Bloomberg Daybreak Europe, anchored live from London, tracks breaking news in Europe and around the world. I dont know what they call themselves back then. "For any professional investor, this is the most difficult period we've ever experienced . 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. April 18, 2023 8:00am by 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. I know the Savoy is in the U.K. and in Europe. And he was, you know, in that moment, completely dismissive. And the size of our private equity business is you know, were now on our ninth fund. RITHOLTZ: Really intriguing. A former employee of SoftBank-backed messaging app IRL alleged in a legal filing that the company has inflated its user count and retaliated against him and other employees who raised concerns about the accuracy of its user numbers. I really wanted to learn how to invest money, not just be an advisor, and I thought private equity was cool because you werent at the whim of the market. 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? Im assuming these are both related M&A-type . Its where we play. 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. And in fact, I invited him to come talk to our partner group. 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. US buyout giant Blackstone Group has announced the appointment of Joe Baratta, the former head of its European private equity team, as its new head of global private equity. BARATTA: technology. And we were kind of oddities at that time, particularly in private equity which was still really in its infancy. How Greed and Easy Money Corrupted Wall Street and Shook the World Economy As companies got larger and larger, it seemed like banks went upscale with them and left sort of a gaping void in the middle, where, you know, mid-market companies didnt have a merchant bank that could facilitate loans, credit, anything . BARATTA: you know, company-based. Follow all of the fine family of Bloomberg podcasts on Twitter @podcast. Publicly traded Blackstone . I started at Blackstone in July of 98, and I guess what was going on that year, you had like a Southeast Asian currency crisis. In the last 16 years, insiders at Blackstone Inc have sold an estimated . Its been almost a year. 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. Those two men really were extremely important in my professional development, my personal development, great, amazing mentors. You had the Russia . India is very attractive. NEW YORK-- ( BUSINESS WIRE )--Blackstone (NYSE:BX) today announced that Joe Baratta, the firm's Global Head of Private Equity, will join its . BARATTA: I go to California all the time. What is . RITHOLTZ: Right. He is also a member of the firm's Management Committee and serves on many of the firm's investment committees. RITHOLTZ: How important was it finding a local partner to, you know, hook up with them and be able to participate in deals with? RITHOLTZ: than the first one. RITHOLTZ: based on whats going on. You get paid for the incremental risk that youre taking in a more leveraged capital structure. Privacy Policy How ChatGPT is Roiling 13 Software Companies, By Kevin McLaughlin, Aaron Holmes and Anissa Gardizy, Apples AI Chief Struggles With Turf Wars as New Era Begins, In Google Founders Shadow, CEO Pichai Discovered the Limits of His Power, IRLs CEO Steps Down After Allegation of Inflated User Numbers, Former IRL Employee Alleges Company Inflated User Count. 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. RITHOLTZ: How did you first get involved with them? BARATTA: Well, what brings me energy and joy in my job is investing capital and working with companies. RITHOLTZ: tell us about Blackstones boss. Like, the last $30 billion deal we did, I mean, we bought Medline in 2021. BARATTA: Yeah. 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. Blackstone was right on their heels back then. It was a small industry. Blackstone (NYSE:BX) today announced that Joe Baratta, the firm's Global Head of Private Equity, will join its board of directors. And so, in terms of where our teams are spending time, its in and around sort of public markets. It has to be growing. BARATTA: crisis. Thats a pretty good run. I mean, inflation is higher than normal, but thats going to come down. 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. But youre looking at valuations and what sort of multiples you want to pay. The modern day striker has to be many things to make it to the top. The first job for Morgan Stanley was McCown De Leeuw. Blackstone's global head of private equity, Joseph Baratta is in contract to pick up a sweet 6-story townhouse from music mogul Lyor Cohen (he's Tory Burch's boyfriend), the NY Post reports.. This net worth estimate does not reflect any other assets that Mr. Baratta may own. You can see the complete history of Mr. Baratta stock trades at the bottom of the page. BARATTA: I had agreed to go before September 11th happened. Financial Advisors, visit our dedicated website to learn how you can partner with Blackstone. So I wanted to get a job at a private equity firm. I do really think they nailed it. Whats an attractive place that people probably overlooked? Theres some like risk management things that you always need to be mindful of. He is very familiar with everything from M&A to credit, to real estate, on and on, and has had experiences both in the U.S. and overseas, really a global perspective on what took place in private equity in the past and what the future looks like. And I thought private equity was interesting because you could live with those investments for a longer period of time. It took a year for all those local currencies, literally paper and coin currencies, to come out of circulation and have euro bills. BARATTA: No, its hard, and what we began to do is hire local people. Is that the sort of infrastructure were talking about in addition to all the obvious ones weve been mentioning? We cant do that. I will learn something, and Ill have something else to do on the other side of it. And so we partnered with a few local firms and actually one of our U.S. competitors to look at this big asset, because it was quite big. In 2006, 07, 08, you saw the financial crisis. BARATTA: Wind, solar, electrifying the economy, getting off of oil and gas, and its all kinds of companies engaged. You saw it in the financial services sector. 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. It sounds like you can scale up by partnering with lots of other PE firms. It was about $3 billion in total size. It seems a house of fire. So, clearly, that was a great time to pull back in mid-2021. And you have to enjoy that process and enjoy like the time it takes. And in the end, we ended up just buying the U.S. textbook business, Houghton Mifflin. In the early days, do whats asked of them, do it as well as they can, and move on to the next step. The music is great. 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. BARATTA: I think private credit has filled the hole for these smaller businesses, but really not on the full banking suite. BARATTA: Well, you have to get him back. 