with? So I said, well, what kind of deals worked in the U.S. in the early 90s, in my experience? We combined it with another one. But I love the announcement when you were promoted to Global Head of PE from Blackstone, they said the 73 investments and pending deals youre involved, and combined for $117 billion in revenue, the equivalent of the 13th largest company by revenue on the Fortune 500 list. Inflation is significant. But it is looking at whats more attractive and whats less attractive. So not a lot of money, you know, get engaged in the arts and really important cultural institution; where in the U.K., its less sort of focused on the elite and more focused on like the democratization of art and culture for the people of the U.K., and I really identified with that. When did Blackstone start to look at Asia? Markets never sleep, and neither does Bloomberg News. So, you know, you could go to France, maybe they didnt love, you know . BARATTA: Yeah. Theres real inflation. RITHOLTZ: Im not being sarcastic. Feel free to sign up for my daily reading list at ritholtz.com. It feels like were very early stages of transitioning to being able to pull up somewhere and spend 10 minutes charging the car to get you another 100 miles or so. Matthew Delly on LinkedIn: Areas of thematic investing focus from So we have to work with our investors, our limited partners, other private equity firms to assemble a deal that gets much more than $10 billion of enterprise value. So taking advantage of the currency declining, a lower cost base in India, but revenues denominated in dollars or euros. For press inquiries, contact [emailprotected]. And they had like bottles of Bordeaux on the conference room table. RITHOLTZ: in prices. Weve had a big business there for a long time and we see really attractive assets. RITHOLTZ: And when you say Steve, for those people who may not be familiar with . Happy to be here. RITHOLTZ: I never would have guessed that. Over the last 16 years, insiders at Blackstone Inc have traded over $2,308,931,535 worth of Blackstone Inc stock and bought 906,721 units worth $30,000,792 I grew up in Sacramento, California. But in the moment, it was less wonderful. Sounds like you guys arent aggressively in the, were in a recession or about to have a recession six months. RITHOLTZ: You start out in California. BARATTA: watch media, changed the way we shop, changed the way we found information. He is also a member of the firms Management Committee and serves on many of the firms investment committees. Is there a ceiling, or at what point you look at something and say, hey, thats just too big to try and take a bite on? I had no language skills. And, you know, I grew up at the foothills of the Sierra Nevada Mountains, and I love to go there. Blackstone has raised the largest-ever long-hold private equity vehicle as interest in the strategy from both investors and managers increases.. Mr. Baratta served as the Senior Managing Director and Head of European Private Equity at The Blackstone Group. BARATTA: Exactly. RITHOLTZ: You know, when there is no alternative, people just pile into equity. I mean, I was in my mid-20s and, you know, looking to build a career in private equity. Your base of operations when youre in the U.K. is London, but youre back and forth to multiple countries. And so, in terms of where our teams are spending time, its in and around sort of public markets. RITHOLTZ: Really quite interesting. Get subscriber-only insights and news delivered by Barry daily. That is part of the energy transition. Read deeply reported stories from the largest newsroom in tech. I think because the private equity investing model has been really good for our clients, which are state pension plans, sovereign wealth funds, you know, ensuring the retirement safety of many tens of millions of people. RITHOLTZ: How did you first get involved with them? Yeah. We were much more networked. Mr. Baratta owns over 85,000 units of Blackstone Inc stock worth over $99,814,339 and over the last 3 years he sold BX stock worth over $81,255,679. It had a lot of momentum. RITHOLTZ: Happy to have you. How are you looking at a geopolitical event like that affecting, you know, whats taking place on the continent? Were seeing some companies have less pricing power maybe than they had a year ago. And I think people just need to relax, take a deep breath. So we kind of went on, did some missionary work, meeting the local private equity firms in France and, of course, in the U.K., in Germany, up in the Nordic region, in Italy, and we just met all the other players. RITHOLTZ: Post Brexit, is that the driver? BARATTA: Well, I would say in my 25-year history at Blackstone, there were certain industries that were growth industries that we were investing in in the mid 90s and late 90s and early 2000s, that now are no longer investable. RITHOLTZ: And you had mentioned private credit before, that seems to have been a giant growth area, especially when rates were at zero, when people arent seeing a whole lot of returns from fixed income. But I could have evolved more quickly as an investor, you know, over time, and I continue to learn that lesson. . Signup for our newsletter to get notified about sales and new products. And there, we were two young Americans, no language skills, like what are we supposed to do? And the cost of financing and the quantum isnt the biggest driver of our returns. The firm had had , RITHOLTZ: Do you need