In Greek and Roman mythology, Apollo is the god of light, medicine, arts, and archery, but Apollo Global Management is even more diverse. The alternative asset manager invests in a wide range of industries, including media and entertainment, real estate, manufacturing, and chemicals, on behalf of institutional and individual investors. Apollo has some $75 billion of assets under management, spread among its private equity, capital markets, and real estate segments. It specializes in buying distressed businesses and debt and and has had some of its biggest successes investing during economic downturns. The company, which began trading on the NYSE in 2011, has offices in the US, Europe, and Asia.
Apollo initially announced plans to go public in 2008, but those plans were delayed due to the recession. It renewed its plans to list in 2010, reasoning that an offering would improve shareholder liquidity and allow existing shareholders to more easily sell stakes in the company. It raised some $565 million in its offering, which it will use for general purposes and making acquisitions.
Flush with cash and ready to spend, Apollo then acquired media and entertainment group CKX -- which owns rights to the Elvis Presley name and likeness and the American Idol brand, among others -- for some $560 million. Although CKX wasn't a distressed acquisition, Apollo has experience owning media brands which it can utilize to further expand CKX's holdings.
The firm's latest private equity fund closed in late 2008 after raising nearly $15 billion. Apollo continues to draw from that fund to make investments The company has named nine industries as investment targets: business services and finance, chemicals, commodities, consumer and retail, distribution and transportation, manufacturing, media, packaging and materials, and wireless. A few of its most notable holdings include AMC Entertainment, CEVA Logistics, Caesars Entertainment, Realogy, and Jacuzzi Brands.
The firm's capital markets business invests in credit-oriented assets including distressed debt, mezzanine debt, and senior bank loans, while its real estate segment focuses on such investments as corporate real estate and non-performing loans. In late 2010 the company acquired Citi Property Investors, Citigroup's real estate investment management arm, adding some $3.6 billion in assets around the world. Then, in 2012, Apollo acquired Stone Tower Capital, adding some $18 billion of assets under management and making the capital markets segment the company's largest business.
In 2011 Apollo expanded its senior loan management business with the acquisition of Gulf Stream Asset Management, which manages 10 collateralized loan obligations. The deal, which is part of Apollo's strategy to broaden its fixed income business, added more than $3 billion in assets under management.
The company has also been investing in European nonperforming loan portfolios. In 2011 it agreed to buy Bank of America's Spanish consumer credit card operations and portfolio. The following year, Apollo agreed to buy Bank of America's Irish consumer credit card business.
Apollo typically invests capital over periods of seven or more years, with the intention of generating long-term results. The company often tackles industries that its competitors try to avoid, and Apollo is not afraid to make big investments during times of economic and financial distress. During the most recent recession, Apollo deployed about $28 billion in capital and focused on distressed assets and buyout investments. The company also acquired some $15 billion of distressed debt and $37 billion of leveraged senior loans at deep discounts.
Apollo also looks to make investments in distressed securities and build positions in companies with stressed balance sheets. Specific areas of interest are in the cable, chemicals, packaging, and transportation industries. In 2012 it bought Taminco from CVC Capital Partners after Tamimco withdrew its offer to go public due to lack of investor interest; it paid some $1.4 billion for the Belgian chemical company. Also in 2012, Apollo, along with Riverstone Holdings, acquired the oil an gas exploration assets of El Paso Corporation for more than $7 billion. It was one of the largest leveraged buyout deals since the end of the financial crisis.
But Apollo wasn't immune to struggles during the recession. As did most investors, Apollo had a rocky couple of years in 2008 and 2009. Its struggling portfolio firm Hexion Specialty Chemicals canceled a $10.6 billion deal to acquire Huntsman, citing that company's poor financial state. Two years after it was acquired by Apollo, UK real estate brokerage Countrywide plc was battered by the market downturn and its own rising debts. A group of investors led by Oaktree Capital Management and Alchemy Partners took control of the company in 2009, diluting Apollo's stake. Linens 'n Things (acquired in 2006 for some $1.3 billion) filed for bankruptcy and closed all of its stores in 2008.
In 2010, as the dust began to settle from the credit meltdown and the economy showed signs of life, Apollo acquired CKE Restaurants, which operates the Hardee's and Carl's Jr. restaurant chains, for nearly $700 million. (The offer trumped CKE's previous takeover bid from Thomas H. Lee Partners.) Apollo also acquired a majority of financial transactions processor EVERTEC from Popular for some $900 million and the aforementioned Citi Property Investors for an undisclosed amount.
In another sign of the economy's recovery, portfolio firm AMC Entertainment filed to go public in 2010. It is the movie theater chain's third attempt at an IPO, after market conditions thwarted earlier attempts. Also in 2010, portfolio firms Hexion and Momentive Performance Materials merged to form the world's largest chemicals firm.
Apollo reported some rather bleak financial results for 2011. Revenue fell drastically and the firm reported a $469 million loss for the year. Its econimc net income (a measure that private equity firms tend to gauge performance) fell 62%. However, Apollo remains focused on the longterm and investors don't seem to be shaken as assets under management continue to climb.
Apollo continues to make investments. In 2012 the firm announced plans to acquire a stake in Endemol, the TV production company behind shows such as Big Brother and Deal or No Deal. That year Apollo also acquired indoor water park operator Great Wolf Resorts.
Established in 1990, Apollo initially earned a reputation for being a vulture investor by specializing in distressed assets. The company was co-founded by Leon Black, formerly the head of mergers and acquisitions at Drexel Burnham Lambert, and a dozen other Drexel refugees after that firm collapsed. The newly established firm invested in former Drexel clients -- notably the $3 billion dollar junk bond portfolio of failed California insurer Executive Life. – less