Apollo Management, the New York private equity and capital markets investment specialist, is telling limited partners to make way for a potentially significant new co-investor – Apollo’s planned publicly traded investment vehicle.
The vehicle, to be called AP Alternative Assets, is currently being raised as a private placement and will be listed on the Euronext Amsterdam exchange. AP Alternative is reportedly targeting $1.5 billion. Kohlberg Kravis Roberts recently listed a similar vehicle on the same exchange that drew $5 billion in capital.
In a recent communication to limited partners, Apollo head Leon Black described the listed vehicle as strategically important and likely to enhance deal flow and market intelligence. AP Alternative will eventually invest half of its capital in Apollo’s private equity activities and the other half in capital markets investments, although initially most of the vehicles’ investments will be in Apollo’s capital markets businesses, which include listed business development company Apollo Investment Corporation as well as Value Investment Fund, a distressed vehicle.
Black noted in the communication that AP Alternative will be a co-investor in deals done by Apollo’s sixth private equity fund, which held a final close on $10.1 billion (€7.8 billion) in January. The listed vehicle will not represent more than 15 percent in any Fund VI deal.
Black also informed limited partners that they will receive a reduction in Fund VI management fees equal to half of any management fee earned by AP Alternative co-investment. This reduction was offered to LPs in the “spirit of partnership”, Black wrote.
Apollo will continue to offer co-investment opportunities to its LPs, Black added.