$8.5B emerging market asset management - Nick Rohatyn, The Rohatyn Group

 Nicolas Rohatyn serves as Chief Executive Officer of The Rohatyn Group. TRG is a team of 190+ emerging market specialists in 18 countries dedicated to pursuing investment opportunities in these economies by focusing on areas of structural inefficiency and special opportunity.

The firm has over $8 billion in assets under management and splits its investments between public markets, private markets and forestry and agriculture.

Prior to founding TRG in 2002, Mr. Rohatyn spent 19-years at J.P. Morgan, including 5 years as a member of J.P. Morgan’s executive management team, holding a variety of leadership positions in emerging markets, foreign exchange, commodities, credit markets and e-commerce functions. As Managing Director and Head of Emerging Markets Sales, Trading and Research, Mr. Rohatyn established offices in Mexico, South Africa, Turkey, Russia, Korea, and India, as part of the growth of J.P. Morgan’s efforts in those markets. Mr. Rohatyn built and restructured the emerging markets sales, trading and research area from a loan-based business to an integrated and diversified sales, trading and capital markets effort while producing significant net income and winning numerous awards and industry-wide recognition. During Mr. Rohatyn’s tenure, J.P. Morgan established its widely acknowledged leadership position in emerging markets securities distribution, trading, and research.

Mr. Rohatyn is a founder and the former chairman of the Emerging Markets Traders Association (EMTA), a body that today is recognized by many professionals as the authority on market standards, practices and volumes. He currently serves on the boards of The Asia Society and the Global Private Capital Association (GPCA), where he also served as chairman, and the French Institute/Alliance Française. He is a Trustee of the Citizens Budget Commission and serves on the Investment Committee of the Foundation for Contemporary Arts. He formerly served on the Boards of The Alvin Ailey American Dance Theatre, Robert College of Istanbul, MarketAxess, the Local Initiatives Support Corporation (LISC), the RiskMetrics Group, Archipelago, and the Lewis T. Preston Foundation for Girls.

A native New Yorker, Mr. Rohatyn holds a Bachelor of Arts in Economics from Brown University.

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Transcript

00:00:00 NICK ROHATYN
One's job on earth is to maximize one's potential. And you can distill your potential into the things you were born with and the situation into which you were born.

00:00:13 NICK LALL
Hello and welcome to the INSEAD Emerging Markets Podcast, where we interview business leaders and emerging market experts on business innovations, market opportunities, and macro-level trends in emerging and frontier market countries. Join us for the next hour to dive deep into the world of emerging markets as we speak with top performers who are successfully investing, working, and living in these markets themselves.

00:00:38 NICK LALL
Hello and welcome to the INSEAD Emerging Markets Podcast. I'm your host, Nick Lall, and I really feel very lucky today to be joined by Nick Roatan. Nick is partner and chief executive officer at the Roatan Group, which is an investment firm focused on emerging markets.

00:00:54 NICK LALL
founded the firm back in 2002 after 19 years at J.P. Morgan, where he built up the emerging market business there. And today the Rohatyn Group has over $8 billion in assets under management.

00:01:06 NICK LALL
And their investments are pretty much evenly split between public markets, private markets, and forestry and agriculture. And the firm is operating in 18 countries globally. So I think before we dive deeper into the details of what the Rohatyn Group does, though, I'd love to learn a little bit more about your personal journey, Nick. So I was wondering if you could tell me where your initial interest in emerging markets came from and how that inspired you to build up JP Morgan's emerging market business and ultimately found the Rohatyn Group.

00:01:35 NICK ROHATYN
Happy to, and thank you for having me. By way of background, I grew up in New York City, but both my parents are half French. So I am a dual citizen, bilingual as well.

00:01:46 NICK ROHATYN
very happy to be interviewed by INSEAD, a school I never qualified to attend. But as such, I was always interested in all things international. and emerging markets is as international as it gets, number one.

00:02:02 NICK ROHATYN
two, the mixture between the scale of markets that you cover, you know, we cover most of the world, right? We cover more countries than other businesses, more currencies, more companies, sort of, you name it. The scale of what you look at with the depth of the issues means that Not only can you do big business in this area, but if you do big business and you do it well, then in my opinion, you are doing something that is fundamentally good in tying together investors from around the world to these countries and companies that need capital.

