Private Equity Boom: Why Apollo's New $18B Buyout Fund Matters

Jan 10 2014, 12:17pm CST | by

Private Equity Boom: Why Apollo's New $18B Buyout Fund Matters

World's 10 Biggest Private Equity Funds

There’s big news in the world of private equity. Apollo Global Management just raised $18.4 billion for its latest flagship buyout fund.

The firm closed the fund on December 31, meaning it’s no longer fundraising but is ready to start buying investments with the cash. Of the $18.4 billion, outside investors represent $17.5 billion with the remaining coming directly from Apollo and its top employees.

Why is all this important? Fundraising hasn’t been easy for private equity shops since the credit crisis, but the Apollo Investment Fund VIII is the largest buyout fund to close since the credit crunch in 2008.

In 2008, the private equity industry overall raised $230 billion in capital, according to Preqin. The figure dropped to $110 billion in 2009 and continued to decline through 2011 raising just $77 billion that year.

That may be why Apollo’s goal for Fund VIII was a mere $12 billion.

But thanks to a booming market in 2013, fundraising picked up big time in with $169 billion in aggregate capital raised, according to Preqin data.

Beyond that, it means Apollo and others are about to deploy the billions they’ve raised.

That’s significant because 2013 was primarily a big year for selling holdings rather than buying them.

Apollo CEO, Leon Black, noted at an industry conference in April 2013: “We think it’s a fabulous environment to be selling.” At the time, Apollo had sold about $13 billion in assets in the previous 15 months. “We’re selling everything that’s not nailed down, and if we’re not selling, we’re refinancing,” the billionaire founder said.

With $18.4 billion of fresh powder in its hands, Black and Apollo are ready to do some more buying too.

But even with all those billions raised, the Apollo Investment Fund VIII still isn’t the biggest buyout fund to ever close.

That title goes to the Blackstone Group’s Blackstone Capital Partners V which closed in 2006 after raising $21.7 billion. The firm was targeting just $13.5 billion.

Goldman Sachs Merchant Banking Division takes the #2 spot with $20.3 billion raised in 2007.

It’s important to note Goldman won’t be expected to raise a fund like that any time soon as regulations like the Volcker rule hamper its ability to act like a private equity firm.

At the same time, traditional PE shops like Apollo, Blackstone and KKR have been busy trying to expand outside of private equity by adding real estate, credit, hedge fund and asset management units.

Apollo, for instance, has $64.4 billion in assets in its credit business compared to $37.8 billion in its private equity unit./>/>

And these days Blackstone is more of a real estate shop than it is a PE firm. It’s the world’s largest private sector owner of real estate assets; its real estate assets, $56.7 billion, represent the biggest chunk of the firm’s total $210 billion.

KKR’s Public Markets segment, which houses its hedge fund and leveraged credit businesses, is growing rapidly managing some $27 billion in assets compared to $13 billion in 2008. KKR  is even experimenting with the retail investment crowd; it launched a couple of traditional mutual funds for individual investors about a year ago.

But don’t expect KKR and its big name competitors to give up on traditional private equity–especially now as investors are hungry to get back into the game.

“If you want to paint a picture of our firm, private equity will continue to be at the center of it,” co-founder George Roberts told Forbes last year.

Watch for big PE deals this year.

Source: Forbes Business

 
 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

Twitter to track apps on your smartphone
New York, Nov 27 (IANS) The micro-blogging site Twitter has launched a new move to track which apps are installed on your cellphone.
 
 
Copper essential for resting brain too
New York, Nov 27 (IANS) A new study has found that proper copper levels are essential to the health of the brain at rest.
 
 
Dogs clearly listen to what we say
London, Nov 27 (IANS) Dogs pay attention not only to who we are and how we say things, but also to what we say, shows a study.
 
 
Eye's 'glassy' proteins behind sight deterioration
London, Nov 27 (IANS) The age-related long-sightedness could be due to proteins in eye-lens that are converted from a fluid solution to a solid glassy state, making the lens more rigid, says a study.
 
 
 

Latest from the Network

Modi, Sharif shake hands, chat at reception
Kathmandu, Nov 27 (IANS) After a day when they apparently ignored each other in front of cameras, Indian Prime Minister Narendra Modi and Pakistani Premier Nawaz Sharif shook hands and met briefly during the retreat at...
Read more on Politics Balla
 
Arsenal's target is to top Group D: Cazorla
London, Nov 27 (IANS) Arsenal mid-fielder Santi Cazorla said that after securing the last 16 spot in Champions League, the club's next target will be the top place of the group. The English club reached the knockout...
Read more on Sport Balla
 
Five killed in Kabul suicide car bombing
Kabul, Nov 27 (IANS) At least five Afghan civilians were killed and 34 others wounded Thursday morning when a suicide car bombing targeted a British embassy armoured vehicle in eastern Kabul, sources said. The British...
Read more on Politics Balla
 
Twitter to track apps on your smartphone
New York, Nov 27 (IANS) The micro-blogging site Twitter has launched a new move to track which apps are installed on your cellphone. "To help build a more personal Twitter experience for you, we are collecting and...
Read more on Politics Balla
 
Galatasaray going through very difficult moment: Prandelli
Brussels, Nov 27 (IANS) Galatasaray coach Cesare Prandelli said that the club are going through "very difficult moment" following the 0-2 away defeat to RSC Anderlecht in the Champions League. "We will continue on our...
Read more on Sport Balla
 
Pele remains in hospital in stable condition
Rio de Janeiro, Nov 27 (IANS) Brazil football legend Pele remains in hospital as he receives ongoing treatment for a urinary tract infection. The 74-year-old is being treated with intravenous antibiotics and is in a...
Read more on Sport Balla
 
Simeone salutes his players for 4-0 win over Olympiakos
Madrid, Nov 27 (IANS) Atletico Madrid coach Diego Simeone praised his players after they defeated Olympiakos of Greece 4-0 in the Champions league at the Vicente Calderon Stadium here Wednesday. "We have produced some...
Read more on Sport Balla
 
Basel made life difficult for us: Gareth Bale
Geneva, Nov 27 (IANS) Real Madrid winger Gareth Bale said Basel posed enough threats after Real won over the Swiss club 1-0 in the Champions League Wednesday night. "Basel are still battling to qualify, still fighting...
Read more on Sport Balla
 
Tennis star Murray to marry
London, Nov 27 (IANS) Two-time Grand Slam champion Andy Murray is set to marry long-time girlfriend Kim Sears, Murray's management team has announced. Murray, 27, and Sears, 26, have been a couple since meeting at the...
Read more on Sport Balla
 
Natalie Portman up for Jobs biopic
Natalie Portman is in talks for a role in the Steve Jobs biopic. The 'Black Swan' actress is negotiating a deal to play a ''major role'' in the movie about the Apple co-founder - who died from pancreatic cancer in 2011...
Read more on Movie Balla