The Wall Street giant that turns its executives into billionaires

Steve Schwarzman and Jon Gray have long been the public faces of Blackstone’s billionaire elite, but more of the buyout giant’s top brass are fitting that description these days.

Joseph Baratta and Michael Chae now have fortunes of more than $US1 billion ($1.6 billion) each through the world’s largest alternative-asset manager, according to the Bloomberg Billionaires Index, expanding a small group of executives at Wall Street firms joining their founders among the mega-wealthy.

Blackstone’s Joseph Baratta is the latest at the firm to be minted as a billionaire.Credit: Bloomberg

Baratta, 54, global head of private equity strategies, and chief financial officer Chae, 56, have a combined net worth of at least $US2.4 billion, according to Bloomberg’s wealth index, which is valuing their fortunes for the first time.

A Blackstone spokesperson declined to comment.

Blackstone is among Wall Street buyout firms — including KKR & Co. and Apollo Global Management — that are vaulting longtime staffers into the top ranks of finance’s wealthy elite amid a recent global private markets boom.

Its latest billionaire executives are beneficiaries of the New York-based firm’s share price tripling in the past five years, fuelled by Blackstone’s assets under management increasing almost four-fold in the past decade to about $US1.1 trillion.

Baratta and Chae took home more than $US500 million between them in pay and dividends over the past decade, partly through compensation plans boosting their equity stakes, according to data compiled by Bloomberg.

While they currently own less than 1 per cent of Blackstone’s overall shares and partnership capital, those holdings alone are worth almost $US1 billion apiece, rivalling the firm’s entire size when Chae and Baratta stated working there in the late 1990s.

Since going public in 2007, Blackstone has delivered overall gains of about 1000 per cent on a total return basis. The company has outperformed the benchmark S&P 500 Index by more than 600 percentage points during that period, even with its share price tracking a broader slump in US stocks this year.

Baratta’s and Chae’s wealth highlights the younger generation of executives rising to the top of the firm that chief executive officer Schwarzman, 78, founded four decades ago with Peter Peterson, who died in 2018 at age 91.

Blackstone has minted overall fortunes worth more than $US60 billion, according to Bloomberg’s wealth index.Credit: Bloomberg

Georgetown, Yale

Baratta, a Georgetown University graduate, and Chae, an alumnus of Harvard University and Yale Law School, trace their private equity origins back to when the sector was still often seen as a cottage industry.

The pair helped lead Blackstone’s global expansion and transformation into a Wall Street powerhouse across leveraged buyouts, real estate and private credit, taking the helm of Europe and Asia teams before returning to New York.

Along the way, Baratta and Chae earned reputations for meticulous attention to detail and worked on several lucrative private equity deals. That includes the 2007 buyout for Hilton, which ranks among the most profitable private equity deals, as well as repeated investments into Legoland owner Merlin Entertainments.

Chae was made CFO in 2015, while Baratta was named to Blackstone’s board five years later. Their annual compensation and shareholding data only became publicly available following those appointments.

Overall, Blackstone has minted overall fortunes worth more than $US60 billion, according to Bloomberg’s wealth index, with Schwarzman and chief operating officer Gray making up the bulk of that total. Former executive vice chairman Tony James stepped down in 2022 after almost two decades at the firm.

“Sharing the spoils is a challenge for every private equity firm when it comes to compensation, but it’s a really important part of succession planning,” said Claire Madden, a managing director at London-based private equity firm Connection Capital. “If you look at any private equity firm that hasn’t worked out, it’s often because they haven’t sorted their succession plans.”

Tactical opportunities

Chae, who joined Blackstone after previously working at rival Carlyle Group, was named vice chairman in January alongside his existing role, a nod to his broader duties and presence on several investment committees.

Blackstone CFO Michael Chae has also joined the ranks of billionaires at the firm. Credit: Bloomberg

Baratta, the longtime face of Blackstone’s signature buyout fund, ceded the role leading day-to-day management at that unit and will oversee private equity teams running roughly $US210 billion of assets worldwide, including the Tactical Opportunities group that billionaire David Blitzer built before ceding leadership of the $US37 billion unit to Chris James last year. Baratta has attributed part of his success to his father, a bodybuilder who set up a small chain of US gyms.

“He said, ‘You can do whatever you set your mind to,’” Baratta said in an interview last year with Goldman Sachs Group executive Alison Mass. He “instilled in me this idea that there is no limit. If you love it and you’re good at it and you fully commit, you can get there.”

Both of Blackstone’s newest billionaires have already started deploying their wealth outside the firm.

Chae and his wife, Alexa, founded an initiative at Yale Law School, where the couple met, to help students explore private-sector careers. Baratta, one of the first members of his family to earn a college degree, and his wife, Abigail, made an $US11 million gift to their own alma mater of Georgetown University in 2023, a year when he reaped almost triple that sum in Blackstone stock sales.

Like Schwarzman, they’ve also given money over the years to Republican politicians such as Paul Ryan and Brandon Williams. They’ve put far greater sums back into the source of their wealth, sinking at least $US90 million between them into Blackstone funds since 2015, strengthening their ties to the firm.

“If you are fortunate, the journey is long,” Chae said about his career in a 2021 interview. “You are always learning.”

Bloomberg

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