00:02:38 NICK ROHATYN
it's really the combination of doing good and doing well that brought me to this. I also, as an internationally oriented person, I love the sound of different languages. I love to go to different countries.

00:02:50 NICK ROHATYN
On average, I travel a quarter million miles a year, or at least I did prior to COVID and it never bothered me. I really like it. I love seeing and learning about countries from the vantage point of work.

00:03:04 NICK ROHATYN
has really helped me and broadened my perspective on so many things. So when I started at JP, I started in a traditional way in sort of capital markets. They then sent me to Japan for about four years.

00:03:18 NICK ROHATYN
which was fascinating. I had never been to Asia prior to that, prior to the age of 22. And then I saw a transaction that JP Morgan had done in Mexico. And that's when sort of the penny dropped on this combination of do good and do well.

00:03:37 NICK LALL
I'm guessing that was back when Japan was really booming. So that must've been a really exciting time to be there and living abroad in your twenties is always fun. So I can definitely see how that could influence you to want to have a more international career going forward.

00:03:50 NICK LALL
yes, I definitely also agree that a lot of the draw for working in these emerging markets is seeing the power of bringing capital to these places and how it can have such an outsized impact compared to what would be possible in a more devolved market. So definitely understand that. I guess my next question would be, at what point did you decide to leave J.P. Morgan and start your own firm? And what made you realize

00:04:13 NICK ROHATYN
it was time to go off on your own? Well, the time was kind of dictated to me, not the other way around, in that we had this merger with Chase Manhattan Bank in 1999, and we had so much overlap between the two institutions, including in our emerging markets business. And it really changed the nature of the bank.

00:04:33 NICK ROHATYN
JP Morgan was a small ish, but very international wholesale investment bank oriented bank. Chase Manhattan was larger, much more of a commercial and U.S. oriented bank.

00:04:47 NICK ROHATYN
so the combination of those two became much more U.S. and commercial oriented with much, much larger management team. So the combination of the nature of the beast and what it entailed then in terms of my prospects in the organization. I

00:05:06 NICK ROHATYN
on the executive committee at J.P. Morgan. And now, as I said, a much, much larger management team had me thinking hard then about next steps.

00:05:16 NICK ROHATYN
I had known for quite some time that if I ever were to leave J.P. Morgan, for whatever reason, that I would start on my own. try to build a firm around the thing that I love the most, which is emerging markets.

00:05:31 NICK ROHATYN
J.P. Morgan, I had built the emerging market sales and trading business from eight people when I took it over in 1988 to 600 people. By 1995, we were a big part of the firm, a big part of the business.

00:05:46 NICK ROHATYN
bosses let me build it as aggressively as I possibly could, and I really wanted to get back that when I left the firm. And so I had built the business a certain way at JP, which I then translated to the buy side in building out the Rohatyn Group. So when I left in 2001, strangely enough, my last day was 9-11, 2001. I

00:06:09 NICK ROHATYN
that I would give myself some time to try to build this firm focused on emerging markets, on a lot of the principles around which I had built the business at JP.

00:06:23 NICK LALL
Definitely. And it seems like it's gone extremely well since then. I was wondering if you could talk about any of the challenges that you faced starting out and how difficult it's been to scale the firm across 18 different countries. To me, that sounds so difficult just because speaking from my own experience, managing a company, even across a few country offices brought about a lot of challenges that probably wouldn't have been faced even within multiple offices in the same country. So I was wondering what challenges you might've faced starting out and scaling the firm and how you overcame them.

00:06:50 NICK ROHATYN
Well, the international physical plant of the firm is kind of the least of the challenges. It doesn't bother me at all. We had the same thing at JP. I

00:07:00 NICK ROHATYN
about 15 offices around the world, and it really boils down to having people in place that you trust at the right level, which is usually regionally, to look over the different offices. So that was never a real issue. You can, you can organize your way around it. I

00:07:16 NICK ROHATYN
going in that starting up my own firm, the first challenge would be that my business card didn't say JP Morgan on it anymore. And it's very easy to be lulled into a false sense of confidence or self-importance when you're in one of these big firms. Because people will pick up the phone when you call.

00:07:34 NICK ROHATYN
have incredible access to all kinds of decision makers and policy makers. And all of a sudden you're on your own and it gets lonely pretty fast. So you realize very quickly, you eat a lot of humble pie in those first few years of running your own firm.

