And in the end, we ended up just buying the U.S. textbook business, Houghton Mifflin. Id never lived abroad. 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. BARATTA: Yeah. My dad was a bodybuilder and owned three gyms in Sacramento. Its where we have competitive differentiation, and its where you find better quality businesses. Mr. Joseph Patrick Baratta, also known as Joe, has been the Global Head of Private Equity at The Blackstone Group, Private Equity Group since July 2012. RITHOLTZ: And when you say Steve, for those people who may not be familiar with . Are goalscorers born or made? Monitor your investments 24 hours a day, around the clock from around the globe. He is also a member of the firms Management Committee and serves on many of the firms investment committees. Why am I talking to him? And I think people just need to relax, take a deep breath. 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. I had no language skills. He is an entrepreneur, attorney, consultant, and advocate for independent investment advisers, which is a $97 trillion industry. A Blackstone View on the Next Wave of Buyouts - LinkedIn Were seeing in our businesses real stability across most sectors. BARATTA: crisis. 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. It wasnt very long after the handover of Hong Kong to China, like a lot of things were changing in both the U.K. and Europe. And, you know, what I sort of decided as well, fragmented industries, where you could drive consolidation that had happened already in the U.S., things like, in the U.K., pubs. BARATTA: Right into the thick of it, trying to figure out what a two younger might my colleague, David Blitzer, I think he was maybe 31. Mr.Barattagraduated magna cum laude from Georgetown University. Behind the Deal Podcast: Merlin Entertainments - Blackstone I found this to be a fascinating conversation because Joes career has very much paralleled the growth of private equity. Most recently he sold 85,000 units of BX stock worth $7,337,200 on 1 April 2023. It seems a house of fire. Is this simply becoming institutionalized, or has the asset class been validated and now people are treating it differently than they did in the 90s where it was kind of a small niche , RITHOLTZ: backwater? A special committee of messaging app IRLs board of directors suspended CEO Abraham Shafi on Friday after receiving a report from outside counsel that outlined a pattern of misconduct by Shafi, an IRL spokesperson told The Information. BARATTA: Yeah. He is also a member of the Board of Trustees of Georgetown University; is a trustee of the Tate Foundation; and serves on the board of Year Up, an organization focused on youth employment. BARATTA: Even more mature companies. BARATTA: Yeah. RITHOLTZ: Well, so far, youre pretty interesting. And were like, whoa, this is the sign, like this is the canary in the coal mine. Like, the last $30 billion deal we did, I mean, we bought Medline in 2021. Am I exaggerating that at all or . The Fed was saying, no, its transitory or whatever adjective they used. The private equity firm has hired Droga5 Chief Strategy Officer Jonny Bauer as head of brand transformation for its portfolio group of more than 200 companies. RITHOLTZ: Really interesting. BARATTA: Yeah. What was it like on the private side at the end in the 90s? BARATTA: that are $10 billion to $15 billion-plus enterprise value company. So thats the type of thing that a decade ago, we wouldnt have invested in. So if your alternative, as a company, is to go public at a given price, youre probably not going to sell it to a private equity firm at a much lower price. Then, in the fall of 2020, Baratta huddled with Kevin Mayer, a longtime Disney executive who had just left TikTok as CEO of the social media app. The war in Ukraine, surprisingly, hasnt had a negative impact, or at least not as much as I expected in the public markets. You could consume Saturdays with kids running around. We never have to sell, only when we want to because we control the companies. We do think, at some level, it does affect the cost structures. 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. RITHOLTZ: But youre still dealing with a lot of European at that time. And so we did, but we were kind of trying to do deals by airplane from New York, and thats not functional. I love football. RITHOLTZ: Lets talk a little bit about your career at Blackstone. Joseph Baratta on the Future of Private Equity Masters in Business Investing Bloomberg Radio host Barry Ritholtz speaks with Joseph Baratta, who has served as global head of private equity at Blackstone - the world's largest alternative asset manager, with $975 billion in assets under management - since 2012. And today, were knocking on the door of 5,000. We started doing deals on our own. And to me, that was a more comfortable form of investing and where I wanted to bet my career. If you enjoy this conversation, well, be sure and check out any of the previous 500 or so weve