Apollo to close Fund IX in second quarter

The firm is looking to raise at least $20bn without a set target or hard-cap, and will begin deploying capital around year-end.

Apollo Global Management expects to close its current fund, Apollo Investment Fund IX, in the second quarter, Apollo co-founder and senior managing director Josh Harris said during the first-quarter earnings call with analysts on Friday.

Harris added that the fund will begin its investment period either by year-end or shortly thereafter.

“The ninth flagship private equity fund currently in market will be a meaningful contributor to fee-related earnings,” he said.

Apollo began marketing its ninth flagship fund in February, according to PEI data, and is eyeing at least $20 billion in commitments for the vehicle, as a limited partner document from the Oregon Investment Council showed. Oregon committed $500 million to this fund.

According to another document from the Connecticut Office of the Treasurer from April obtained by Private Equity International, Fund IX has no set target or hard-cap, which the pension plan said poses a concern, and the firm has only “verbally indicated it will probably raise in the lower range of $20+ billion of commitments”.

If the New York-based firm reaches that amount, it would become Apollo's largest private equity fund and one of the largest private equity funds ever. Some of the mega-buyout funds that recently closed – including KKR Americas XII, which closed on $13.9 billion in March, and Blackstone’s Blackstone Capital Partners V, which closed in 2007 on $21.7 billion and VII, which closed in December 2015 on $18 billion.

Fund IX will make investments in North America, with capacity to invest elsewhere, especially Western Europe, and seeks three specific strategies of distressed investing, corporate carve-outs and opportunistic buyouts, the Connecticut treasury document showed.

Although Harris declined to comment specifically on Fund IX’s LP base during the call, he said generally there is a globalisation of the investor base.

“Certainly in Asia, Middle East, Europe, we’re seeing the globalisation [of our LP base],” he said. “So, if you look at the overall percentage from North America, it’s fallen a bit. It would be probably under 50 percent at this point.” He also noted that Apollo’s LPs are writing bigger cheques.

In terms of traditional institutional investors versus retail investors, he said retail has been growing in absolute dollars but remains just 10 percent to 15 percent of Apollo’s overall business.

The Connecticut treasury document showed Apollo Investment Fund VIII, a 2013-vintage fund that closed on $18.9 billion, was generating a 13 percent net internal rate of return as of 30 September.