(Adds private equity fundraising background)
By Greg Roumeliotis
NEW YORK Jan 9 Apollo Global Management LLC
said on Thursday it had completed fundraising for its
latest flagship global private equity fund, amassing $17.5
billion from investors, the most any such fund has raised since
the financial crisis.
In their hunt for yield amid persistently low interest
rates, investors who fell out of love with private equity and
its debt-fueled excesses in the aftermath of the 2008 crisis are
now increasing allocations to the asset class.
Global private equity fundraising throughout 2013 totaled
$431 billion, up 13 percent on 2012, market research firm Preqin
said last week.
Apollo's peers have also benefited. Carlyle Group LP
finished raising a $13 billion U.S. buyout fund in November; KKR
& Co LP is wrapping up fundraising for its latest North
American fund with more than $8.3 billion; Warburg Pincus LLC
closed on a $11.2 billion global fund last May and
technology-focused Silver Lake has clinched $10.3 billion.
The largest private equity fund in history remains
Blackstone Group LP's $21.7 billion fund that was raised
Apollo and its investment professionals committed an
additional $880 million toward the fund, dubbed Apollo
Investment Fund VIII, the New York-based firm said.
"Fund VIII benefited from the support of a diversified group
of investors, including many public pensions, sovereign wealth
funds, corporate pensions, endowments and foundations, funds of
funds and high net worth investors," Apollo Chief Executive Leon
Black said in a statement.
To be sure, Apollo's private equity funds go beyond the
traditional acquisitions of companies and unloved divisions of
conglomerates, often buying the debt of companies that are in
distress and ending up with their equity in a restructuring.
This has proved to be a winning combination. Apollo's
previous flagship fund, the $14.7 billion Fund VII, has been one
of best-performing private equity funds raised in 2008. The fund
generated, from inception to the end of September, gross and net
annual internal return rates of 38 percent and 29 percent,
respectively, according to Apollo.
In Fund VII, 57 percent of Apollo's deals involved buying
debt of distressed companies or buying distressed companies
outright, while only 28 percent were straightforward
acquisitions of companies not in distress. Corporate carve-outs
of divisions accounted for 15 percent.
With more money flowing into private equity, however, and
competition for deals becoming fiercer, the challenge Apollo now
faces is spending the biggest fund it has ever raised without
overpaying for assets.
Apollo started raising Fund VIII with a $12 billion target
in November 2012. But strong demand from investors resulted in
it seeking approval from them to raise the ceiling on the fund.
Apollo was founded in 1990 by Black and former Drexel
Burnham colleagues Joshua Harris and Marc Rowan and went public
in March 2011. It had $113 billion in assets under management as
of the end of September, $43 billion of which was in private
(Reporting by Greg Roumeliotis in New York.; Editing by Matthew