done over the past eight years. So I wanted to get a job at a private equity firm. How are you looking at a geopolitical event like that affecting, you know, whats taking place on the continent? BARATTA: I was watching the 10:00 a.m. game. Theyre predicated on buying a good business, doing something to make it grow more quickly, and having an attractive exit when we come to sell it, which means it has to be a good business. Im assuming that all these different names all come from different work products, different strategies, different funds, or is just everybody getting this wrong? MiB: Joe Barratta, Blackstone's Global Head of Private Equity April 15, 2023 10:00am by Barry Ritholtz This week, we speak with Joseph Baratta, who since 2012, has served as Global Head of Private Equity at Blackstone - the world's largest alternative asset manager, with $975 billion in assets under management. We also discuss how Private Equity has developed over the past three decades from a small $50 billion alternative to a massive multi-trillion dollar investment sector. High-yield junk bonds still 'frothy': Blackstone - Yahoo Joseph Baratta is an American business executive who is Global Head of Private Equity at Blackstone, a New York-based global asset management giant. RITHOLTZ: Yeah. So it was a beneficiary of the technology change. Joseph Baratta - Wikipedia Is this just part of the life cycle of business, or do you go through these periodic spasms where everything changes? BARATTA: particularly this offseason, theyve done a nice job. It was a small industry. And so, yeah, and weve had limited partners in our funds whove been with us since the early 90s now and keep re-upping because we deliver a good return for their beneficiaries. BARATTA: I think starting with the fundamentals, you know, the economy is quite sound. RITHOLTZ: Tell us what that growth has been like over the past 25 years? RITHOLTZ: So here we are, enter the first quarter 2023, whats the environment look like relative to mid-2021? Were seeing maybe wage increases beginning to decline. BARATTA: I think that it changes so much fundamentally, that you cant hold on to like, you know, absolutes. You know, economically, thats a big thing. And the whole firm was maybe 200 total employees , BARATTA: not just investment people, total staff. Matthew Delly on LinkedIn: Areas of thematic investing focus from RITHOLTZ: Really interesting answer. BARATTA: But they were private equity. But if we can find a great business at a reasonable price in Europe, were going to buy it. As for the right way, the correct way, and the only way, it does not exist. You know, we bought Hilton in June of 2007. RITHOLTZ: Let me ask you about India because it feels like, at least, in the public markets, India is always on like a year or two away from being the next big thing and it just hasnt seemed to happen. How are you looking at the investment environment today? And so, we bought the pub business. BARATTA: Its certainly investable for venture investors and smaller guys who are willing to sort of dig holes in the ground and hope something comes out. And the size of our private equity business is you know, were now on our ninth fund. And, you know, cost structures are a little less efficient there may be than in the U.S. now. Those do seem to be valued relatively more attractively. But, in general, we became much more risk averse, risk-off in that, you know, mid 2021 period. The Mysterious Man Behind - Institutional Investor And then when the Niners got good, I became a contrarian and said, no, Im going to root for the Cowboys . RITHOLTZ: And have done a pretty nice job, right? Theres some like risk management things that you always need to be mindful of. 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So we did a lot of these sorts of consolidation place. BARATTA: Yeah. RITHOLTZ: Renewable meaning wind, solar, nuclear, whatever? BARATTA: Yeah. So lets talk a little bit about the state of PE investing today. RITHOLTZ: based on whats going on. RITHOLTZ: So youre anticipating one of the questions Im going to ask you, which I might as well bring it up now. Its attracted a lot of capital. In addition, he makes $0 as Global Head of Private Equity and Director of the Company at Blackstone Inc. Joseph has made over 11 trades of the Blackstone Inc stock since 2020, according to the Form 4 filled with the SEC. Exclusive: Blackstone grooms six executives for Schwarzman's job RITHOLTZ: You know, when there is no alternative, people just pile into equity. You know, people knew who we were. The whole aesthetic of it is amazing. Joseph Baratta on the Future of Private Equity - Apple Podcasts BARATTA: Exactly. But its nothing like it is today. When he began, PE was a little bit of a niche boutique sort of investment, and over the ensuing 25 years, it has grown to be really a major asset class with giant opportunities that have been expressed by then small, now very large companies, of which Blackstone is one