Apollo Global Management LLC (APO), the private-equity firm run by Leon Black, is close to securing at least $5 billion for its latest flagship fund, according to two people with knowledge of the matter.
The firm plans what is known as a first close by the end of May for Apollo Investment Fund VIII LP, which is seeking $12 billion, said the people, who asked not to be named because the information is private. Apollo, based in New York, gathered $14.7 billion for its current fund in 2008.
Carlyle Group LP (CG) is raising $10 billion for a global fund, while KKR & Co. (KKR) is seeking $8 billion for a North American pool. Buyout firms are stepping up sales of investments by funds raised before the 2008 financial crisis to help persuade investors to commit fresh cash.
Apollo is “selling everything that’s not nailed down in our portfolio,” Black said yesterday at the Milken Institute Global Conference in Beverly Hills, California. “If it is nailed down, we’re refinancing it.”
Black, a former Drexel Burnham Lambert Inc. executive who co-founded Apollo in 1990, said the firm has sold about $13 billion of assets in the past 15 months. Prices for traditional buyouts have risen so much that it’s a good time to sell, he said.
Apollo’s new fund will invest in distressed assets, divisions of companies and leveraged buyouts, according to a marketing document obtained by Bloomberg News. Apollo is giving clients a bigger share of the fees it levies on companies, directing 80 percent of such fees to the investors, also known as limited partners, compared with 68 percent in the prior fund, the document shows. Private-equity firms charge the companies they own fees for services including consulting, investment banking and advice.
Melissa Mandel Kvitko, a spokeswoman for Apollo at Rubenstein Associates, declined to comment.
Apollo’s previous flagship pool, Fund VII, was generating a 26 percent net internal rate of return as of Dec. 31, according to firm’s annual report, after taking advantage of distressed opportunities that arose from the financial crisis. The firm’s $10.1 billion Fund VI, which invested during the buyout boom of 2006 to 2008, was producing a 9 percent net IRR as of year-end, the report shows.
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