NEW YORK Apollo Global Management LLC (APO.N) said on Tuesday it was beginning fundraising for its next large buyout fund with a target of $12 billion, less than its previous private equity fund yet still one of the largest buyout funds in the market.
Blue-chip private equity firms have moderated fundraising expectations as some investors have become skeptical of multibillion dollar buyouts in light of the high prices paid to acquire companies in the lead-up to the financial crisis.
The largest private equity fund currently in the market by target size had so far been Warburg Pincus Private Equity XI, which is seeking $12 billion. Carlyle Group LP (CG.O) is raising a $10 billion fund, while KKR & Co LP (KKR.N) is hoping for $8 billion.
"I'm pleased to announce that we are launching this week our next flagship private equity fund, Apollo Fund VIII, that will have a $12 billion target. We expect to be in the market shortly," Josh Harris, Apollo co-founder and managing partner, said at a presentation at the Bank of America Merrill Lynch (BAC.N) banking and financial services conference on Tuesday.
Harris called the firm's previous buyout fund, the $14.7 billion Fund VII, best in its class. Launched in 2008, it had generated, from inception to the end of September, gross and net annual internal return rates of 35 percent and 26 percent, respectively.
Fund VI, launched in 2006, raised $10.1 billion. It has performed less well, generating gross and net annual internal rates of return of 9 percent and 8 percent, respectively, from inception to the end of September.
"There is less capital available for sure. From our point of view, we expect increased market share. Really, the number we picked came out of very details discussions with our investors," Harris said.
(Reporting by Greg Roumeliotis in New York; Editing by Kenneth Barry)