BARATTA: Well, in our private equity business, were spending all of our time looking at things that touch the public markets, because that is where the valuation correction, you know, is really happening, where you can transact at prices lower today than they were two years ago. Behind the Deal Podcast: Merlin Entertainments - Blackstone BARATTA: Yeah. Thats why I joined Blackstone, it was one of the leading firms in that moment. No, no, thats I mean, the firm is called Blackstone, period. And so, you know, that was kind of the strategy Day 1. So we share themes and we share these economic signals. Because people start so early, you have to do so much to get in college. 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. Its a great group of people, great organization. Nielsen CEO heading to private equity | Fortune Mr. Baratta has served on the boards of a number of Blackstone portfolio companies and currently serves as a member or observer on the boards of directors of First Eagle Investment Management, Refinitiv, SESAC and Merlin Entertainments Group. Were seeing full employment. Hours Left50% Off The Information Pro Ends TonightGet Pro. Joseph Baratta is Global Head of Private Equity and a member of the firm's Management Committee. I dont know what they call themselves back then. That sounds quite fascinating. BARATTA: You know, the book I most recently finished, by Arthur Brooks, a book on happiness. What sort of new markets are you guys considering? Now, the funniest story I can remember is, in these early days, when we were out trying to introduce ourselves to the local private equity firms, I went to Paris and went to Lazard Freres, which was you know, that is the bastion of, like, French establishment business. Its attracted a lot of capital. Deep-dive into topics like startups and autonomous vehicles with our top reporters and other executives. RITHOLTZ: Theyre nice sized property, nice set group of . So a big part of what we do is trying to figure out where we dont want to invest, and whats going to be dislocated by ubiquitous broadband back in 2005, 06, 07, and now, AI with a rate of sophistication of that technology. Please click here if you would like more information about the cookies used on this website and how to change your cookie settings. Barry Ritholtz. And then the metaverse, you know, almost came and went already, a lot of hype there. 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. 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. 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 the total AUM of our private equity business, AUM assets under management is roughly $80 billion, $90 billion. I would be remiss if I did not thank the fine team who help put this conversation together each week. And, you know, I grew up at the foothills of the Sierra Nevada Mountains, and I love to go there. BARATTA: Yeah. Probably somewhere around 2004 or 05, we started doing things by ourselves. I grew up in Sacramento, California. But in the moment, it was less wonderful. I thought the conversation was quite fascinating, and I think you will as well. RITHOLTZ: So lets talk about geographies, and lets talk about sectors. So, clearly, that was a great time to pull back in mid-2021. That was our first deal in Europe, which was actually a U.S. deal, but we probably wouldnt have done it had we not been there . BARATTA: Steve Schwarzman, our co-founder and CEO and chairman and, you know, amazing mentor and great businessman. That sounds like a fascinating organization. Off-duty: Blackstone's Joe Baratta on gravel biking, Cloud Cuckoo Land and the Dallas Cowboys Baratta's shares his New Year's resolution, books he's reading and high and low career moments, as well as his fantasy management role in the NFL. Thursday July 19, 2012 11:50 pm. And so I didnt know, you know, what finance was all about. Incentive alignment in India has been a harder thing. In private equity, you know, were owning things for 5, 6, 10 years and were not subject to, like, the vicissitudes of the market in the short run. Bloomberg Daybreak Europe, anchored live from London, tracks breaking news in Europe and around the world. 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. Meaning, your team, your group would be a Fortune Top 20 Company. RITHOLTZ: Is AI investable? Elon Musk May Yet Meet Twitter Executives in Court. It kind of helped us get off the ground, so to speak. BARATTA: No. Sometimes we buy things from our competitors, particularly if we think we can make them a lot bigger through acquisition or other things. RITHOLTZ: And so you guys are expanding in the 2000s in Europe. RITHOLTZ: So eventually you leave Morgan Stanley, you ended up at Tinicum Incorporated and McCown De Leeuw & Company. BARATTA: Yeah. And then it evolved. The other one I love is White Lotus, which is fantastic, not a Black Swan-related thing, also awesome. I guess you kind of forget, hey, when stock prices come down enough at a certain point, that valuation becomes really attractive, if the assets themselves are productive enough. He joined Blackstone . 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. 