You know, bigger technology companies, software businesses that have proven theyve got really durable sticky revenue models. I would be remiss if I did not thank the fine team who help put this conversation together each week. And so, you know, that was kind of the strategy Day 1. The fund, Blackstone Core Equity Partners II, held the final close on its hard-cap of $8 billion, making it 70 percent larger than its 2016-vintage predecessor, according to a statement. And by the time youre in your 50s, with some wisdom, you can be really good at the job. BARATTA: Its a real thing in Europe. RITHOLTZ: Lets talk a little bit about your career at Blackstone. Id been to, like, Paris and Venice or something. The global head of private equity at Blackstone Inc. spelled out the conundrum he and the entire buyout industry is faced with: Financing is getting. In the early days, do whats asked of them, do it as well as they can, and move on to the next step. They introduced me to the head of a significant private equity firm in Europe. The music is great. For office-specific contact information, please visitour offices page. Even when you read that announcement from that was 2012 . It was a small industry. And the way buyouts are being financed is evolving away from syndicated big syndicated capital structures committed to by banks to now the people who are actually going to hold the risk, firms like ours and Apollo and Ares and others, who are actually lending money directly to the people who are borrowing, instead of going through the banking intermediaries. You saw it in the financial services sector. 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. We do think, at some level, it does affect the cost structures. RITHOLTZ: Theyre nice sized property, nice set group of . It kind of helped us get off the ground, so to speak. By the way, my wife loves the Tate Modern, one of her favorite museums. From Strength to Strength: Finding Success, Happiness, and Deep Purpose in the Second Half of Life. Both in terms of the aggregate revenue of our company, size of our portfolio, were probably now something like 150 total investments, many hundreds of billions of revenue, hundreds of thousands of employees if you add up all of the companies in which were invested. Sebastian Escobar is my audio engineer. You can stream and download our full conversation, including any podcast extras, iTunes, Spotify, Stitcher, Google, Bloomberg, and Omny. 2013-2023 The Information. Obviously, rates are higher, but prices seem to have come down a bit. 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. Yeah. And so, you know, my base case was that it wouldnt and youd have like called it wonkily like mean reversion in global cost of capital, which means rates would go up, market risk premiums would go up, you know, PE multiples would come down, credit spreads would probably gap out. I mean, I knew nothing about finance. BARATTA: Well, I think if you look at the evolution of the size of private equity transactions over the last decade, actually, they havent grown very much, notwithstanding the fact that the equity capital market cap is like three or four times bigger than it was in 2007. Disputes over compensation and firings, and potentially over layoffs, could push both sides into fresh legal battles. There was a big consolidation and lots of divestitures of pubs that were owned by brewers in the time, and there were rules came down that brewers can own distributors. We had some real estate guys there. Two years ago, Joe Baratta couldn't figure out what Blackstone, the private equity giant he worked for, should do for its next move in media and entertainment. Your base of operations when youre in the U.K. is London, but youre back and forth to multiple countries. We find great management teams. Thank you, Joe, for being so generous with your time. RITHOLTZ: Really intriguing. Joe Baratta - Private Equity - Blackstone | LinkedIn Joe reflects on what the end of easy monetary policy and near-term growth headwinds mean for investors. The big TV companies, such as ViacomCBS and Discovery, were bleeding viewers as people cut the cord to cable television and streaming powerhouses like Netflix grew ever bigger. Publicly traded Blackstone . So, clearly, that was a great time to pull back in mid-2021. Is finding the back of the net the hardest job in football? 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. Is that the sort of infrastructure were talking about in addition to all the obvious ones weve been mentioning? Switchboard:+1 (212) 583-5000. In London, in September, I had him come to talk about like what it means to be from where you should be deriving your happiness. My dad was a bodybuilder and owned three gyms in Sacramento. But were seeing solid demand. It is an institutionalized asset class. RITHOLTZ: You see that on the private market? 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? BARATTA: I got a lot of good friends from high school. And so, Im proud of how we navigated that cycle, and I think were in a more normal world. Thats why, as an investor, Im much happier today because were able to buy things more cheaply. And in fact, I invited him to come talk to our partner group. But what it is, is we have to figure out what businesses are going to be disrupted and avoid those, and figure out what mature businesses will be enabled by this and invest in it. You know, the blockchain, when it came people like, hmm, Im always like, whats the use case? From Strength to Strength: Finding Success, Happiness, and Deep Purpose in the Second Half of Life by Arthur C. Brooks. To me, this world is normal, not abnormal, with, you know, positive real interest rates. Its attracted a lot of capital. Blackstone Seeks 'Coalition' Partners to Invest Like Buffett And so, we bought the pub business. Thats a pretty good run. 