Apollo shows growth in $480m IPO filing

The Leon Black-led firm has $10bn of dry powder for private equity investments and has spent about half of its $14.7bn seventh fund, which closed in 2008.

Apollo Global Management has grown its total private equity assets under management about 26 percent since 2004, for a total of $39 billion as of the end of 2010, according to an amended initial public offering filing.

The firm, led by Leon Black, has about $10 billion in uncalled capital for private equity investments and has spent about $7.8 billion of the $14.7 billion it raised in 2008 for its seventh buyout fund, according to the filing.

In total, Apollo has grown its assets under management – which include private equity, real estate and capital markets – from $11.3 billion in 2004 to $67.6 billion at the end of last year. Each of its business segments has grown and the firm will continue to expand, Apollo said in the filing.

The firm amended its IPO filing Monday, revealing plans to sell 26.3 million shares on the New York Stock Exchange that are expected to price at $17 to $19 per share.  The firm could raise up to $480 million.  Apollo previously listed shares in its management company on a private exchange run by Goldman Sachs in 2007.

Leon Black

The firm’s growth, and its diversification into different product offerings, is important in terms of going public, as investors are looking to see how the firm generates revenue. Having funds in various strategies like debt, buyouts and real estate brings in diversified sources of revenue, which provides protection for the overall company if one line of business hits a downturn.

Other firms that have gone public, like The Blackstone Group and Kohlberg Kravis Roberts, have also expanded their strategies to include things like infrastructure and natural resources investing. The Carlyle Group, which also is reportedly planning a public offering, acquired massive institutional investor AlpInvest earlier this year as another step in its efforts to diversify.

“Private equity is a cyclical business … to the extent [firms] have been able to diversify earnings streams … that all

Private equity is a cyclical business … to the extent [firms] have been able to diversify earnings streams … that all improves the consistency of the fee-related earnings.

Michael Kim

improves the consistency of the fee-related earnings,” said Michael Kim, an analyst with Sandler O’Neill who covers KKR.

One of the business lines Apollo has expanded into recently in a formal way is real estate. The firm reported it managed $6.4 billion in real estate AUM and that its real estate team, led by Joseph Azrack, was made up of 38 professionals.

The firm is considering launching “a series” of real estate funds that focus on distressed debt and equity recapitalisations including corporate real estate, distress for control and acquisitions and recapitalisations of real estate portfolios, platforms and operating companies, according to the filing.

As part of its plans to go public, the firm has named three directors to serve on its board: AB Krongard, former executive direct of the US Central Intelligence Agency; Paul Fribourg, president of Contigroup and Pauline Richards, chief executive officer of Armour Reinsurance Group.