00:07:51 NICK ROHATYN
things you thought were relationships were acquaintances, if you see what I mean. And only a few are real relationships. That was Number one.

00:08:01 NICK ROHATYN
two was when you run a small firm, unlike when you work in a big bank, you need senior people right away. You can't do it the way they do it in banks where you have a pyramid, you have a lot of young people, you train them up, you grow them, they get promoted, you form them in the same culture, all this kind of stuff. You have to have impactful people at the very beginning in running a small firm and setting a small firm up.

00:08:27 NICK ROHATYN
that can cause trouble because some of those senior people were not with me before. You are all learning about each other, each other's habits, strengths, weaknesses, what have you. So that, that was item number two.

00:08:41 NICK ROHATYN
then item number three was this, you know, minor issue that post 2008 emerging markets had a horrible 15 year run in terms of performance across the asset class. And that was certainly not something I was expecting. Emerging markets has always had lots of ups and downs.

00:08:58 NICK ROHATYN
a volatile asset class, a volatile part of the world. But I certainly did not expect that we would have such a long run of dollar strength, emerging market currency weakness, emerging market equity underperformance, developed market outperformance across the board. That made it very hard to build out the business post 2008.

00:09:20 NICK ROHATYN
And that's really what forced us to adjust our tactics to not just build it the old fashioned way by launching funds and growing funds, but also by acquiring other managers who perhaps did not have the scale that we had, did not have some of the strengths that we had, but where they brought to the table some interesting features that put together with us, made us stronger all around. And so. That was quite the journey starting really in 2010, 2011, to not only continue to develop products and new funds the old fashioned way, but to start

00:09:55 NICK ROHATYN
down this path of consolidation inside our industry. Right. I'm sure it was quite a

00:10:02 NICK LALL
working for such a large, well-known organization like J.P. Morgan to starting your own business from scratch and suddenly having to interact with people both internally and externally in much different ways. Definitely not an easy time to start an emerging market focused firm at all.

00:10:20 NICK LALL
of growth through acquisition, I've read a lot of articles recently on your recent acquisition of Ethos in South Africa. I was wondering if you could talk about that acquisition and what made you especially interested in expanding in Africa at this point in time.

00:10:35 NICK ROHATYN
Sure. It's not so much at this point. I've always been interested in Africa.

00:10:40 NICK ROHATYN
you are a global emerging market firm, I'm convinced you have to be in Africa. At JP, we were the first bank to reopen in Africa post-apartheid. That was an office that I managed or I supervised in South Africa in 1995.

00:10:55 NICK ROHATYN
So I've always been convinced that you have to be in Africa. I have also, over the last 10, 15 years, gotten to know a lot of the GPs in Africa, a lot of the managers in Africa. There just aren't that many who are of the right scale and quality. I

00:11:11 NICK ROHATYN
say there's definitely less than five ethos quite prominent amongst them in their culture, their ethics, the fact that they had diversified themselves over the last several years. So I had stayed in touch with them through the years and the timing was really theirs, not mine. I was always interested.

00:11:33 NICK ROHATYN
took them a while to run through their potential path or paths and end up deciding that this was the best one. The thing that I think convinced both of us was when we looked at the number of areas where neither of us could do it alone, but both of us could do it together. So to give you a couple of ideas.

00:11:54 NICK ROHATYN
Secondary market private equity investing is a big item in emerging markets today. We are much better equipped to do that with ethos than without, and they are much better equipped to do it with us than without. Private credit is something that investors are very interested in on a global diversified basis, much more so than on a regional basis.

00:12:17 NICK ROHATYN
so again, we can do these things together. We couldn't do them apart. Forestry and agriculture is sector in Africa that is of interest, particularly agriculture.

00:12:28 NICK ROHATYN
Ethos had no domain expertise, and we had the domain expertise, but no relationships. And so issue after issue after issue, we went through and we came up with about half a dozen where We really felt one plus one equal three or four in a combination of our two firms. And that's what drove the acquisition.

00:12:47 NICK ROHATYN
since then, I just came back from South Africa last week. It's very clear that it's a big game changer for our relationships in Africa and our possibilities in Africa. That

00:12:59 NICK LALL
a lot of sense. I can definitely see why going. inorganically with a local partner who has market expertise and you both bring different synergies to the partnership would definitely be easier than trying to expand on your own, especially when you're employing strategies like private market secondary investing in a new market.