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. And I think, largely, you want to avoid highly regulated industries, where youre relying on the government to do something. Joe Baratta to Join Blackstones Board of Directors In addition, he makes $0 as Global Head of Private Equity and Director of the Company at Blackstone Inc. I found this to be a fascinating conversation because Joes career has very much paralleled the growth of private equity. 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. Its obvious in the public markets, things get frothy. In the real estate, its Blackstone Real Estate Partners, and then there are variants on that theme. It does this by using extraordinary people and flexible capital to help companies solve problems. Mr.Barattahas served on the boards of many past Blackstone portfolio companies and currently serves as a member or observer on the boards of. But cable television models or satellite TV, like, those suffered. 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 what sort of input do you give to managements there? Youve been listening to Masters in Business on Bloomberg Radio. What sort of a challenge does that present for private markets? I mean, I knew nothing about finance. Your base of operations when youre in the U.K. is London, but youre back and forth to multiple countries. RITHOLTZ: I can imagine. And so, instead of investing in those, we decided to back Kevin Mayer and Tom Staggs, two ex-Disney guys, really well-regarded business guys in the entertainment industry, to build an independent content creation business, which weve done both in childrens content with Moonbug, and in live action entertainment with Hello Sunshine, which was the business that Reese Witherspoon started. All the places youve mentioned, like Germany is very different than the Switzerland . 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. BARATTA: where the music is amazing. You get paid for the incremental risk that youre taking in a more leveraged capital structure. Inflation is significant. What are some of your favorites? 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. So Im watching the Cowboys like every Sunday. RITHOLTZ: Lets talk a little bit about your career at Blackstone. Most recently he sold 85,000 units of BX stock worth $7,337,200 on 1 April 2023. Inside Blackstone's Plans to Create an Entertainment Empire BARATTA: I agree with you, I mean, 100 percent. As of 1 April 2023 he still owns at least 1,145,448 units of Blackstone Inc stock. Not to say like we executed on that vision perfectly, I mean, we would have made some mistakes, but we definitely became much more cautious when the bull market really ramped up, in particular, post COVID, when not only did you have the low rates which the Fed double down on, you had this huge transfer payment from the federal government . Is that the sort of infrastructure were talking about in addition to all the obvious ones weve been mentioning? So, you know, you could go to France, maybe they didnt love, you know . Elon Musk May Yet Meet Twitter Executives in Court - New York Times I was supposed to go over you know, in November, I ended up doing that. He helped to build out Blackstones PE business in Europe in 2001, moving to London in 2001. We talked earlier about inflation and rising rates. But for listeners, you know, you dont have the same capital costs. How often does a new business model come along thats really notably different from what preceded it? 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. Now, the firm had assets. 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. 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. Off-duty: Blackstone's Joe Baratta on gravel biking, Cloud Cuckoo Land You mentioned real estate, private equity, M&A. So it was a beneficiary of the technology change. RITHOLTZ: To say nothing of two people separated by a common language, right? And then at Blackstone, you know, Steve Schwarzman changed my life; and Tony James, who when I was about four years into Blackstone, really helped transform the firm and make it what it is today. It changed the way we communicated with each other. In the U.K., we own the Savoy Group of Hotels, which is the Connaught and Claridges and Savoy. It sounds like you can scale up by partnering with lots of other PE firms. RITHOLTZ: But youre not dealing with startups; youre dealing with . RITHOLTZ: Theres still textbooks in schools. RITHOLTZ: Yeah. So its a whole broad spectrum of investing in the energy complex focused on the transition from hydrocarbons to renewable sources. Blackstone Group is talking to its biggest investors to create a "coalition of the willing" that can buy control of large companies outside its existing funds, according to Joe Baratta, head . Kirk Falconer - January 10 2022 + And we were kind of oddities at that time, particularly in private equity which was still really in its infancy. Joseph P. Baratta serves as Global Head of Private Equity and Director of the Company of the Company. Transcript: Joe Barratta of Blackstone - The Big Picture View stories on our mobile app and tune into our weekly podcast. Joseph Baratta is an American business executive who is Global Head of Private Equity at Blackstone, a New York-based global asset management giant. BARATTA: manufacturing those facilities. And by the time youre in your 50s, with some wisdom, you can be really good at the job. Brown shoes that are for like, you know . 