Investors clamour for Apollo fund listing

Apollo Management, a US buyout firm, has overcome investor scepticism to raise $2 billion (€1.6 billion), a third more than expected, for AP Alternative Assets, its Amsterdam listed private equity fund.

Apollo listed on the Euronext Amsterdam exchange on 8 August, with 100 million shares at $20.

The share price dipped to $19.80 reflecting the listing costs, but bounced back to $19.95 by the end of the week, according to investment banking trade newspaper Financial News.

This meant a further 4.95 million shares could be be admitted to give the vehicle a market capitalisation of $2.1bn, before an 11 million share over-allotment facility can be used.

When Apollo priced the shares in mid-June it had expected to issue 75 million shares at $20.

A $600m cornerstone investment by the Abu Dhabi Investment Authority had given investors concerns about the liquidity of the vehicle but it also allowed the offer size to be increased.

Apollo had put a $2.5bn hard cap on the AP vehicle but demand was lower than expected following the after-market performance of a $5bn investment vehicle raised by Kohlberg Kravis Roberts, a US rival.

KKR Private Equity Investors, has traded as much as 20% below its initial price. Both Apollo and KKR’s listed vehicles act as feeder funds for more traditional limited partner buyout structures, and can also co-invest in deals.

Citigroup, Credit Suisse, Goldman Sachs and JP Morgan led the Apollo listing. Citigroup and Goldman also worked on KKR’s funnel fund, along with Morgan Stanley.

Financial News said the success of Apollo’s AP vehicle is expected to put more pressure on the London Stock Exchange to revise its listing rules. The Financial Services Authority is expected to change the rules by the start of next year to create a single principles-based regime for all investment entities and abolish the requirement that they must be passive investors.

The changes would ideally come before the next wave of listed private equity investment vehicles are formed. Texas Pacific Group, CVC Capital Partners and Apax are among those understood to be considering a listed vehicle, sources said.

Separately, the firm has opened a new London office, headed by former Goldman Sachs banker Gareth Turner, who joined in 2005. From 1997 to 2005, Turner was a managing director and head of global metals and mining and co-head of global chemicals invesmtent banking.

According to Apollo’s private placement memorandum for its most recent fund, Turner was also active in the Goldman’s principal investments area, home to its private equity activity.