00:13:15 NICK LALL
that definitely makes a lot of sense. When you make these sort of acquisitions, how do you evaluate the potential partners you acquire? Is it just an overview of potential synergies like the ones that you just mentioned, or are there any other factors that you look at to evaluate whether another firm is one

00:13:33 NICK ROHATYN
like to bring under the Roatan brand? The categories are really impact and fit. Impact being a multi-dimensional word, right?

00:13:40 NICK ROHATYN
It's not just Not impact in the sort of impact investing sense of it, but impact is a financial term, right? Is it a profitable firm? Do we think it can grow? What are its prospects? What are its prospects with us? Are there new things that, that can grow off of the existing ethos business? Because we're there. So that's one. How scalable is it? And fit is more about culture.

00:14:08 NICK ROHATYN
To build the kind of firm we are building where one plus one needs to equal three or four on a firm-wide basis, you have to have a certain type of culture, a culture where people want to work together, where people work across boundaries, where people are not living in their silos, if you will, and just hunting their own P&L. So that was the second thing. As you said, Nick, at the very beginning, I think there is a culture amongst emerging market investors.

00:14:35 NICK ROHATYN
that we are all in it for more than just the financial return. Everybody understands in this industry that there's more to it than just that. And I think everybody in the industry gets satisfaction and a feeling of achievement and pride from some of the non-financial elements of what we

00:14:58 NICK LALL
Sure. Great to hear. And it is part of what makes it so exciting to work in these markets. I was wondering, I know that it may be a bit broad since you do so many different things, but do you have any sort of investment thesis at the Rowlaton Group or any way that you evaluate investments that may be overarching or unique to you, whether public market or private market or forestry and

00:15:22 NICK ROHATYN
Yeah, look, I think the key to me is to understand how emerging markets are different than developed markets and make sure that you are adjusting your approach to take that into account. So to give you an example, in private investing, in developed markets, very often the methodology is to take minority positions, rely on contractual rights and look for public market exits, right? And by the way, throw a bunch of leverage in there along the way.

00:15:53 NICK ROHATYN
Virtually none of that formula, strictly speaking, works in emerging markets. Minority passive investments are, you can do them. We have done some of them, but most of the time we really want to be either in a control position or have significant influence and rights.

00:16:12 NICK ROHATYN
have to have contractual rights, of course, that goes without saying, but in emerging markets, your relationships are at least as important as your contracts. Thirdly, we use very little leverage in most of our private equity. And fourth, the exit is very rarely an IPO.

00:16:32 NICK ROHATYN
is much more often strategic sale. So there's an example of where you just have to understand the way the markets work and you have to adjust your methodology. And then there are analogs on the public market side in terms of how the public market benchmarks are built, for instance, and also the breadth of countries that you're exposed to if you take a benchmark-based approach in emerging markets, which makes it difficult as well.

00:17:03 NICK ROHATYN
just understanding the different structure, the different vagaries of our markets and adjusting one's approach, regardless of how successful another approach is in developed markets, is the key to me.

00:17:17 NICK LALL
Those are all really interesting points. One of them that stood out to me was the aspect of it most likely needing to be a strategic sale for these businesses. And it makes me interested in what the due diligence process is for you, given that since it most likely will be a strategic sale, it seems that not only do you need to due diligence the company itself, but you'd also have to look and make sure that it's an industry and a country even that a strategic sale would be possible in.

00:17:45 NICK LALL
So I was wondering if you could dive a little bit deeper and speak about what your due diligence process is. If you have any examples of some of the private investments you've made and how you've had to due diligence them and maybe just speak a bit more broadly in terms of what goes into due diligence in emerging markets versus what the process would typically be in a more developed market.

00:18:07 NICK ROHATYN
Well, I think in general, I won't give any specific examples, but in general, of course, the information is sometimes not as transparent, not as readily available, not as well audited, if you will, in emerging as in developed markets. Often part of our job is to install a CFO or install a new auditing and financial regime. I think we spend more time on management teams than one would in developed market investing.

00:18:36 NICK ROHATYN
So it's those sorts of things in diligence that we try to spend some extra time on. In terms of understanding then the exit market, we do want to have multiple exit markets. It could be a private sale, as I say, industry sale, regional sale.

