YouSaid · the spoken record

Joseph Baratta

lines on the record: 83
first: 2023-04-14
most recent: 2023-04-14
sittings or episodes: 1
sources: podcast

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“Weather I don't know. No, I mean, I go back to California all the time. I got a lot of good friends from high school. And I grew up at the foothills of the Sierra Nevada Mountains, and I love to go there. But I can't explain it. You just like life gets in the way. And I had a cool career going. And I just stuck with it. And, you know, I've lived in great places. I've been super lucky to have these fun adventures, whether notwithstanding.”
2023-04-14 · Masters in Business · Joseph Baratta on the Future of Private Equity · IDENTIFIED FROM THE TRANSCRIPT · source
“I think it was 2005 when we started to look in China and in India in particular and also Japan. And it really, most of our expansion started with our real estate business because that's a... It's a little bit easier to expand globally in real estate because it's more asset based rather than like company based. And so we sort of followed our real estate colleagues where they went, established a toehold, became successful. So really in private equity, our first adventure outside of Western Europe was in India and China. And that was somewhere around 2005.”
2023-04-14 · Masters in Business · Joseph Baratta on the Future of Private Equity · IDENTIFIED FROM THE TRANSCRIPT · source
“I think early on it was important until we established ourselves, and then we did less of that. We started doing deals on our own probably somewhere around 2004 or 5. We started doing things by ourselves. We were much more networked. People knew who we were Blackstone as a brand name was becoming more known just everywhere but in particular in Europe because we weren't particularly well known at that time and so yeah it was helpful it kind of helped us get off the ground so to speak”
2023-04-14 · Masters in Business · Joseph Baratta on the Future of Private Equity · IDENTIFIED FROM THE TRANSCRIPT · source
“They Holdings. Exactly. So the second deal we did was we worked with another firm, a local UK firm called CVC and also TPG to buy Scottish in Newcastle's pubestiture. Scottish and Newcastle was a big brewer up in Scotland at the time. And so we bought the pub business. We combined it with another one. We bought some more. And that was a pretty successful investment. Then we did other similar investments, particularly with real estate content. The pubs all own their real estate. So we were working with our real estate guys in healthcare facilities, in visitor attractions, in theme parks. So we did a lot of these sort of consolidation plays.”
2023-04-14 · Masters in Business · Joseph Baratta on the Future of Private Equity · IDENTIFIED FROM THE TRANSCRIPT · source
“And then it evolved, you know. I sort of looked at well, the industry in Europe is a good decade or two behind the US. So I said, well, what kind of deals worked in the US in the early 90s, in my experience? And, you know, what I sort of decided is, well, fragmented industries where you could drive consolidation that had happened already in the US, things like in the UK pubs 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't own distributors similar to you”
2023-04-14 · Masters in Business · Joseph Baratta on the Future of Private Equity · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, if you want. Fewer of them, yeah. And so we'd partnered with a few local firms and actually one of our US competitors to look at this big asset because it was quite big. And in the end, we ended up just buying the US textbook business Hot and Mifflin. That was our first deal in Europe, which was actually a US deal. But we probably wouldn't have done it had we not been there looking at the divestiture from Vivendi. And so, you know, that was kind of the strategy day one”
2023-04-14 · Masters in Business · Joseph Baratta on the Future of Private Equity · IDENTIFIED FROM THE TRANSCRIPT · source
“So our strategy was, and sort of David had conceptualized, like we're going to be the neutral Americans who can work with the local European firms to help them get deals done. So we kind of went on, did some missionary work meeting the local private equity firms in France and of course in the UK and Germany up in the Nordic region, in Italy. And we just met all the other players. It was a small industry. There weren't that many people. There weren't that many firms. And we were like, look, we'd be great partners as you're looking at assets. The first deal we looked at was in France. We were looking at taking, remember, Vivendi at the time, the big media conglomerate. They had bought a bunch of educational publishing assets, including U.S. textbook company Houghton Mifflin.”
2023-04-14 · Masters in Business · Joseph Baratta on the Future of Private Equity · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, which is a good asset, a nice calling card. We had actually two investments in Germany in telecom infrastructure that in that moment were doing that great. And so we did, but we were kind of trying to do deals by airplane from New York, and that's not functional. So Steve said, we got to have a real presence. We have some assets. We had some real estate guys there. My friend and former Morgan San Leanney's colleague, Chad Pike, ran our European real estate stuff. And David and I moved over to do the private equity stuff.”
2023-04-14 · Masters in Business · Joseph Baratta on the Future of Private Equity · IDENTIFIED FROM THE TRANSCRIPT · source
“Right into the thick of it, trying to figure out what do too young my colleague David Blitzer, I think he was maybe 31. I was 29. And there we were, two young Americans, no language skills. Like, what are we supposed to do? Now, the firm had had assets in the UK. We own the Savoy group of hotels, which is the Connot and Claridge and Savoy.”
2023-04-14 · Masters in Business · Joseph Baratta on the Future of Private Equity · IDENTIFIED FROM THE TRANSCRIPT · source
“So there was still French francs and Lira and German Deutschmarks. And so that didn't happen until 2002. And it took the year for all of those local currencies to literally paper and coin currencies to come out of circulation and have euro bills.”
