Apollo Management plans to raise $418 million (€264 million) via an initial public offering on the New York Stock Exchange, despite a 42 percent drop in the value of its private-exchange listing and its co-founder’s personal reservations.
Private shareholders of New York-based Apollo, which as of last December managed more than $40 billion in assets, will sell 29.8 million Class A shares to the public at a yet-to-be-determined price, according to documents filed with the Securities and Exchange Commission.
The public filing also revealed that the mega-buyout and distressed debt specialist is trading at $14 per share on private exchange GSTRuE, down 42 percent from its $24 issue price.
Apollo co-founder Leon Black, along with co-founders Josh Harris and Marc Rowan, will retain 87 percent of shareholder voting power after the IPO. Because the transaction is a public offering of private shares, Apollo will not receive any additional proceeds from the sale.
A spokesman for Apollo declined to comment.
Led by Drexel Burnham Lambert alum Black, Apollo first tested investor appetite for its shares last August when it sold 27 million shares of Class A stock on Goldman Sachs' private exchange, GSTRuE.
Earlier in 2007, Apollo also moved to lock in its management company's franchise value via stake sales to the California Public Employees' Retirement System and the Abu Dhabi Investment Authority, stakes together valued at $1.2 billion. Those institutions, regular and powerful limited partners in Apollo funds, are now in possession of much of the declining private stock.
Los Angeles-based Oaktree Capital Management also opted to list shares last year on GSTRuE, a move that allows a private company to expand its capital base without confronting the cumbersome regulatory burdens of public markets.
The public filing comes as many publicly listed private equity firms are watching their stock prices plummet. Apollo rival The Blackstone Group’s stock has dropped more than 40 percent since its IPO, while Fortress Investment Group has also seen its shares swoon. Meanwhile, Kohlberg Kravis Roberts has delayed its public debut as investors worry over the drying up of cheap leverage.
Despite Apollo’s recent moves towards public capitlisation, Black has repeatedly voiced his concerns over the perils of going public. “The real negative is being public; it’s being in that fish bowl; it’s Sarbanes-Oxley; it’s having any little shareholder sue you for whatever,” he said at a conference last year. “I’m not sure any of us needs that.”
Apollo is no stranger to public markets, however.
Apollo Investment Corporation, a business development company listed on NASDAQ, and Apollo Partners Alternative Assets, a traditional buyout fund listed on Euronext, are both publicly traded affiliates of Apollo Management.
The buyout firm is currently raising a $15 billion private equity fund.