language skills in England, or is it . You have your way. Were down to our last two questions, what sort of advice would you give to a recent college grad who was interested in a career in private equity? RITHOLTZ: Really quite interesting. Blackstone: long-life private equity funds 'now an asset class' RITHOLTZ: Youre like late 20s at this time? And so, yeah, it was helpful. BARATTA: I think that it changes so much fundamentally, that you cant hold on to like, you know, absolutes. Blackstone CEO Schwarzman took home $610.5 million in 2020 The war in Ukraine, surprisingly, hasnt had a negative impact, or at least not as much as I expected in the public markets. So, you know, the answer is we cant really get deals much bigger than, you know, $10 billion to $15 billion done on our own. Then we did other similar investments, particularly with real estate content, the pubs all own their real estate. BARATTA: Yeah. What are you reading right now? Kirk Falconer - January 10 2022 + You know, in the market, its like if you start at the wrong time, if youre wrong for a few quarters, like, boom, like the career is abbreviated. Barry Ritholtz. I dont miss a game. It took a year for all those local currencies, literally paper and coin currencies, to come out of circulation and have euro bills. And so, that didnt happen until 2002. RITHOLTZ: Yeah, supposed to be sort of loosely fashion day . RITHOLTZ: And have done a pretty nice job, right? Joe Baratta is preparing for a new world. We talked earlier about inflation and rising rates. Blackstone on LinkedIn: Global Head of Private Equity, Joe Baratta In addition, he makes $0 as Global Head of Private Equity and Director of the Company at Blackstone Inc. You see it in real-time across real estate, across labor . BARATTA: Yeah. One of the things that I have to follow up with is how important was it partnering with local other investors and other VCs or PEs? We were trying to figure out whether any of these assets were investable, said Baratta, global head of private equity at Blackstone, referring to media companies. Business models are changing. As an example, the firm invested in Reese Witherspoons production company Hello Sunshine versus the legacy cable and satellite firms. You know, people knew who we were. Incentive alignment in India has been a harder thing. Follow me on Twitter @ritholtz. So our strategy was, and sort of David had conceptualized, like, were going to be the neutral Americans who can work with the local European firms to help them get deals done. How Greed and Easy Money Corrupted Wall Street and Shook the World Economy And weve become better at what we do in buying control of companies, engaging with them, making them better, helping them grow. And then by the time youre in your 40s, you can actually be good at this job. It seems like private equity is qualitatively different than it was back in the early days. It is an institutionalized asset class. I mean, I think the biggest deal thats been done in the last 10 years is around $30 billion and that, you know, yeah, to get that done, we had to work with two of our competitors, which is fine. And its cool and, you know, Bitcoin or whatever, theyre just probably a real store of value. And to me, that was a more comfortable form of investing and where I wanted to bet my career. Blackstone Joe Baratta Finance Manager Boca Raton, FL INFINITI of Coconut Creek, +10 more Joe Baratta I/O Psychologist, Trustee, Vice Chair Lake Tahaoe School Board, CEO TBIG Investments. Just like life gets in the way and I had, you know, a cool career going and I stuck with it. You could only wear black shoes. The music is great. Blackstone Group Inc Chief Executive Stephen Schwarzman pocketed at least $610.5 million in 2020 from dividends and compensation, more than any other private equity executive and up 20% from last . I love football. We recently announced to take private of a technology company called Cvent, which is publicly traded. BARATTA: How could a kid from Sacramento be a Dallas Cowboys fan? Do you have to be selfish to be a striker? RITHOLTZ: Really interesting. I dont know what they call themselves back then. What was it like on the private side at the end in the 90s? RITHOLTZ: But youre not dealing with startups; youre dealing with . You know, the blockchain, when it came people like, hmm, Im always like, whats the use case? But, in general, we became much more risk averse, risk-off in that, you know, mid 2021 period. Blackstone was right on their heels back then. How often does a new business model come along thats really notably different from what preceded it? And I think if you add it all up, we have about $40 billion of funds that were currently investing in their investment period. It was about $3 billion in total size. BARATTA: You had stuff going on in Latin America. And I met the director one day and, you know, they asked me to get involved. So when youre adjusting your investment posture, youre basically saying were going to take more risk or less risk . Transcript: Joe Barratta of Blackstone April 18, 2023 8:00am by Barry Ritholtz The transcript from this week's, MiB: Joe Barratta, Blackstone's Global Head of Private Equity, is below. I mean, there is some degree of like heightened caution concern, because when you do take rates up and really tighten financial conditions, there are consequences in the economy at some point.
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