00:18:55 NICK ROHATYN
could be an IPO. As I said, that's in a minority of cases. But in all of our structuring, we try to keep the door open to multiple exits. And we also, I think, do more downside protection structuring than one would typically do in a developed market private equity construct. Sure.

00:19:17 NICK LALL
sense. So how much do macroeconomic trends affect your investment strategy in general or even on a more individual investment level? Well, a

00:19:28 NICK ROHATYN
in general and sometimes only a little on an individual basis, but certainly in emerging markets, of course, the macro matters a lot. It can be very violent. It can be very volatile.

00:19:41 NICK ROHATYN
can be very profound. So you can go from environments where interest rates locally are 15, 20% to environments where three years later, local interest rates are 5%. And you can imagine that in those two macro environments, in the first one, equities and private equity are a terrible idea.

00:20:00 NICK ROHATYN
the second one, equity and private equity are much better ideas. So understanding the macro trends has to be reflected across the portfolio and across all the activities while taking into account the fact that you have different mandates in different funds, you have different tenors, different outlooks. You know, in one fund, it may be me investing on a six month rolling outlook while in another one, let's say it's forestry, it's really thinking in terms of 10, 15, even 20 years.

00:20:32 NICK ROHATYN
So you're trying to match up these things. It's very hard to think macro trend for 15 years, but. you can certainly try to extrapolate things around stability, institutional strength, rule of law, contractual rights, things like that in one country versus

00:20:52 NICK LALL
Sure. Are there any macro trends right now that are causing you the most concern or

00:20:59 NICK ROHATYN


00:20:59 NICK LALL
are a lot of things going on globally now with the decoupling from China, a

00:21:04 NICK ROHATYN
U.S. dollar. Yeah, they...

00:21:06 NICK ROHATYN
There are, there are two biggies. Uh, one is interest rates and one it's the dollar, the higher interest rate regime, which we are now in. And the fact that we have come out of a 20 year bull run in interest rates in the U S has profound implications.

00:21:23 NICK ROHATYN
you have seen it in all markets. Actually, you've seen it in, Most markets that are outside of emerging markets, it has affected emerging markets much less because emerging markets have less leverage and because emerging markets are under-owned due to poor performance over the last decade plus. But higher interest rates means that there's a higher price for risk now.

00:21:49 NICK ROHATYN
hence the things that people got into in a zero interest rate environment have started to explode, implode, or just really, really get repriced. So you look at crypto first, you look at venture capital second, you look at mismatched bank balance sheets third. I think we'll see private equity in the US and Europe, which has leverage, start to get repriced.

00:22:13 NICK ROHATYN
are talking about insurance as well. So you really have to think through the whole architecture of markets and where interest rates show up. and really understand this is a massive, massive change.

00:22:28 NICK ROHATYN
that's one. The second is that in our view, the dollar is getting weaker now, not stronger, and the dollar has tipped over. You know, in general, people take the view that, and I think this is a consensus view.

00:22:41 NICK ROHATYN
not, we're not outliers at all here. Once you have passed peak inflation and you have an economy that's slowing down, then you are likely going to have a currency that is weakening. And the dollar has been also on a six, seven, eight year strengthening run.

00:22:57 NICK ROHATYN
stronger dollar falling interest rates. This is a terrible, a great combination for the U S to attract capital, a terrible combination for the rest of the world. And now you have the opposite happening.

00:23:11 NICK ROHATYN
those two things actually bode well for emerging markets. The third is China. You mentioned China reopening, but I think in general, while that is true, And China is not an uninvestable country, as some people would exaggerate, but it is a more problematic investment destination now than had been the case before.

00:23:33 NICK ROHATYN
to COVID, of all the private money invested in emerging markets around the world, 90% of all that money went to Asia and 90% of that went to China. So prior to COVID, 81% of all the private investment flow in emerging markets went to one country. Today, that country is clearly a more complicated place to navigate, so it's going to be a much less of an obvious, massive destination for capital.

00:24:01 NICK ROHATYN
that bodes well also for emerging markets, non-China emerging markets. And you talked about this a

00:24:07 NICK LALL
bit when I asked you about ethos. You just mentioned that 90% of its capital has gone to Asia. Do you see that shifting? to Africa at all, and what role do you see Africa playing in the global economy in the

00:24:22 NICK ROHATYN
few decades? Okay, that's a big question. On the first part of that question, not sure yet. I

00:24:29 NICK ROHATYN
more people will look at Africa, but right now Africa, the capital flowing into Africa is all coming from the development finance institutions, e.g. the IFC, the DFC, the World Bank, EBRD, British Investment institutions, that sort of thing. It will take some time for commercial capital to come back.

