| Type | Public (NYSE: APO) |
|---|---|
| Industry | Private Equity |
| Founded | 1990 |
| Founder(s) | Leon Black, John Hannan, Craig Cogut, Arthur Bilger |
| Headquarters | New York City, United States |
| Key people | Henry Silverman, Marc Rowan, Joshua Harris |
| Products | Private equity funds, hedge funds, real estate funds |
| Total assets | $37 billion[1] |
| Website | www.agm.com |
Apollo Global Management, LLC is a private equity investment firm, founded in 1990 by former Drexel Burnham Lambert banker Leon Black.[2] The firm specializes in leveraged buyout transactions and purchases of distressed securities involving corporate restructuring, special situations and industry consolidations. Apollo is headquartered in New York City, and also has offices in Purchase, New York, Los Angeles and London. The firm has invested over $16 billion in companies.[3]
As of March 2011, Apollo managed over US$70 billion of investor commitments across its private equity funds and other investment vehicles making it one of the largest private equity firms globally.[1] Among the most notable companies currently owned by Apollo are AMC Entertainment, Claire's, Caesars Entertainment Corporation, Norwegian Cruise Line, and Realogy (Coldwell Banker and Century 21 Real Estate).[4]
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Apollo is operated by its managing partners, Leon Black, Joshua Harris and Marc Rowan and a team of more than 175 investment professionals, as of December 31, 2007. The firm's headquarters are located in the Solow Building at 9 West 57th Street[5] in New York City, and the firm operates additional offices in Purchase, New York, Los Angeles and London.[6]
Apollo’s executive committee includes: Leon Black, chairman and chief executive officer; Josh Harris, senior managing director; Marc Rowan, senior managing director; Henry Silverman, vice chairman and chief operating officer and Marc Spilker who was hired as President in November 2010. [7]
Apollo operates two business lines in an integrated manner:
Apollo has historically relied primarily on private equity funds, pools of committed capital from pension funds, insurance companies, endowments, fund of funds, high net worth individuals, family offices, sovereign wealth funds and other institutional investors. Since 2008, Apollo has begun investing its seventh private equity fund, Apollo Investment Fund VII, which raised approximately $15 billion of investor commitments.[8] Since inception in 1990, Apollo has raised a total of seven private equity funds, including:[9]
| Fund | Vintage Year |
Committed Capital ($m) |
| Apollo Investment Fund VII[8] | 2008 | $14,900 |
| Apollo Investment Fund VI | 2005 | $10,200 |
| Apollo Investment Fund V | 2001 | $3,700 |
| Apollo Investment Fund IV | 1998 | $3,600 |
| Apollo Investment Fund III | 1995 | $1,500 |
| Apollo Investment Fund II | 1992 | $500 |
| Apollo Investment Fund I | 1990 | $400 |
| Type | Public company (NASDAQ: AINV) |
|---|---|
| Founded | 2004 |
| Revenue | US$404M (FY 2010)[10] |
| Net income | US$263M (FY 2010)[10] |
| Total assets | US$3.47B (FY 2010)[11] |
| Total equity | US$1.77B (FY 2010)[11] |
| Website | www.apolloic.com |
Apollo Investment Corporation (NASDAQ: AINV) is a US-domiciled publicly traded private equity closed-end fund and an affiliate of Apollo. AIC was formed to invest primarily in middle-market companies in the form of mezzanine debt and senior secured loans, as well as by making certain direct equity investments in companies. The Company also invests in the securities of public companies.[12][13]
AIC is structured as a business development company, a type of publicly traded private equity vehicle that is designed to generate interest income and long term capital appreciation. AIC historically has not invested in companies controlled by Apollo's private equity funds.[14]
| Type | Public company (Euronext: AAA) |
|---|---|
| Founded | 2004 |
| Website | www.apolloalternativeassets.com |
AP Alternative Assets (Euronext: AAA) is a Guernsey-domiciled publicly traded private equity closed-end limited partnership, managed by Apollo Alternative Assets, an affiliate of Apollo Management. AAA was formed to invest alongside Apollo's main private equity funds and hedge funds.[12][13]