2023-04-14 · Masters in Business · Joseph Baratta on the Future of Private Equity · IDENTIFIED FROM THE TRANSCRIPT · source
“Even more mature companies, yes. But when I moved, you didn't have the single currency in circulation until January of 2002, right?”
2023-04-14 · Masters in Business · Joseph Baratta on the Future of Private Equity · IDENTIFIED FROM THE TRANSCRIPT · source
“In November of 2001, when I moved over, the industry wasn't called private equity, it was called venture capital. And it wasn't technology. Venture capital was the nomenclature for everything that was basically a private investment.”
2023-04-14 · Masters in Business · Joseph Baratta on the Future of Private Equity · IDENTIFIED FROM THE TRANSCRIPT · source
“Exactly. Now, in that moment, Americans were sort of viewed positively and as neutral. So, you know, you could go to France. Maybe they didn't love, you know. Germans as much. But these sort of Americans were tolerated, you know. And we were kind of oddities at the time, particularly in private equity, which was still really in its infancy. Right.”
2023-04-14 · Masters in Business · Joseph Baratta on the Future of Private Equity · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I'm 29 when I'm asked. I'm 30 when I move. Yeah, because it was 2001. And it was just after September 11th, I had agreed to go before September 11th happened. I was supposed to go over in November. I ended up doing that. I remember a completely empty plane flying over to London with my then girlfriend moving to London. I had no language skills. The firm had had last year.”
2023-04-14 · Masters in Business · Joseph Baratta on the Future of Private Equity · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I mean, it was certainly not expected. I'd never lived abroad. I think I'd been to London. I'm not even sure I'd been to London. I'd been to Paris and Venice or something. And the guy who was going over Truly Leader, David Blitzer, who was a good friend and colleague. And he sort of said, geez, why don't you come and do this with me? He was the senior guy at the time. And I was like, geez, okay, well. You're like Lee.”
2023-04-14 · Masters in Business · Joseph Baratta on the Future of Private Equity · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I mean, I was in my mid twenties, and looking to build a career in private equity, I liked it. I thought I could build a successful career. I recognized that it was still pretty early in the development and there should be a lot of growth in these firms. And I wanted to work at 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. Keep up with the big dogs. Yeah. I had very modest expectations like, geez, if I can last two or three years, at least I will have done it. I will have learned something and I'll have something else to do on the other side of it.”
2023-04-14 · Masters in Business · Joseph Baratta on the Future of Private Equity · IDENTIFIED FROM THE TRANSCRIPT · source
“Whose business strategy it is to serve smaller and medium sized businesses. But in financing acquisitions and capital needs of these middle market companies, the private credit market has played an important role in that.”
2023-04-14 · Masters in Business · Joseph Baratta on the Future of Private Equity · IDENTIFIED FROM THE TRANSCRIPT · source
“Along those lines, I think private credit has filled the hole for these smaller businesses, but really not on the full banking suite. There's plenty of great smaller banks.”
2023-04-14 · Masters in Business · Joseph Baratta on the Future of Private Equity · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, yeah, the private credit market, I think, is really attractive. And it's actually been around a long time. I mean, there have been leverage loans and high yield bonds since the 1980s. And as an asset class, they've performed extremely well with low incidence of loss, good returns. You get paid for the incremental risk that you're taking in a more leveraged capital structure. So it's been a great asset class. It's attracted a lot of capital. 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 Aries and others who are actually lending money directly to the people who are borrowing instead of going through the banking intermediaries.”
2023-04-14 · Masters in Business · Joseph Baratta on the Future of Private Equity · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, that's part of it. I mean, we're not specifically investing in charging stations. We actually have assets where those are going in or we're investing in components that are part of manufacturing facilities. But yes, that's the kind of thing we're talking about. That is part of the energy transition.”
2023-04-14 · Masters in Business · Joseph Baratta on the Future of Private Equity · IDENTIFIED FROM THE TRANSCRIPT · source
“And it's all kinds of companies engage. It's not just power generation from those sources, but it's companies that are involved in consulting and utility services, in companies that make components that are helping electrify the economy and electric vehicles or in HVAC systems. So it's a whole broad spectrum of investing in the energy complex focused on the transition from hydrocarbons to renewable sources.”
2023-04-14 · Masters in Business · Joseph Baratta on the Future of Private Equity · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, energy has been a major investment theme across many of our businesses and credit and corporate private equity. And for the last six or seven years, the way we've been expressing, investing in energy is in energy transition. So in companies that are helping accelerate the transition from burning hydrocarbons to produce electricity and energy to renewable sources. And so in private energy.”
2023-04-14 · Masters in Business · Joseph Baratta on the Future of Private Equity · IDENTIFIED FROM THE TRANSCRIPT · source
“No, no. It was more of a cottage industry. There were a few firms, a couple of big leaders like KKR, Blackstone was right on their heels back then. But it's nothing like it is today. It is an institutionalized asset class. There's definitely been proof of concept for large-scale institutional investors and even retail investors that we can produce sustainable, predictable above public market returns. And we've become better at what we do. In buying control of companies, engaging with them, making them better, helping them grow. And so, yeah, and we've had limited partners in our funds who've been with us since the early 90s now and keep re-upping because we deliver a good return for their beneficiaries.”