00:24:52 NICK ROHATYN
if you think about some of the basics of Africa around demography and around commodities and around scale, there's a lot of promise in Africa. The counter to that is it's a lot of different countries. It's 54 countries.

00:25:06 NICK ROHATYN
are obviously some that have more governance issues than others. the industrial scale that is necessary in some of our industries is not there yet in Africa. But in general, the world is a shrinking place. Africa is a big place. And it's going to, I think, play a very important role on the planet for the foreseeable future. Sure.

00:25:31 NICK LALL
I guess part of the reason I asked that was I did a project during the NBA on what Africa would look like 100 years from now. And one of the big opportunities we saw was for agriculture there. And I guess that kind of leads me to my next question, which would be what prompted you to add forestry and agriculture to the suite of strategies and solutions that the Rowden Group offers? Well,

00:25:54 NICK ROHATYN
of all, you have to send us your papers so we know what Africa is going to

00:25:58 NICK LALL


00:25:58 NICK ROHATYN
Forestry and agriculture, I wish I could tell you that I was prescient and I saw that the world was moving in the direction where climate mitigation, carbon capture, all of that kind of stuff was going to be so, so important and so universally recognized. And similarly on the agriculture side. But the truth is that in building out a firm like this, in building out any small firm, you have a strategy and then you have tactics.

00:26:27 NICK ROHATYN
that strategy had been what I mentioned, you know, multi-asset class, global, local, asset manager, multiple funds, catering to institutional investors. Nowhere in that original vision was forestry and agriculture, but I knew the firm GMO, where this team had been practicing their craft since 1997. And when I heard that they were divesting themselves of this small unit, it was $2 billion out of a $70 billion business.

00:26:58 NICK ROHATYN
It just piqued my curiosity and I looked into it more. I realized that the team did a third of their activity in emerging markets. So that was one excuse.

00:27:09 NICK ROHATYN
Secondly, I did have an inkling about the potential size of the opportunity over the long term. Thirdly, you could see that in forestry and agriculture is very similar to emerging markets in that the professionals who I have a real passion for it, do so out of much more than a pure financial calculation. And I really liked the culture that that fed.

00:27:33 NICK ROHATYN
then lastly, it was a very good team. It was $2 billion when we took it over of long-term locked up money with great client base. And so it was a very attractive proposition in general.

00:27:46 NICK LALL
That all makes a lot of sense. Maybe switching more to the personal side, I've seen that you're on the board of the Asia Society. I was wondering what drew you to that organization and how you support them and what your goals are for

00:27:59 NICK ROHATYN
work? Well, I've been on a bunch of not-for-profit boards. I'm now also on the board of Alliance Francaise, just so you know.

00:28:06 NICK ROHATYN
So going back to my roots there, Asia Society is a great place. You know, it's a very important interlocutor between Asia and the US. And we do a lot of business in Asia. I

00:28:19 NICK ROHATYN
in Japan. I have good friends from throughout the region. So participating in Asia Society is just a wonderful way to sort of stay in touch in a different way with everything that's going on out there.

00:28:33 NICK ROHATYN
as now things are so so important in the US-China relationship, what's happening with North Korea, what's happening with Japan, you name it, throughout Asia. The rise of India, having a perspective on it through Asia Society, which has a very important think tank, a policy institute. It's also got an arts and culture programming and it's got educational programming.

00:28:58 NICK ROHATYN
just helps me a lot in rounding out my thinking and I very often pass on to the team here. some of the things I see and hear over at Asia Society. That's

00:29:08 NICK LALL
great. I think having that access to some of the best minds and the political and cultural side could definitely be very helpful when it comes to investing in these different countries. So you can see how helpful it must be to be on the board there.

00:29:23 NICK LALL
Sort of along those lines, I was wondering how much do you travel to these countries? You have mentioned that you've lived abroad and you enjoy traveling, but I was curious what role that plays when it comes to your investing and your work that you do before opening an office in a country or committing capital to investments there. Do you need to be on the ground? Do you need to visit these countries yourself? How much of a role does visiting places and traveling to them play in your investments?

