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

SEC Accuses Former BP Employee Of Insider Trading During Deepwater Horizon Spill
SEC Accuses Former BP Employee Of Insider Trading During Deepwater Horizon Spill
The Securities and Exchange Commission charged a former 20-year veteran of BP plc with insider trading during the immediate aftermath of the Deepwater Horizon rig explosion and subsequent oil spill, alleging the...
 
 
No Twitter-Like Leap, But Weibo Pops 13% In IPO Debut
No Twitter-Like Leap, But Weibo Pops 13% In IPO Debut
Chinese social network Weibo has been accused of being a Twitter clone. That may not be entirely accurate, but certainly Weibo would love to copy Twitter’s 73% stock jump on its first day of trading last year. So far,...
 
 
Why Did Detroit Mayor Sideline Anti-Blight Entrepreneur Bill Pulte?
Why Did Detroit Mayor Sideline Anti-Blight Entrepreneur Bill Pulte?
Just when Detroit begins to climb up off the mat a bit, the city has a way of knocking the props out from under itself. First there was the awful beating of a man after a car accident a couple of weeks ago with the vile...
 
 
Heartbleed Roundup: Hacking Made Easy, First Victims Come To Light And Heartbleed Hacker Arrested
Heartbleed Roundup: Hacking Made Easy, First Victims Come To Light And Heartbleed Hacker Arrested
The Heartbleed bug which enables attackers to retrieve chunks of sensitive information from websites, services and devices has now been patched on a large number of systems globally, though as outlined in my previous...
 
 
 

Latest from the Network

Bully Ray: I could be new James Gandolfini
TNA Superstar Bully Ray wants to become an actor and thinks he can be the new James Gandolfini. The wrestler has started to branch into other areas of entertainment and thinks he would be a good fit for some of the...
Read more on Celebrity Balla
 
Hayden Panettiere will be 'sexy' bride
Hayden Panettiere wants to be a "sexy and youthful" bride. The 24-year-old actress has not yet set a date for her wedding to fiancé Wladimir Klitschko but already knows she wants to look "classy and elegant". She told...
Read more on Celebrity Balla
 
Home Improvement and Roofing Contractor in Chicago Stands Apart from Other SMBs with New Web Site
Chicago, IL, April 17, 2014 --(PR.com)-- Fewer than half of small and medium businesses (SMBs) across the country have a Web site. One of the latest SMBs to join the Web-savvy minority and take steps to create a...
Read more on Business Balla
 
Record $550 Million Milwaukee Bucks Sale Highlights NBA's Prosperity
LeBron James took to Twitter last year in January to express his incredulity over the sale of the lowly Sacramento Kings for a huge sum one year after the NBA lockout ended. “So the Kings getting sold for 525M!! And the...
Read more on Business Balla
 
Wild Cards: Tennis' Free Lunch May Cause Indigestion
There’s no such thing as a free lunch, but tennis has something close to it: wild cards. A wild card grants entry into a tournament’s main draw or qualifying rounds for a pro who doesn’t make the ranking cutoff for a...
Read more on Business Balla
 
Bye Bye Barbie: Mattel Sinks On Tanking Doll Sales
For nearly 70 years, Barbie has ruled the dollhouse. But Mattel’s star may now be a relic of the past. Mattel shares sank slightly on Thursday morning after the company announced a net loss of $11.2 million and...
Read more on Business Balla
 
Mexico's Drug War: Substantial Changes Seen In Michoacan
Editor’s Note: This week’s Security Weekly summarizes our quarterly Mexico drug cartel report, in which we assess the most significant developments of the first quarter of 2014 and provide a forecast for the second...
Read more on Business Balla
 
Learning A Language Is For Life Not Just For Business
The ability to speak another language is seen as crucial to success in a globalized economy but advocating learning languages based on their usefulness is flawed. Instead, we should promote them for their own sake and...
Read more on Business Balla
 
FDA's Proposed Regulation Of Brewers' Spent Grains Is All Wet
During his February 5, 2014 appearance at a House Energy and Commerce Committee hearing, Food and Drug Administration (FDA) Deputy Commissioner Michael Taylor stated that “the whole goal of [the Food Safety...
Read more on Business Balla
 
Europe's Car Sales Boom, But Honda Trips Over Lame Product Lineup
Car sales in Western Europe continued to rally from a six year slump, but Honda of Japan’s sales dived as its range of CR-V SUVs and Civic small cars proved unloved and too expensive. And don’t expect an improvement...
Read more on Auto Balla
 
 
Auto Balla Sexy Balla Sport Balla TV Balla Politics Balla Movie Balla Apple Balla Business Balla Ad Balla Celebrity Balla