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. And so, were trying to find the businesses that are going to be enabled and benefited by AI, and avoid the things that are going to be dislocated. But for listeners, you know, you dont have the same capital costs. So I actually think, at the large end of the private equity market, were undercapitalized. We still continue, in many of our companies, to struggle to fill open roles. BARATTA: So there were still French francs and, you know, lira, and German Deutsche Marks. Tell us a little bit about the work you do with them. RITHOLTZ: And have done a pretty nice job, right? RITHOLTZ: Hell reach out to Steve, Steve will put you in touch. Off-duty: Blackstone's Joe Baratta on gravel biking, Cloud Cuckoo Land But were not seeing it. BARATTA: They had bought a bunch of educational publishing assets, including U.S. textbook company, Houghton Mifflin, back when there were actually textbooks in schools. The firm had had , RITHOLTZ: Do you need language skills in England, or is it . So, were, were very much open for business in Europe, in the U.K. You know, the conflict has definitely been a drag to some degree in the economy, and introduces some uncertainty. RITHOLTZ: Im halfway through it, really loving it. BARATTA: Well, you have to get him back. The big TV companies, such as ViacomCBS and Discovery, were bleeding viewers as people cut the cord to cable television and streaming powerhouses like Netflix grew ever bigger. Blackstone already manages $439 billion across alternative assets such as private equity and real estate, and is looking for ways to grow further. BARATTA: crisis. BARATTA: Yeah. BARATTA: Yeah. Kirk Falconer - January 10 2022 + RITHOLTZ: So you end up at Blackstone in 1998, at a time when public equity prices became a little unmoored and were on the way up to a real bubble. And I think people just need to relax, take a deep breath. But Mayer and a former Disney colleague, Tom Staggs, had a different pitch: Would Blackstone back a brand-new media company they were forming that would tap into the gusher of money going into streaming? RITHOLTZ: I never would have guessed that. Ive been a Dallas Cowboys fan since Im 7 years old. For press inquiries, contact[emailprotected]. So its been a great asset class. We bought some more, and that was a pretty successful investment. Theres real inflation. 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. Youve been there for 25 years. It was more of a cottage industry. Its very hard for us to assemble much more than a $5 billion equity check. RITHOLTZ: Really quite interesting. I think that also theres a bunch of businesses that are manufacturing things that must exist in the physical world, you know, to cool or heat the environment, food, the distribution of essential medical products, whole energy transition. We had our second real estate fund, which was I think about $1.2 billion or $1.3 billion. We have some assets. stonco lighting catalog. BARATTA: looking at the divestiture from Vivendi. Financial Advisors, visit our dedicated website to learn how you can partner with Blackstone. And enjoy the journey. But wed prefer to buy things on our own, just Blackstone with our limited partners. What are some of your favorites? 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? And I think fundamentals mattered more in private equity than they did in public market investing. BARATTA: I mean, theres no question that financing costs are higher, both debt and equity, which is a healthy thing because I think the global cost of capital was too low, induced by super low rates and capital allocation to riskier assets, institutional investors chasing return. Since 2012, Mr.Barattahas served as the firms Global Head of Private Equity and is located in New York. You got to get it elsewhere. RITHOLTZ: I wonder, do fundamentals matter more, or is it really just a question of how far away from fundamentals can public equities get, either to the upside or the downside where it creates some form of opportunity, which kind of raises the question, how closely do private market fundamentals track whats going on in the public markets? BARATTA: I think people are very negative on the U.K. and . It seeks to create positive economic impact and long-term value for its investors, the companies it invests in, and the communities in which it works. Blackstone Inc's most recent insider trade came on April 4, 2023 by Joseph Baratta who sold 85,000 units worth $7.34M . RITHOLTZ: So really a period of transition and . I grew up in Sacramento, California. I was 29. RITHOLTZ: I dont want to suggest that thats what we hear. And so, yeah, there was a lot of volatility. And in the end, we ended up just buying the U.S. textbook business, Houghton Mifflin. 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. BARATTA: But these sort of Americans were tolerated, you know? 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You end up in London. You can take margins up. I think its really important for people who are workaholics, who are high achievers to put, you know, everything that were doing every day into context and define happiness kind of outside that box. BARATTA: Yeah, Im 29 when Im asked. This website uses cookies, including third-party cookies, in order to obtain information about your visit to the website and make this website better. 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: Patience. Individual Investors & Financial Advisors. Its a great group of people, great organization. What is it like being on these boards? I think they were operating at the really top of the industry, really smart people, good track record. Follow all of the fine family of Bloomberg podcasts on Twitter @podcast. And, you know, I needed to earn some money and I was adept in finance. I have my way. What are you looking at that might not have been on the table a decade ago? And so, in terms of where our teams are spending time, its in and around sort of public markets. And he was, you know, in that moment, completely dismissive. A Blackstone View on the Next Wave of Buyouts - LinkedIn So what is $10 billion dollars . BARATTA: Well, one thing that John and Steve have done is to make sure the firm is really joined up across our investment businesses. BARATTA: We leaned into exiting what we could in that period. So, as an investor, you have to be nimble. And so we sort of followed our real estate colleagues, where they went and establish a toehold, became successful. Happy to be here. Joseph Baratta | Year Up BARATTA: Well., they definitely did that. Monitor your investments 24 hours a day, around the clock from around the globe. BARATTA: technology. How are you looking at a geopolitical event like that affecting, you know, whats taking place on the continent? Meet the frontrunner to lead Blackstone in Europe The estimated net worth of Joseph Baratta is at least $105.31 million as of April 3rd, 2023. And so, in the early 90s, analysts had these big investment banks, Morgan Stanley, Goldman Sachs, had sort of two or three options, you can stay there and become an investment banker and do that for a career, you could go into the emerging fields of investing in private equity or in hedge funds, or you go to business school, or maybe go to business school later. 