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Apollo IX seeks to exploit European financial weakness

The fund will focus on acquisition and recapitalisation potential in distressed European financial institutions.

Apollo Global Management will use its latest flagship fund to take advantage of “a clear thematic investment opportunity” in distress in the European financial system, according to documents prepared for a US pension.

The New York-headquartered asset manager expects to use Apollo Investment Fund IX, which has a $23.5 billion target, to take “meaningful or controlling stakes in financial institutions, buying operating subsidiaries such as banks or insurance companies, or recapitalising troubled banks to earn attractive rates of return”, documents dated 2 May by advisory firm Portfolio Advisors prepared for Pennsylvania Public School Employees’ Retirement System show.

Apollo IX will also take advantage of a likely increase in distressed opportunities in the US, according to the documents.

“With the US Federal Reserve poised to continue raising interest rates the near-/medium-term, Apollo anticipates increased distressed opportunities to be available for Fund IX,” the papers note. “Given this dynamic, Apollo believes it is prudent to underwrite investments assuming the possibility of a near-term recessionary environment.”

Apollo IX launched in February and will focus on opportunistic buyouts and build-ups, corporate carve-outs and distressed investments, according to PEI data.

PSERS committed $250 million to Apollo IX, according to the documents. Excluding this latest commitment, the pension has invested a total of $620 million in three Apollo-managed funds since 2012: $220 million to Apollo Investment Fund VIII, $200 million to the Apollo European Principal Finance Fund II and the same amount to Apollo European Principal Fund III.

Other investors in Fund IX include Teachers’ Retirement System of Louisiana with a $125 million commitment and State Teachers Retirement System of Ohio, which committed $250 million.

Portfolio Advisors, which advised PSERS on its investment, at the same time recommended the pension commit $150 million to Bain Capital Fund XII and $200 million to a real assets-focused secondaries fund being raised by Blackstone’s Strategic Partners.

Founded in 1990, Apollo Global Management had $192 billion of assets under management as of 31 December across private equity, private credit and real estate. Of this total, around $43.6 billion is invested in private equity, according to the documents.

Apollo declined to comment.