Private Pitch

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Anthony “Tony” Pritzker and his younger brother J.B. might be partners in business, but they are fierce competitors when it comes to baseball. As proof, Los Angeles Dodgers fan Tony was forced to wear a Chicago Cubs pullover for an entire day after losing a bet to J.B., and he’s not happy about it. Tony, who lives in Beverly Hills, and Chicago-based J.B. are two of the billionaire heirs of Hyatt Hotel Corp. and manufacturing conglomerate Marmon Group. Warren Buffett acquired a 60 percent stake in Marmon in 2007 for $4.5 billion and later acquired the balance. Tony, 55, with a net worth of $3.53 billion, ranked No. 20 on the Business Journal’s 2016 list of Wealthiest Angelenos. His sister, Penny Pritzker, is the U.S. secretary of commerce. The brothers’ West L.A. investment firm Pritzker Group holds assets valued at nearly $8 billion, including stakes in high-profile companies such as Playa Vista’s Honest Co. and Space Exploration Technologies Corp. (SpaceX) of Hawthorne. But much of its portfolio comprises under-the-radar manufacturers, such as pallet rental company Peco Pallet of Irvington, N.Y., and aerosol can maker PLZ Aeroscience of Addison, Ill. While J.B. leads Pritzker Group’s venture capital efforts, Tony leads the firm’s investments in these middle-market companies.

NAME: Anthony “Tony” Pritzker AGE: 55

HOMETOWN: Atherton

COMPANY: Pritzker Group

TITLE: Managing Partner

What is your investment strategy?

We like owning things and building things. The sweet spot for us on enterprise value is probably $300 million to $500 million. Our private capital behaves similar to private equity, but we are long term, so we can stay in businesses for anywhere between four and 40 years.

What’s your advantage over a private equity investor to a seller?

Private equity is exhausting because you are going to be sold every five years. You’re in a beauty contest. Maybe John Ferring (chairman of PLZ) could have made a couple more bucks (selling to a private equity firm), but in the long run he’s making more money because he kept 23 percent with us and that business is growing at a 26 percent internal rate of return.

Why invest in so many packaging companies?

In today’s world of buying companies, of leveraged buyouts, you really need to be an expert in the field. If somebody comes to me with an oil and gas deal, I don’t know if it’s the best deal or worst deal because I’m not in the oil and gas business. In packaging, we’ve become kind of an expert.

Isn’t that industry vulnerable to foreign competition? Why invest in U.S. manufacturers?

The first reason is shipping costs. And the second reason is most people want just-in-time manufacturing. Another thing that’s happened is in a lot of manufacturing it used to be one guy worked on one machine and he was an artisan. Now, you’ve got one guy and there are four machines running automated, and he’s just watching over those for problems. You’ve reduced the amount of labor and the result is, if I have high-quality equipment, it really doesn’t matter if I’m making it in China or Wisconsin.

Would you invest in a company that had high labor costs?

Yes. Sometimes I see an opportunity to invest in equipment and therefore get higher quality and bring the labor cost down.

Are you bullish on U.S. manufacturing?

A lot of products are going to be produced in the U.S. because we’ve got the capital base and we’ve got just-in-time manufacturing, which allows people to reduce their inventory costs.

Have you purchased any local manufacturing companies?

We haven’t been able to buy a lot of California companies.

Why not?

California is a tough manufacturing state. Lots of regulation, workers’ compensation, high tax rate; it’s not the cheapest place to manufacture. There are some great manufacturers here, but we haven’t bought a company out here.

What’s it like working closely with your brother?

He never does anything to advantage himself. We are 50-50 partners in everything we do. There’s nothing (to complain about), other than the fact that he likes the Cubs.

What’s it like doing business with Warren Buffett?

What you see is what you get. There’s no bullshit.

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