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. And so, weve pursued, in the last decade, a control strategy, and largely where we are an outsourcing partner, providing a critical component or service to Western companies. Thats another in market that were investing in today, that maybe a decade ago, we wouldnt have been. BARATTA: where the music is amazing. RITHOLTZ: I never would have guessed that. 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. I mean, his family dates back to like Louis Quatorze. 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. And I think fundamentals mattered more in private equity than they did in public market investing. BARATTA: I think that it changes so much fundamentally, that you cant hold on to like, you know, absolutes. It seems like private equity is qualitatively different than it was back in the early days. RITHOLTZ: And businesses just have to exist. Theres real inflation. RITHOLTZ: What about geographies? RITHOLTZ: Yeah, supposed to be sort of loosely fashion day . BARATTA: Yeah. BARATTA: Yeah. Terms and Conditions. How do you keep all that straight? But for listeners, you know, you dont have the same capital costs. Where is the most fertile ground for growth size-wise? We have been speaking with Joe Baratta. BARATTA: Yeah. Yeah. He was the senior guy at that time. Its one firm made unified. For press inquiries, contact[emailprotected]. The Fed was saying, no, its transitory or whatever adjective they used. So given the change in size of private equity over the past 25 years, is there a sweet spot? BARATTA: and nice calling card. And so, yeah, there was a lot of volatility. I think Id been to London Im not even sure Id been to London. RITHOLTZ: Tell us what that growth has been like over the past 25 years? Thats why, as an investor, Im much happier today because were able to buy things more cheaply. So I actually think, at the large end of the private equity market, were undercapitalized. And I met the director one day and, you know, they asked me to get involved. Yeah. RITHOLTZ: But youre still dealing with a lot of European at that time. Your base of operations when youre in the U.K. is London, but youre back and forth to multiple countries. And so, in private equity . RITHOLTZ: Hell reach out to Steve, Steve will put you in touch. RITHOLTZ: I can imagine. I would be remiss if I did not thank the fine team who help put this conversation together each week. Sebastian Escobar is my audio engineer. Markets never sleep, and neither does Bloomberg News. Hours Left50% Off The Information Pro Ends TonightGet Pro. But, like, really, our preference is to do it just by ourselves. Joseph Baratta Age : 51 Public asset : 567,113,101 USD Country of residence : Unknown Linked companies : Blackstone Inc. - Merlin Entertainments plc Biography of Joseph Baratta Joseph Patrick Baratta is Director & Head-Global Private Equity at Blackstone, Inc. and on the board of 13 other companies. These are physical assets. And to me, that was a more comfortable form of investing and where I wanted to bet my career. All of our earlier podcasts on your favorite pod hosts can be found here. So, yes, private equity valuations are influenced very significantly by whats going on in the public markets. Im not saying were clairvoyant and we handled everything perfectly. BARATTA: watch media, changed the way we shop, changed the way we found information. So its been really significant growth. Were seeing some companies have less pricing power maybe than they had a year ago. I got an analyst job at Morgan Stanley in the M&A group, and thats kind of two-year training program and I did that and that was painful. 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. All of our earlier podcasts on your favorite pod hosts can be found here. 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? BARATTA: Yeah. But we ended up being you know, that was an example of, like, I just think we were discounted, but it was really early in the development of private equity. What sort of a challenge does that present for private markets? Tell us about those experiences. Happy to be here. Clever. Is finding the back of the net the hardest job in football? Please click here if you would like more information about the cookies used on this website and how to change your cookie settings. You end up in London. You began more or less in the M&A space at Morgan Stanley, is that right? RITHOLTZ: Well, the past decade, the intangibles have been super attractive. My dad was a bodybuilder and owned three gyms in Sacramento. Sounds like you guys arent aggressively in the, were in a recession or about to have a recession six months. Those do seem to be valued relatively more attractively. . So that is one sector that were investing, and that a decade ago, we wouldnt. View stories on our mobile app and tune into our weekly podcast. BARATTA: So I think we just raised a small credit fund, which is $900 million, and then we had an M&A advisory business. Read deeply reported stories from the largest newsroom in tech. RITHOLTZ: You dont have the same labor costs. BARATTA: Exactly. Clearly, there was a ton of hype in crypto. and Merlin Entertainments Group. Im Barry Ritholtz. Were hiring summer interns now who are 19 and 20 years old. I was supposed to go over you know, in November, I ended up doing that. Privacy Policy You see it in real-time across real estate, across labor . That sounds quite fascinating. BARATTA: Yeah. But, in financing acquisitions and capital needs of these middle market companies, the private credit market has played an important role in that. And also, there are new business models, new media models. 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. 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. Theres plenty of great smaller banks whose business strategy is to serve smaller and medium-sized businesses. We bought some more, and that was a pretty successful investment. Atika Valbrun is our project manager. Even when you read that announcement from that was 2012 . And its cool and, you know, Bitcoin or whatever, theyre just probably a real store of value. RITHOLTZ: Post Brexit, is that the driver? Youve been listening to Masters in Business on Bloomberg Radio. Inflation is significant. It does this by using extraordinary people and flexible capital to help companies solve problems. What is energy transition? What are the challenges of investing in a place like India? I think they were operating at the really top of the industry, really smart people, good track record. The other one I love is White Lotus, which is fantastic, not a Black Swan-related thing, also awesome. Get subscriber-only insights and news delivered by Barry daily. Baratta explains how the firm thinks about dislocation and change, and the steps they take to make sure they are investing on the disruptor and not the disrupted side. Joseph Baratta* Global Head of Private Equity Wayne Berman Global Head of Government Relations David Blitzer Global Head of Tactical Opportunities Martin Brand Head of North America Private Equity and Global Co-Head of Technology Investing Kenneth Caplan Global Co-Head of Real Estate Gilles Dellaert Global Head of Blackstone Insurance Solutions BARATTA: looking at the divestiture from Vivendi. 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 .

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