US buyout firm Apollo Management is to list on Goldman Sachs’ private exchange, following private placements with the Abu Dhabi Investment Authority and possibly the California Public Employees’ Retirement System, according to a Wall Street Journal report.
Apollo co-founder Leon Black’s recently said in a discussion of the merits and drawbacks of a public US listing there were “many paths to Rome”, suggesting his firm might pursue an alternative to the path taken by rivals Fortress Investment Group or The Blackstone Group. Both firms have listed on the New York Stock Exchange.
Speaking at the Milken Institute’s annual conference in April, Black admitted a public offering is a great tool for attracting and retaining talent, and provides an attractive means of unlocking the franchise value of management companies and creating a permanent pool of capital.
But, he added, “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. I’m not sure any of us needs that.”
Listing on the GS Tradable Unregistered Equity OTC Market, or GSTrUE, allows the firm to create liquidity without being subject to the regulations that govern publicly traded US companies.
Oaktree Capital Management became the first to list on the exchange for that very reason. GSTrUE is accessible only to institutions and “highly sophisticated” investors.
While the election to list on Goldman’s exchange differs from what many of its competitors have done – Fortress and Blackstone trade on the New York Stock Exchange and hedge fund Och-Ziff Capital Management and private equity firm Kohlberg Kravis Roberts have registered to do so – private placements are nothing new to private equity.
In 2001, TPG’s venture arm, now called TPG Growth, sold a $60 million stake to CalPERS, and TPG is reportedly mulling more private placements with pension groups. Last year, Abu Dhabi invested $600 million in AP Alternative Assets, Apollo’s $2 billion, Euronext-listed fund. And most recently, Blackstone sold a $3 billion stake to China’s state investment company, prior to its public offering.