2023-04-14 · Masters in Business · Joseph Baratta on the Future of Private Equity · IDENTIFIED FROM THE TRANSCRIPT · source
“We're probably three times the size as we were in 2012, both in terms of the aggregate revenue of our company, size of our portfolio. We're 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 we're invested. So it's been really significant growth. Why is that? I think because the private equity investing model has been really good for our clients, which are state pension plans, sovereign wealth funds, ensuring the retirement safety of many tens of millions of people.”
2023-04-14 · Masters in Business · Joseph Baratta on the Future of Private Equity · IDENTIFIED FROM THE TRANSCRIPT · source
“And the size of our private equity business is, you know, we're now on our ninth fund. We have associated funds in Asia and in energy transition and a long-dated vehicle that allows us to hold things for 15 plus years. And I think if you add it all up, we have about $40 billion of funds that we're currently investing in their investment period. And the total AUM of our private equity business, AUM assets under management, is roughly $80, $90 billion. So, I mean, we're. Materially bigger than we were 25 years ago, even when you read that announcement from 2012.”
2023-04-14 · Masters in Business · Joseph Baratta on the Future of Private Equity · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, when I started at Blackstone, we were, I think we just started investing our third private equity fund. It was about $3 billion in total size. We had our second real estate fund, which was, I think, about a billion, two or three size. I think we just raised a small credit fund, which was $900 million. And then we had an MA advisory business, and the whole firm was maybe 200 total employees, not just investment people, total staff. And today we're knocking on the door of 5,000. I think we're 4,500 or something like that.”
2023-04-14 · Masters in Business · Joseph Baratta on the Future of Private Equity · IDENTIFIED FROM THE TRANSCRIPT · source
“Maybe at the first or second time. And so, yeah, there was a lot of volatility. Private equity was still, I'd say, in the first phase of its existence. And Blackstone was one of the, and that's why I joined Blackstone. It was one of the leading firms in that moment. It had a lot of momentum. I think they were operating at the really top of the industry, really smart people, good track record. And I wanted to attach myself at that point in my career. I was 2, I think, 27 years old. I wanted to attach 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.”
2023-04-14 · Masters in Business · Joseph Baratta on the Future of Private Equity · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I started at Blackstone in July of 1998, and I guess what was going on that year, you had like a Southeast Asian currency crisis. You had stuff going on in Latin America. You had the Russia crisis. You had Lehman almost go bust, I think, around that time for.”
2023-04-14 · Masters in Business · Joseph Baratta on the Future of Private Equity · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, in the long run, they do. 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 2099. So yes, you're right. Like in the long run, fundamentals drive determine Share prices in private equity. We're owning things for five, six, ten years and we're not subject to like the vicissitudes of the market in the short run. We never have to sell only when we want to because we control the companies. And to me, that was a more comfortable form of investing. And where I wanted to bet my career.”
2023-04-14 · Masters in Business · Joseph Baratta on the Future of Private Equity · IDENTIFIED FROM THE TRANSCRIPT · source
“Or you go to business school, or maybe go to business school later. I really wanted to learn how to invest money, not just be an advisor. And I thought private equity was cool because you weren't at the whim of the market, you know, and the market's like if you start at the wrong time, if you're wrong for a few quarters, boom, like the career is abbreviated. And I thought private equity was interesting because you could live with those investments for a longer period of time. You had a longer period of time to figure out if you were right or not. And I think fundamentals mattered more in private equity than they did in public market investing. So I wanted to get a job at a private equity firm.”
2023-04-14 · Masters in Business · Joseph Baratta on the Future of Private Equity · IDENTIFIED FROM THE TRANSCRIPT · source
“Or private equity firms? Yeah, the first job from Morgan Sandler was McCow and DeLoo. And so in the early 90s, analysts at these big investment banks, Morgan Sanley, Goldman Sachs, had sort of two or three options. You could 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.”
2023-04-14 · Masters in Business · Joseph Baratta on the Future of Private Equity · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I mean, I knew nothing about finance. I grew up in Sacramento, California. My dad was a bodybuilder and owned three gyms in Sacramento. Really? Yeah. And so I didn't know what finance was all about. I had never been to New York City until I was. I think 20 years old, and I had some roommates who grew up in New York City who'd gone to Dalton High School here, so completely different world. I say the least. Yeah, when I came to the city, I was like, wow, this place is amazing. And, you know, I needed to earn some money. And I was adept in finance. I'd 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 was way exceeded my dreams at that point.”
2023-04-14 · Masters in Business · Joseph Baratta on the Future of Private Equity · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, right after I graduated college, I went to Georgetown in 1993. I got an analyst job at Morgan Stanley in the M&A group. And that's a kind of two year training program. And I did that. And that was painful.”
2023-04-14 · Masters in Business · Joseph Baratta on the Future of Private Equity · IDENTIFIED FROM THE TRANSCRIPT · source