AAA was launched in August 2006, shortly after Kohlberg Kravis Roberts completed an initial public offering for its $5 billion for its KKR Private Equity Investors vehicle in May 2006.[13][15] Apollo raised a total of $2 billion for AAA including the vehicle's $1.5 billion IPO and a subsequent private placement.[16]
AAA's investment portfolio is made up of a mix of private equity and capital markets investments:[17]
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Early history |
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Apollo, originally referred to as Apollo Advisors, was founded in 1990, on the heels of the collapse of Drexel Burnham Lambert in February 1990. It was founded by Leon Black, the former head of Drexel's mergers and acquisitions department, along with other Drexel alumni.[18] Among the most notable founders are John Hannan, Drexel's former co-director of international finance; Craig Cogut, a lawyer who worked with Drexel's high-yield division in Los Angeles; and Arthur Bilger, the former head of the corporate finance department. Other founding partners included Marc Rowan and Michael Gross, who both worked under Black in the mergers and acquisitions department and Tony Ressler, who worked as a senior vice president in Drexel's high yield department with responsibilities for the responsibility for the new issue/syndicate desk.[19][20][21]
Less than six months after the collapse of Drexel, the founders of Apollo had already begun a series of ventures. Apollo Investment Fund L.P., the first of their private equity investment funds was formed to make investments in distressed companies. Apollo's first fund raised approximately $400 million of investor commitments on the strength of Black's reputation as a prominent lieutenant of Michael Milken and key player in the buyout boom of the 1980s.[19] Lion Advisors was set up to provide investment services to Credit Lyonnais, which was seeking to profit from depressed prices in the high yield market.[22]
At the time of Apollo's founding, financing for new leveraged buyouts was minimal and Apollo turned instead to a strategy of distressed-to-control takeovers.[23][24] Apollo would purchase distressed securities which could be converted into a controlling interest in the equity of the company through a bankruptcy reorganization or other restructuring. Apollo used distressed debt as an entry point, enabling the firm to invest in such firms as Vail Resorts,[25] Walter Industries,[26][27] Culligan and Samsonite.[28]
Early on, Apollo made a name for itself by acquiring interests in companies that Drexel had helped finance by purchasing high-yield bonds from failed savings and loans and insurance companies. Apollo acquired several large portfolios of assets from the U.S. government's Resolution Trust Corporation.[29] One of Apollo's earliest and most successful deals involved the acquisition of Executive Life Insurance Company's bond portfolio. Using this vehicle, Apollo would purchase the Executive Life portfolio, generating tremendous profits when the value of high yield bonds recovered, but also resulting in a variety of state regulatory issues for Apollo and Credit Lyonnais over the purchase.[30] More than a decade after the purchase, in 2002, California Attorney General Bill Lockyer accused Apollo, Leon Black, and an investor group led by French bank Credit Lyonnais, of illegally acquiring the assets and bond portfolio of Executive Life Insurance Co. in 1991. According to the State of California, Lion allegedly violated a California law that prohibited foreign government-owned banks from owning California insurance companies.[31]