of the largest. But wed prefer to buy things on our own, just Blackstone with our limited partners. RITHOLTZ: in Europe. JOSEPH BARATTA, GLOBAL HEAD OF PRIVATE EQUITY, BLACKSTONE: Thank you. BARATTA: How could a kid from Sacramento be a Dallas Cowboys fan? Abraham Shafi has stepped down as CEO of messaging app IRL following allegations that the company used bots to inflate the users it reported publicly and to investors, according to a person with direct knowledge. You can stream and download our full conversation, including any podcast extras, iTunes, Spotify, Stitcher, Google, Bloomberg, and Omny. What sort of a challenge does that present for private markets? These are people who were, you know, in their late 20s, early 30s, oldest maybe mid-30s, and they kind of grew up with the firm, and they were able to be the translator, so to speak, both physically and culturally, in some of these other countries. BARATTA: Steve Schwarzman, our co-founder and CEO and chairman and, you know, amazing mentor and great businessman. RITHOLTZ: To say nothing of two people separated by a common language, right? The spokesperson for the company, previously valued at $1.2 billion when SoftBank invested in it in 2021,declined to offer details on the misconduct Sequoia Capital Hired National Security Advisory Firm as China Deals Draw U.S. And I wanted to work in a place that was operating at the highest level, with the smartest people, where I could learn the most, and see if I could hang, you know, so to speak, with the best. So when youre adjusting your investment posture, youre basically saying were going to take more risk or less risk . You get paid for the incremental risk that youre taking in a more leveraged capital structure. RITHOLTZ: Really quite fascinating. When Baratta led private equity giant Blackstone Group's 102 million ($136 million) deal to buy Merlin Entertainments in 2005, the U.K. theme park group was best known for the macabre London. People were declaring last summer, were already in a recession. I liked it, I thought I could build a successful career. So, yes, private equity valuations are influenced very significantly by whats going on in the public markets. ANNOUNCER: This is Masters in Business with Barry Ritholtz on Bloomberg Radio. Global Head of Private Equity, Joe Baratta, shared insights on how Blackstone is thinking long-term in this business cycle and how investors can prepare - by focusing intently on sector &. RITHOLTZ: Who, by the way, we were supposed to have on the show, and a little thing called COVID came along and interrupted us, like, literally, that end of March, beginning of April, when his book came out . And I was doing my pitch, so here I am, 30 years old. RITHOLTZ: Oh, really? You werent taken seriously. It is an institutionalized asset class. In the last 16 years, insiders at Blackstone Inc have sold an estimated . And for the last six or seven years, the way weve been expressing investing in energy is an energy transition, so in companies that are helping accelerate the transition from burning hydrocarbons to produce electricity and energy, to renewable sources. The whole dressing custom, yeah. But were not seeing it. Because it looks like a couple of big companies push their way in, there were a couple of transactions, or is this going to, you know, be the fertilizer that launches a thousand blooms, or whatever the expression is? I mean, there have been leveraged loans and high yield bonds since the 1980s. BARATTA: Wind, solar, electrifying the economy, getting off of oil and gas, and its all kinds of companies engaged. Switchboard:+1 (212) 583-5000. they do. RITHOLTZ: Thats very interesting because we typically think of private equity as looking at these mature non-public companies. 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. But for listeners, you know, you dont have the same capital costs. IRL Suspended CEO Shafi After Reported Pattern of Misconduct; Acting CEO Named, By Mark Matousek · April 30, 2023 2:33 PM PDT. 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. RITHOLTZ: So you lasted two or three years, and then you get tapped to go to London in 2001. Its a great group of people, great organization. RITHOLTZ: So lets talk about geographies, and lets talk about sectors. This website uses cookies, including third-party cookies, in order to obtain information about your visit to the website and make this website better. He was the senior guy at that time. And so, in terms of where our teams are spending time, its in and around sort of public markets. At that point in my career, I was 20 I think 27 years old, I wanted to attach my myself to a firm that I thought really had a lot of growth potential, where I could learn from the best people in the industry, and that certainly was what I found there. And I think thats, right now, a little bit plus, the financing markets are less liquid, and theres less quantum available.
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