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. BARATTA: No, no. BARATTA: You had stuff going on in Latin America. RITHOLTZ: And have done a pretty nice job, right? So we did a lot of these sorts of consolidation place. Were hiring summer interns now who are 19 and 20 years old. BARATTA: Exactly. 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. What is energy transition? Tell us about those experiences. With no further ado, my discussion of private equity with Blackstones Joe Baratta. So I think thats kind of the realm were in. Blackstone 3d Amid global economic uncertainty and the ongoing recovery from COVID's systemic shock, we asked Global Head of Private Equity Joe Baratta for his perspective on the current. You know, bigger technology companies, software businesses that have proven theyve got really durable sticky revenue models. 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. But youre not wrong, I mean, theres different names within the individual businesses, but we all work at Blackstone. BARRY RITHOLTZ, HOST, MASTERS IN BUSINESS: This week on the podcast, I have an extra special guest, Joe Baratta is the Global Head of Private Equity at PE giant Blackstone, where he has worked since 1998. RITHOLTZ: So really a period of transition and . One-on-one with Joe Baratta: Navigating Today's Investment - YouTube And, you know, why is that? RITHOLTZ: But youre still dealing with a lot of European at that time. BARATTA: Well, one thing that John and Steve have done is to make sure the firm is really joined up across our investment businesses. Ive studied finance, it was my major at Georgetown, and I was hoping to get a job somewhere, and I got a job at Morgan Stanley which way exceeded my dreams at that point. Thats why, as an investor, Im much happier today because were able to buy things more cheaply. And they had like bottles of Bordeaux on the conference room table. BARATTA: And it is this perfect example of what we thought Hello Sunshine could do, the convening power to assemble that amazing ensemble cast, amazing music creators, and create something that is really important to, in this case, Amazon Prime, to be an important counterparty of the streamer. RITHOLTZ: And businesses just have to exist. RITHOLTZ: I dont want to suggest that thats what we hear. RITHOLTZ: I didnt realize philanthropy was that different overseas than it is here. When did that beckon? Theres a scalability there that you dont get in the real world, which probably is why a lot of real-world assets eventually become attractively priced. BARATTA: But they were private equity. BARATTA: Yeah. BARATTA: Yeah. And, you know, Ive lived in great places. BARATTA: I think early on, it was important until we established ourselves, and then we did less of that. RITHOLTZ: Really interesting. We bought some more, and that was a pretty successful investment. You began more or less in the M&A space at Morgan Stanley, is that right? The Tate Foundation is the private philanthropic arm of the Tate that helps fund special projects, whether its exhibitions or building new buildings, you know, the big Tate Modern gallery was, in large part, funded by private donations. I mean, were not specifically investing in charging stations. BARATTA: And I think they nailed it. But thats not uncommon to see private equity firms taking companies private and transacting with public companies. Do you have the same phenomenon in the private market? RITHOLTZ: So youre anticipating one of the questions Im going to ask you, which I might as well bring it up now. Mr. Baratta was elected to the board of directors effective March 2, 2020. In the short run, there can be distortions in public market valuations as we saw in 2001 and we saw prior to that in 2007, and prior to that in 2000, in 99. You got to get it elsewhere. I have my way. RITHOLTZ: And everybody started drinking and we looked at each other, can we have a drink that morning? You can find those at YouTube, iTunes, Spotify, wherever you find your favorite podcasts. And so, in private equity . I do really think they nailed it. Who cares about brown shoes? And I was doing my pitch, so here I am, 30 years old. Is finding the back of the net the hardest job in football? Theres really no absolutes. BARATTA: Well, yeah, the private credit market I think is really attractive, and its actually been around a long time. The Fed was saying, no, its transitory or whatever adjective they used. 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? 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. We had our second real estate fund, which was I think about $1.2 billion or $1.3 billion. And the cost of financing and the quantum isnt the biggest driver of our returns. BARATTA: How could a kid from Sacramento be a Dallas Cowboys fan? About 10 or 15 years later, we actually did work together, and he acknowledged that moment and said, God, I just thought you guys were just such jokes. How are you looking at the investment environment today? * * * * * Blackstone buys Clarus to bulk up in life sciences | Reuters
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