In 1993, Apollo Real Estate Advisers was founded in collaboration with William Mack to seek opportunities in the U.S. property markets.[32] Apollo Real Estate Investment Fund, L.P., the first in a family of real estate “opportunity funds” was closed in April 1993 with $500 million of investor commitments. In 2000, Apollo exited the partnership, which continued to operate as Apollo Real Estate Advisers until changing its name to AREA Property Partners, effective January 15, 2009. That firm is owned and controlled by its remaining principals, who include William Mack, Lee Neibart, William Benjamin, John Jacobsson, Stuart Koenig and Richard Mack. [33] Apollo Real Estate Investment Fund, L.P., the first in a family of real estate “opportunity funds” was closed in April 1993 with $500 million of investor commitments. As of 2008, the firm was investing out of three funds: Apollo Real Estate Investment Fund V, Apollo European Real Estate Fund II and Apollo Value Enhancement Fund VII. In 2004, Apollo Real Estate acquired the Value Enhancement Funds family of investment vehicles to broaden its offerings in the “value-added” segment of the real estate investment spectrum. Apollo also operates a real estate mezzanine lending program and real estate securities hedge fund called Claros Real Estate Securities Fund, L.P.[34]
In 1995, Apollo raised its third private equity fund, Apollo Investment Fund III with $1.5 billion of investor commitments from investors that included CalPERS and the General Motors pension fund.[9][35] Unlike its first two funds and later funds, Fund III would ultimately prove only an average performer for private equity funds of its vintage. Among the investments made in Fund III (invested through 1998) were: Alliance Imaging, Allied Waste Industries, Breuners Home Furnishings, Levitz Furniture,[36] Communications Corporation of America,[37] Dominick's, Ralphs (acquired Apollo's Food-4-Less),[38] Move.com, NRT Incorporated,[39] Pillowtex Corporation,[40] Telemundo[41] and WMC Mortgage Corporation.[42]
Also in 1995, Apollo founding partner Craig Cogut left the firm to found a smaller competitor Pegasus Capital Advisors. Since inception Pegasus has raised $1.8 billion in four private equity funds focused on investments in middle-market companies in financial distress. In 1997, Apollo co-founder Tony Ressler founded Ares Management as the successor to its Lion Advisors business which would manage collateralized debt obligation vehicles.[43]
In 1998, Apollo raised its fourth private equity fund, Apollo Investment Fund IV, with $3.6 billion of investor commitments.[9] Among the investments made in Fund IV (invested through 2001) were: Allied Waste Industries,[44] AMC Entertainment,[45] Berlitz International,[46] Clark Retail Enterprises,[47] Corporate Express (Buhrmann), Encompass Services Corporation, National Financial Partners, Pacer International,[48] Rent-A-Center, Resolution Performance Products, Resolution Specialty Materials, Sirius Satellite Radio, SkyTerra Communications, United Rentals and Wyndham Worldwide.[49]
Apollo deployed its fourth fund during the booming markets of the late 1990s, only to experience difficulties with the collapse of the Internet bubble and the onset of the recession. Amid the turmoil of collapsing markets, Apollo was able to raise its fifth private equity fund in 2001, Apollo Investment Fund V, with $3.7 billion of investor commitments, roughly the same amount raised as for its previous fund.[9] Among the investments made in Fund V (invested through 2006) were Affinion Group, AMC Entertainment, Berry Plastics, Cablecom, Compass Minerals, General Nutrition Centers (GNC), Goodman Global, Hexion Specialty Chemicals (Borden), Intelsat, Linens ‘n Things, Metals USA, Nalco Investment Holdings, Sourcecorp, Spectrasite Communications, and Unity Media.
Meanwhile, Ares continued to grow through the late 1990s, and profited significantly from investments made after the collapse of the high yield market in 2000 and 2001. Although technically, the founders of Ares had completed a spin out with the formation of the firm in 1997, they had maintained a close relationship with Apollo over its first five years and operated as the West Coast affiliate of Apollo. By 2002, when Ares raised its first corporate opportunities fund, the firm announced that it was more formally separating itself from its former parent company.[50] The timing of this separation also coincided with Apollo's legal difficulties with the State of California over its purchase of Executive Life Insurance Company in 1991.
