A year in listed mega-firms: New strategies and lots of fundraising

In 2018, listed giants Blackstone, Apollo, Carlyle and KKR gave us glimpses of what’s to come.

There were new products and strategies across the board this year. Apollo Global Management held a $2.2 billion first close for its Hybrid Value fund – a long-term vehicle which combines credit and equity, focusing on capital solutions, structured equity and non-control stressed and distressed investments. It will target returns in the low to mid-teens. It expects to hit its $3 billion target by year-end.

Blackstone acquired global life sciences investment firm Clarus and launched Blackstone Life Sciences, which will invest across the life-cycle of companies and products within the key life sciences sectors.

KKR registered its debut impact fund in Luxembourg, joining a growing band of blue chip firms targeting the strategy.

The Carlyle Group planted a flag in the insurance market, agreeing to acquire 19.9 percent of DSA Reinsurance from AIG and partnering with AIG to build DSA Re into a standalone reinsurance provider.

Apollo set fundraising records in 2017, with its $25 billion mega-fund. But it has not rested on its laurels in 2018, with the aforementioned first close for Hybrid Value and a fundraise on the go for its third natural resources fund, anticipating a first close around year-end.

Meanwhile, in the 12 months to end-September, Blackstone raised $125 billion across all strategies, including almost $20 billion for private equity. This includes the firm’s debut Asia-focused fund, which closed on $2.3 billion. Its next flagship private equity fund is expected to be around $20 billion.

KKR raised $38 billion in the 12 months to end-September, including capital for its latest Europe fund.

Carlyle raised $26 billion in the first three quarters, and is on track to meet its $100 billion long-term fundraising target next year. Closes this year include its $18.5 billion flagship buyout fund and its $6.55 billion Asia buyout fund.

Apollo is focusing on take-privates as it searches for value-oriented investment opportunities in a competitive market. The firm has completed eight take-private transactions in the US over the past three years, and committed to two more during Q3: the acquisition of LifePoint Health by a Fund VIII portfolio company and the acquisition of Aspen Insurance.

KKR, meanwhile, is getting excited at the prospect of the recent US public market volatility translating into good buying opportunities for the firm. “It’s good news when things get cheaper,” co-president and co-chief operating officer Scott Nuttall said on the firm’s third-quarter earnings call. “We can buy assets at lower valuations. In fact, in our 40-plus years of experience, some of our best investments have been made in periods of dislocation and volatility in the public markets.”