00:29:50 NICK ROHATYN
Well, I'll break that into two categories. One, I think as a firm, we need to be local in as many places as possible, in as many ways as possible to be good at our jobs. In private investing, if somebody shows us a Brazilian deal here in New York, it's because four local Brazilian private equity firms all said no to that deal.

00:30:10 NICK ROHATYN
three Brazilian billionaires who all know about the industry also said no to that deal. So there's enormous adverse selection if you try to source investments, particularly private investments, but also in many cases, understanding the macro in a given country. where being local is absolutely prerequisite.

00:30:31 NICK ROHATYN
Hence, we are in 18 countries. For me, the travel is usually around building a strategy for that country or that region. So it's about visiting the biggest clients, the biggest investors, trying to get a sense of where the opportunity lies as a business strategy, not at all as individual investment, if you see what I mean.

00:30:54 NICK LALL
Sure. And how do you pick which countries to invest in or to have a team

00:30:59 NICK ROHATYN
Again, scale counts, opportunity counts, and tactics versus strategy. In a perfect world, in all of the, let's say, biggest 30 countries, I would have a team. But we don't always have investors who match up with that desire, you know?

00:31:18 NICK ROHATYN
So we have to match up a little bit where do investors want to look, Where do we have capabilities? Where can we find capabilities? And where do we not have capabilities and can't have capabilities for whatever reason, even though investors are interested in it?

00:31:39 NICK ROHATYN
So for instance, China would obviously have been a logical place for any emerging market firm over the last 15 years, or at least until things got a little dicey through COVID. We just never had the right team and investors had so many alternatives for investing in China. So that combination to me said, we shouldn't worry about China.

00:32:03 NICK ROHATYN
should go and look in the places where we might have a little less competition. We might be, have a little more of an edge for whatever reason. It makes a lot of sense. I

00:32:14 NICK LALL
if you're setting up in a new country, you want to make sure you have the level of resources. to actually have an advantage in that market, especially considering such a big country like China that has been such a destination for capital over the past couple of decades and the nature of the market that it is, which makes it more difficult for international investors as well. I guess my next question

00:32:38 NICK ROHATYN


00:32:38 NICK LALL
be more about the challenges you faced. I know you mentioned earlier how when you first started out, one of the challenges you faced was that A lot of the people that you thought were friends were actually just acquaintances. I was wondering how the challenges for you have changed as you've grown and what the challenges for the Roach and group are now

00:32:58 NICK ROHATYN
back when you first started. It is slowly changing. At 190 people, we can start having more young people and training them up.

00:33:06 NICK ROHATYN
instance, we have 18 interns this summer working in the firm, which is great. At eight and a half billion, we are certainly more of a presence. So going to Africa recently with the Ethos team and traveling around with them, the combination of them and us definitely changes the dialogue.

00:33:25 NICK ROHATYN
we will be talking to many more CEOs down there now than we were previously, that sort of thing. But we're still a small company. I mean, 190 people, eight and a half billion under management, that is a small company. by most descriptions. So most of the challenges of, you know, you're not yet in a major leagues, the name on a card, not that important. Those challenges remain. I guess I just

00:33:52 NICK LALL
one last question and it's if you could distill your life's work into a message that you'd want to get across to the world that would be written on a billboard that people could

00:34:05 NICK ROHATYN
what would it say? Um, Well, I don't know if you saw what Harrison Ford said he would put on his tombstone, which was, was useful, which I thought was pretty funny, but mine would be a much longer answer. My basic view is One's job on earth is to maximize one's potential.

00:34:29 NICK ROHATYN
you can distill your potential into the things you were born with and the situation into which you were born. And in my situation, I was more than lucky in both. And so my job is to do the most with what I was given. So maybe on the billboard, it would say, did a fair amount with what he was given or something like that.

00:34:54 NICK LALL
Amazing. I love it. Was there anything else that you wanted to talk about

00:34:59 NICK ROHATYN
No, I think, um, as I said, the beginning, uh, Nick, we want more people to know about us. We want more people to call us. We want more people over time to work with us.

00:35:10 NICK ROHATYN
want more international people. The firm is today only about a third American. I think we must have 60 Americans out of 190 people, something like that. And I love that, but more is better. I should say more women is better too, more people of color is better too. And so to the extent that INSEAD students or others listening to this podcast fit the bill and find what we are doing and our approach interesting, we'd love to hear from them.