Following the spin-off of Ares in 2002, Apollo developed two new affiliates to continue its investment activities in the capital markets. The first of these new affiliates, founded in 2003, was Apollo Distressed Investment Fund (DIF) Management a credit opportunity investment vehicle.[51] The following year, in April 2004, Apollo raised $930 million through an initial public offering (IPO) for a listed business development company, Apollo Investment Corporation (NASDAQ: AINV)). Apollo Investment Corporation was formed to invest primarily in middle-market companies in the form of mezzanine debt and senior secured loans, as well as by making certain direct equity investments in companies. The Company also invests in the securities of public companies.[12][13]
The 2005 - 2007 period marked a boom period in private equity with new "largest buyout" records set and surpassed several times in an 18-month window from the beginning of 2006 through the middle of 2007.[52] Apollo was among the most active investors in leveraged buyout transactions during this period. Although Apollo was involved in a number of notable and large buyouts, the firm largely avoided the very largest transactions of this period. Among Apollo's most notable investments during this period included Harrah's Entertainment, a leading US gaming and casino company; Norwegian Cruise Line, the cruise line operator; Claire's Stores, the retailer of costume jewelry; and Realogy, the real estate franchisor that owns Coldwell Banker, Century 21 and Sotheby's International Realty.[53]
In August 2006, Apollo launched a $2 billion publicly traded private equity vehicle in Europe, AP Alternative Assets (ENXTAM:AAA).[13] The IPO of this new vehicle followed in the footsteps of Kohlberg Kravis Roberts, which raised $5 billion for its KKR Private Equity Investors vehicle in May 2006.[15] Apollo initially attempted to raise $2.5 billion for the public vehicle, but fell short when it offered the shares in June, raising only $1.5 billion. Apollo raised an additional $500 million via private placements in the weeks following that sale.[16]
As the private equity industry expanded through 2006 and 2007, several of the largest private equity firms, most notably The Blackstone Group and Kohlberg Kravis Roberts, announced plans to realize value from their firms through the sale of shares in the public equity markets. Apollo Management chose a slightly different path, by completing a private placement of shares in its management company in July 2007. By pursuing a private placement rather than a public offering, Apollo would be able to avoid much of the public scrutiny applied to Blackstone and KKR.[13][54] In November 2007, Apollo was able to realize additional value from the sale of a 9% ownership interest in its management company to the Abu Dhabi Investment Authority (ADIA).[55] Ultimately, in April 2008, Apollo would file with the U.S. Securities and Exchange Commission (SEC)[6] to permit some holders of its privately traded stock to sell their shares on the New York Stock Exchange.[56] In 2008, the firm opened an office in India, marking their first push into Asia.[57]
As the deterioration of the financial markets worsened into 2008, Apollo saw several of its investments come under pressure. Apollo's 2005 investment in the struggling US retailer, Linens 'n Things suffered from a significant debt burden and softening consumer demand. In May 2008, Linens was forced to file for bankruptcy protection, one of several high profile retail bankruptcies in 2008, costing Apollo all of its $365 million investment in the company.[58][59] At the same time, Apollo's investment in Claire's, Realogy and Harrah's Entertainment came under pressure.[53] Apollo would respond actively to its investment difficulties seeking to exchange a portion of the existing debt at Harrah's and Realogy to more favorable securities[60]. At Claire's, Apollo exercised its "PIK toggle" option to shut off cash interest payments to its bondholders and issue more debt instead, in order to provide the company with additional financial flexibility.[61]
In December 2008, Apollo completed fundraising for its latest fund, Apollo Investment Fund VII with approximately $14.9 billion of investor commitments. Apollo had been targeting $15 billion, but had been in fundraising for more than 16 months, with the bulk of the capital raised in 2007.[8]
In December 2009, it was announced that Apollo would acquire Cedar Fair Entertainment Company shares and the company would be become private underneath the management group.[62] The deal includes a cash payment of $635 million and assumed debt which gives the transaction a value of $2.4 billion.[63] It was later announced in April 2010 that the deal was pulled due to poor shareholder response.[64]
In March 2011, the company announced plans for a $473 million IPO, giving it a market value of $6.4 billion. [65]
Apollo has been an active private equity investor through the mid-2000s buyout boom. The following is a list of Apollo's most recent and currently active private equity investments. The bulk of these investments are held in Apollo Investment Fund V, VI and VII.
