Apollo Global Management is planning to launch its next main private equity fund, Apollo Investment Fund IX, before the end of the year, according to the firm.
“We currently anticipate the fundraising process for our next flagship fund to launch in the fourth quarter,” Apollo's co-founder Joshua Harris said during the firm's third-quarter earnings conference call on Friday. “Fundraising for this product is expected to be completed in 2017.
He added that the size will be similar to predecessor fund Apollo Investment Fund VIII, which closed in December 2013 on around $18.5 billion.
In a little more than three years, Apollo has deployed around 65 percent of Fund VIII, as of the end of the third quarter, according to Harris. “It gives you a sense of the run rate,” he said. Fund VIII will be considered fully invested when 90 percent of the fund is invested, he added
Despite high valuations for private companies, particularly in the US, Apollo has been deploying capital at a fast pace this year
The Apollo funds, along with co-investors, have deployed or committed more than $5 billion in aggregate across all platforms in the third quarter, and more than $12 billion so far this year.
“We're currently on pace to deploy more capital in 2016 than in any other year in our history,” Harris said, adding that capital deployment has been primarily driven by Apollo's private equity business as Fund VIII has been able to secure purchase multiples averaging 6X adjusted EBITDA, significantly below industry average, which Harris said is approaching 11X EBITDA, the highest he has ever been.
During the third quarter, Apollo was busy fundraising. It raised $1 billion for its second natural resources fund, Apollo National Resources Partners II, bringing total commitments to $3.4 billion, more than double the size of its predecessor. Fundraising for ANRP II will likely wrap up in the fourth quarter with modest incremental capital expected, according to the firm
It also raised $250 million in equity co-investments to help finance the acquisition of time-share company Diamond Resorts International, which Apollo plans to buy for $2.2 billion, the company announced at the end of June
In credit, Apollo is in the process of raising capital for the latest vintage of its Financial Credit Investment fund, or FCI III, and of raising its third vintage European Principal Finance fund focused on buying portfolio of assets and businesses from financial institutions. Its predecessor EPF fund received $3.4 billion in total commitments. “We're hopeful the third vintage will meet or exceed that size,” Harris said
Apollo posted net economic income of $230.8 million in the third quarter, down from $394.9 million in the second quarter and up from $104 million in the third quarter last year.
Total assets under management have remained stable from last quarter at about $189 billion, while the firm currently has $24.4 billion of available dry powder, down from $28.7 billion a year ago.