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. 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. By selecting the relevant option, you certify that it accurately reflects your residency. Late last year, a trio of engineers who had just helped Apple modernize its search technology began working on the type of technology underlying ChatGPT, the chatbot from OpenAI that has captivated the public since it launched last November. And so, we began to hire local people who were young in their careers. RITHOLTZ: Really interesting answer. You guys seem to play across a lot of different sizes. The goal: to help bring brand . What attracted you to them in 1998 when they were still kind of a modest, small firm? Well, if you do this if youve been doing this long enough, which fortunately, I have, since really 1095, you see different cycles, and you see what happens when capital becomes cheap and money becomes easy, and interest rates are lower, not really a factor. Nielsen CEO heading to private equity | Fortune RITHOLTZ: And so you guys are expanding in the 2000s in Europe. And the guy looks at me like I had, you know, two horns coming out of my head, whos his young American? RITHOLTZ: Youre looking at the cost of capital and how much margin or leverage you want to assume. BARATTA: Wind, solar, electrifying the economy, getting off of oil and gas, and its all kinds of companies engaged. Joseph Baratta is 46, he's been the Global Head of Private Equity and Director of the Company of Blackstone Inc since 2020. I think a big chunk of what we do over our history has been taking companies private and doing corporate carve-outs from public company, so non-core assets that a large company is divesting, family-owned businesses. So its a whole broad spectrum of investing in the energy complex focused on the transition from hydrocarbons to renewable sources. What are you reading right now? Were seeing some companies have less pricing power maybe than they had a year ago. So, yeah, theres a few companies where Im closely involved, and I sit on the board and I help their management teams plot strategy and deal with important strategic issues. Energy has been a major investment theme across many of our businesses in credit and corporate private equity. Its really quite fascinating. Thats just because . Were seeing in our businesses real stability across most sectors. 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? So I think the large end of the market we think is the most attractive. Mr.Barattaalso worked at Morgan Stanley in its mergers and acquisitions department. The IOC and FIFA are scrambling to change their ways before it's too late. It has to be useful if you have skills. I mean, some of your holdings like Hilton, obviously, giant. 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 . Barry Ritholtz. BARATTA: No, no. But it is looking at whats more attractive and whats less attractive. I dont miss a game. RITHOLTZ: tell us about Blackstones boss. My friend and former Morgan Stanley analyst, colleague, Chad Pike, ran our European real estate stuff. BARATTA: Yeah, hes amazing. BARATTA: If Apple decides it wants to buy something for, you know, 10, 20, 30, 40, it doesnt blink, and there are a lot of companies like that. BARATTA: Yeah. Sometimes we buy things from our competitors, particularly if we think we can make them a lot bigger through acquisition or other things. Because people start so early, you have to do so much to get in college. 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. Otherwise, we will assume you're OK to continue. The other one I love is White Lotus, which is fantastic, not a Black Swan-related thing, also awesome. 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. How did the buildout go for a couple of young Americans saying, hey, we want to play with this private equity thing in the EU? Where are you looking around the world? This seems to really be a potential sea change. 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. Big software companies including Microsoft and Salesforce are racing to incorporate the technology behind ChatGPT, known as generative artificial intelligence, into their products to attract new users and boost profits. But it doesnt just happen like that. Roger Staubach, Tony Dorsett, Tony, RITHOLTZ: Oh, really? I recognized that it was still pretty early in the development and there should be a lot of growth in these firms. You see these things before they start to show up in the economic data. Mr. Baratta has been with Blackstone for 22 years, including ov BARATTA: Yeah. He is also a member of the Board of Trustees of Georgetown University, is a trustee of the Tate Foundation, serves on the board of Year Up, an organization focused on youth employment, and serves on the Board of Trustees of Trinity School in New York City. How often does a new business model come along thats really notably different from what preceded it? Probably somewhere around 2004 or 05, we started doing things by ourselves. RITHOLTZ: You know, when there is no alternative, people just pile into equity. And its cool and, you know, Bitcoin or whatever, theyre just probably a real store of value. RITHOLTZ: Youre like late 20s at this time? BARATTA: and nice calling card. You know, I sort of looked at, well, the industry in Europe is a good decade or two behind the U.S. I have to point out that your life history is a series of ever-worsening weather. Mr.Barattahas served on the boards of many past Blackstone portfolio companies and currently serves as a member or observer on the boards of.