| Investment | Year | Company Description | Ref. |
| AMC Entertainment | 2001 | In April 2001, Apollo made a $250 million cash infusion into AMC through a preferred stock that would convert into 64% of the company. In 2004, JPMorgan Partners acquired a controlling interest in the company in a $2 billion transaction, with Apollo retaining 49.9% of AMC. | [45][66][67] |
| Berry Plastics | 2006 | In June 2009, Apollo and Graham Partners announced the acquisition of Berry Plastics Corporation, a maker of plastic containers, for $2.25 billion from Goldman Sachs Capital Partners and JPMorgan Partners. | [68] |
| Claire's | 2007 | In March 2007, Apollo announced the $3.1 billion leveraged buyout of costume jewelry retailer, Claire’s Stores. In 2008, Claire's experienced financial difficulty amid the slump in consumer spending. | [69][70] |
| Countrywide plc | 2007 | In May 2007, Apollo acquired Countrywide plc, the leading provider of residential property related services in the UK, formerly known as Hambro Countrywide (1988) and Countrywide Assured Group (1998) for $1.05 billion (not related to Countrywide Financial). | [71] |
| CEVA Logistics | 2006 | In August 2006, TNT N.V. announced that it had agreed to the sale of its logistics division to Apollo for $1.9 billion. The business was re-branded as CEVA in November 2007. | [72] |
| Debt investments | 2008-2009 | Since the beginning of 2008, Apollo has been a significant acquiror of senior secured loans from investment banks and other financial institutions. In April 2008, Apollo, TPG Capital and The Blackstone Group completed the acquisition of $12.5 billion of bank loans from Citigroup. The portfolio comprised primarily senior secured leveraged loans that had been made to finance leveraged buyout transactions at the peak of the market. Citigroup had been unable to syndicate the loans before the onset of the credit crunch. The loans were reported to have been sold in the "mid-80 cents on the dollar" relative to face value. In late 2008, it was reported that Apollo had received margin calls associated with the financing of its purchase of certain loan portfolios as the price of the loans decreased. | [73][74][75] |
| Harrah's Entertainment | 2006 | On December 19, 2006, Apollo and TPG Capital announced an agreement to acquire the gaming company for $27.4 billion, including the assumption of existing debt. | [76] |
| Hexion Specialty Chemicals | 2005 | Hexion was formed in 2005 through the merger of Borden Chemical, Inc., Resolution Performance Products LLC, and Resolution Specialty Materials LLC, and the acquisition of Bakelite AG. Hexion announced in July 2007 that it was acquiring Huntsman Corporation, a major specialty chemicals company, in a $6.5 billion leveraged buyout. Hexion announced in June 2008 it would refuse to close the deal, prompting a series of legal actions. The transaction was officially terminated on December 14 after a settlement between Hexion and Huntsman, wherein they were required to pay Huntsman $1 billion to drop fraud charges that would have potentially sent the CEO of Apollo to prison. | [77][78] |
| Jacuzzi Brands | 2006 | In October 2006, Apollo announced a $990 million leveraged buyout of Jacuzzi Brands, the manufacturer of whirlpool baths. | [79] |
| Linens 'n Things | 2006 | In February 2006, Apollo completed the acquisition of the struggling US retailer of home textiles, housewares and decorative home accessories for $1.3 billion, announced in November 2005. By 2008, the company's problems had increased as the economy slowed and Linens filed for bankruptcy protection in May 2008, one of several high profile retail bankruptcies in 2008. | [58][59][80] |
| Momentive Performance Materials | 2006 | In June 2006, Apollo acquired General Electric's Advanced Materials (Silicones & Quartz) business in a deal valued at approximately $3.8 billion. | [81] |
| Noranda Aluminum | 2007 | In April 2007, Apollo acquired the US aluminum business of the mining company Xstrata for $1.15 billion. The aluminum business, Noranda Aluminum, includes a primary smelter and three rolling mills in Tennessee, North Carolina and Arkansas along with other operations. | [82] |
| Norwegian Cruise Line | 2008 | In January 2008, Apollo completed a $1 billion investment in the cruise line operator to support a recapitalization of the company's balance sheet. | [83] |
| Oceania Cruises | 2007 | In February, 2007, Apollo acquired the luxury cruise line and provided additional capital to fund the expansion of the company with the purchase of two new cruise ships. | [84][85] |
