Apollo Global Management LLC (APO), the private-equity firm run by Leon Black, closed the first stage of capital raising for its newest flagship buyout fund with about $6.8 billion, a person with knowledge of the matter said.
The pool, Apollo Investment Fund VIII, is seeking $12 billion and has set a maximum of $15 billion after New York-based Apollo started marketing it without a limit, two people familiar with the matter said last month.
Charles Zehren, a spokesman for Apollo at public-relations firm Rubenstein Associates, declined to comment on the fundraising progress.
Fewer buyout firms are raising a larger share of capital as the industry consolidates and investors, seeking to cut costs, allocate their money to a smaller group of managers. Ten funds amassed 55 percent of the money raised in the second quarter, according to London-based research firm Preqin Ltd. Carlyle Group LP (CG), the second-biggest private-equity firm, expects to exceed its U.S. buyout fund target of $10 billion when it finishes fundraising for the pool in the next few months, according to a letter sent to investors this week.
Apollo is one of a few firms that may be able to gather a larger fund than it did before the 2007-2009 financial crisis that halted deals. Carlyle’s previous U.S. pool gathered $13.7 billion in 2007, and KKR & Co. (KKR)’s newest North America fund, which is targeting $8 billion, follows a $17.6 billion vehicle. Blackstone Group LP (BX) (BX) last year finished raising one of the biggest post-crisis funds, collecting $16 billion. That fund followed a $21.7 billion pool that wrapped up capital raising in 2007.
Apollo agreed to direct all transaction fees collected from the fund’s deals to its investors, after proposing an 80 percent share when the fund started marketing last year, according to the people familiar with the terms. The firm’s previous fund, which raised $14.7 billion in 2008, offered a 68 percent share as a fee offset.
The previous pool, Apollo’s seventh flagship, was generating a 28 percent net internal rate of return as of March 31, according to the firm’s most recent earnings report. Its predecessor pool, raised in 2006 with $10.1 billion, had a 10 percent net IRR.
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