NEW YORK (Reuters) - Apollo Management founder Leon Black said on Wednesday his firm sold 9 percent of itself to the Abu Dhabi Investment Authority, representing yet another foreign investment in a U.S. private investment fund.
U.S. private equity firms and hedge funds are seeking out investments from sovereign funds, or investment vehicles run by state governments, as a quick way to raise money.
Sovereign funds in the fast-growing Middle East and China are loaded with money, and such investments also establish a foreign partnership in a region where the firms see good investment opportunities.
“We recently sold 9 percent of our firm to the Abu Dhabi Investment Authority (ADIA),” Black said, speaking at The Deal’s M&A Outlook 2008 conference in New York.
The Wall Street Journal said in July that Apollo was in talks to sell 10 percent of the firm to ADIA.
Selling a stake of a private investment firm also is an easy way to set a valuation for the firm, which is key should it have plans to go public.
Blackstone Group (BX.N) sold nearly 10 percent of the firm to an arm of the Chinese government just before the private equity firm’s June IPO. The China stake gave Blackstone a key partner in its Asian expansion and raised an additional $3 billion on top of the $4 billion it raised through the IPO.
Hedge fund Och-Ziff has signed an agreement with Dubai International Capital LLC and its unit, DIC Sahir Ltd, to sell 9.9 percent of its outstanding Class A shares to DIC Sahir, pursuant to the fund’s IPO.
Carlyle Group CYL.UL said in September it was selling 7.5 percent to an investment unit of the government of Abu Dhabi, located in the United Arab Emirates, for $1.35 billion.
Apollo was one of the first private equity firms to launch a publicly traded fund, bringing its debt-investment vehicle, Apollo Investment Co, to market in 2004. Apollo also launched AP Alternative Assets LP last June, a publicly traded fund on the Euronext that raised $1.5 billion in the offering.
ADIA invested about $600 million in AP Alternative Assets, Reuters reported last year, for some 40 percent of the shares.
ADIA is among the largest government investment authorities in the world and is responsible for investing all Abu Dhabi’s state oil revenues and assets. Standard Chartered Bank in Dubai estimates it manages between $450 billion and $500 billion.
More Middle Eastern money has been headed to U.S. private equity and private investment firms lately as record oil prices prompt oil-wealthy investors to diversify their holdings.