| Realogy: | 2006 | In December 2006, Apollo announced an $8.5 billion buyout of the real estate franchisor that owns Coldwell Banker, Century 21 and Sotheby’s International Realty. The transaction closed in April 2007 and was delisted from the New York Stock Exchange. As the housing market crash accelerated in 2008, Realogy faced financial pressures relating to its debt load. In November 2008, Realogy launched an exchange offer for a portion of its debt to provide additional flexibility, prompting a lawsuit from Carl Icahn. | [60][86][87][88] |
| Regent Seven Seas Cruises | 2008 | In February 2008, Apollo purchased the luxury cruise line from Carlson Companies for $1 billion. Following the purchase, Apollo made public their plans to order a new ship for Regent. | [89] |
| Rexnord | 2006 | In May 2006, Apollo announced the acquisition of the manufacturer of precision motion technology products, primarily focused on power transmission, from private equity firm The Carlyle Group for $1.825 billion. | [79][90] |
| Smart & Final | 2007 | In February 2007, Apollo announced the acquisition of the Smart & Final chain of warehouse style food and supply stores. In June 2007, Smart & Final completed the acquisition of the Henry's Marketplace chain of "farmers market" style food retailers from Wild Oats Markets as part of that companies acquisition by Whole Foods Market. In 2011, the Henry's chain was merged with Sprouts Farmers Market, which, like the Henry's markets, had been founded by Henry Boney. | [91][92] [94] |
| Vantium Management | 2008 | In May 2008, Apollo invested in Vantium, a company that buys residential mortgage assets as part of a strategy to profit from the housing market crash. | [95] |
| Verso Paper | 2006 | In 2006, Apollo acquired International Paper's coated and supercalendered paper business for $1.4 billion, renaming the business, Verso Paper. Verso has been the second largest producer for the North American magazine publishing and catalog/commercial print markets. In May 2008, Verso was able to complete an initial public offering of stock. | [96][97] |
Other investments include Connections Academy and Unity Media GMBH.
From its inception, Apollo built as part of a network of affiliated businesses focusing on private equity and a variety of distressed investment strategies.
Lion Advisors (or Lion Capital), which was founded at the same time as Apollo in 1990, focused on investment management and consulting services to foreign institutional accounts targeting investments in public and private high yield debt securities in the US. In 1992, Lion entered into a more formal arrangement to manage the $3 billion high-yield portfolio for Credit Lyonnais which together with a consortium of other international investors provided the capital for Lion's investment activities. The Lion business would ultimately be replaced by Ares Management.[98]
| Type | Private |
|---|---|
| Founded | 1997, 2002 (independent) |
| Website | www.aresmgmt.com |
Ares Management, founded in 1997, was initially established to manage a $1.2 billion market value collateralized debt obligation vehicle. Ares would grow to manage a family of collateralized loan obligation (CLO) vehicles that would invest in capital markets-based securities including senior bank loans and high-yield and mezzanine debt. Ares was founded by Antony Ressler and John H. Kissick, both partners at Apollo as well as Bennett Rosenthal, who joined the group from the global leveraged finance group at Merrill Lynch.[99]
Ares I and II which were raised were structured as market value CLOs. Ares III though Ares X were structured as cash flow CLOs. In 2002, Ares completed a spinout from Apollo management. Although technically, the founders of Ares had completed a spinout with the formation of the firm in 1997, they had maintained a close relationship with Apollo over its first five years and operated as the West Coast affiliate of Apollo. Shortly thereafter, Ares completed fundraising for Ares Corporate Opportunities Fund, a special situations investment fund with $750 million of capital under management.[98][99]
In 2004, Ares debuted a publicly traded business development company, Ares Capital Corporation (NASDAQ:ARCC).[100] In 2006, Ares raised a $2.1 billion successor special situations fund (Ares Corporate Opportunities Fund II).[99]
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