How did Apollo only raise $20B?
Not a troll question, genuinely curious. Previous fund was $24.7B and was marked at a 36% gross / 24% net earlier this year. Track record in previous funds is extraordinary. I would've imagined that in this environment LPs would want to allocate more to Apollo's strategy vs. other funds that have all raised a lot more (Advent, CD&R, CVC, Brookfield Infra, Blackstone RE, etc). How did Apollo manage to only raise $20B?
Also don't understand this. And they hadn't raised the one before that since 2018 (CD&R raised in 16b in 2021, 26 in 2023, most funds are raising every couple years)
My firm (a PE FoF) has been an Apollo LP for a couple of fund cycles. Their performance has been very underwhelming compared to most of the large buyout peers (i.e only one 2x+ net in c.20 years). Also the co-investment deal flow hasn’t been great from what we saw.
Seconding this.
I would also add that Brookfield Infra, and Blackstone RE aren't comparable since LP's allocate money to them from separate pools of capital than they would use to invest in a mega cap buyout.
Fundraising right now is extremely challenging. LPs are stretched for cash, they aren't getting distributions from their current portfolio, so have less dollars to commit to the new funds. Getting an existing LP to come in at the same size as last fund is considered a win, increased commitments are very rare. Lose a few LPs here or there and it becomes difficult to match the prior fund size, finding new LPs is difficult as well. Just not as much capital in the systems as a few years ago.
Question was more on a relative basis compared to peers: advent, CD&R, CVC, blackstone RE, brookfield infra, H&F, etc all managed to raise more across the same timeframe. Most of those don’t have the same returns apollo PE does.
CDR has much better returns, all of their most recent funds are easily over 2x net. Apollo only has 1
Very good questions and I was wondering the same. I heard that they did some bad investments in fund 9, so maybe this affected the ability to fundraise more from the existing LPs. I also wonder whether they actually managed to get to 20bn? They say roughly 20bn but the last figure I saw was 16bn - so did they actually raise 20bn or do they just say 20bn (rounded from 16-18)? Don’t forget that the CEO changed during the fundraising time so maybe that was the key determinator.
https://www.buyoutsinsider.com/apollo-completes-latest-flagship-buyout-…
https://www.privateequityinternational.com/apollo-to-close-fund-x-in-lo…
16bn in March - did they get additional 4bn in 3 months? Maybe.
Don't forget the headaches with the founder and leadership team transitions in the midst of fundraising.
I think this is most of it (Carlyle has similar leadership issues and can't raise either). All of the MFs major LPs are giving them hundreds of millions each. They'll just go to the MF next door with more or less the same returns. Also most institutions who aren't forced to only invest in MFs due to massive size, would rather go to LMM/MM firms anyways as returns are simply better historically and likely even better on a relative basis going forward as MFs are so damn big their universe to buy from is tiny and banked to death.
Watch the Holiday video they released and it will make sense to you.
right, now LPs decide on what fund to invest based on holidays vids.
btw BX holiday vid > Apollo
haven't watched apollo's holiday video, but BX's this year was so cringe. coming from someone that enjoyed their previous ones
It’s a more reliable indicator than past performance
Apollo broadly is moving away from PE because that’s just not the part of the firm that will grow. This is obvious even across the industry and they always knew this but with Rowan at the head of the firm, this agenda has accelerated and is being marketed and executed with more intensity than would be if Josh Harris had taken over. Internally, Rowan also isn’t shy about telling the PE team how much he doesn’t care about them, ask anyone you know who works there, doubt they’ll say something different.
Yes the fundraising markets have been challenging but facts show that competitors like CVC operating at a similar scale have done well with their most recent raise. Doesn’t seem like there’s that much overhang from the Leon issue, if anything Leon probably personally had certain LP relationships and could twist people’s arms to commit, weirdly he might have been a positive from a pure aggregating $ perspective. Above posters all mentioned it but fund performance is weak. The rumored top decile returns is just not true. Fund 8 was and still is a disaster, Fund 9 was ok until the largest investment in the fund became a problem, and no one internally actually likes the investments Fund 10 has made so far, they just deployed so they could show LPs momentum since the fundraise took so long. If anything, future fund sizes should shrink further.
Idk what’s going on there, it’s definitely not what it was even 3-5 years ago. New layers getting added with some weird MD title now in the PE team and also shittier compensation. The whole place is now just focused on generating fees and trying to mirror a bank.
You are actually making things up, I work on the PE team in NY and there is not a single MD in PE.
To add to this - Rowan was in PE IC this Monday and certainly cares about the line of business. He doesn’t advertise it as a growth business because it’s not, it’s a mature industry at this point and is not relevant for AUM purposes he’s concerned about more broadly.
Agree, idk why people post false notions on here. Not to go off topic. How’d you transition from S&T to the PE team? You can DM if you want
The bolded is true of any public PE firm, all they want is management fees at this point as the carry is a moot point, especially if their funds are only going to return 12-13% going forward. Open as many perpetual offerings with $1k minimums for the lowest common denominator investor (i.e. dumbest) and gouge away with those management fees and 6% hurdle rates.
Do you all feel like PE won’t be worth it for future Associates due to future dilution of the carry pool? Could’ve sworn Apollo restructured the way they pay Senior Partners to mitigate this.
PE IR at MF here. Good to see I can finally be helpful😂
Plenty of factors that go into why AIF X is closing at $20B..
In addition to the above, I wouldn’t compare the fundraise figures of corporate PE to that of RE, or Infra. Different asset classes, different mandates.
the only GPs killing fundraising right now are the top quartile buyout mega funds (CVC just raised the largest PE fund ever) and the middle market players who have stellar track records. Every Publicly traded GP has had a horrible time fundraising (less KKR) their buyout funds. APO is actually in a better situation than others (TPG, Carlyle, BX, etc)
Great intel thanks for contributing
What do CVC and CD&R's historical returns look like, for them to blow past their fundraising targets?
Not the most up to speed on CDR, but CVC is the best, most consistent scaled GP (think $17B+ fund size)IMHO.
Since inception, they’ve generated between 17 and 24 net across virtually every vintage. That’s extremely exceptional for mega fund PE where businesses are already usually efficient and well capitalized.
For the three funds Fund VIII-X invested between 2009-2020, CD&R is well on track to realize 3.0-4.0x Gross MOI in each Fund.
For Fund VII (2009-13), they were pretty consistent with several outperformers at 4-6x, while Fund IX and X performance was primarily driven by two outperformers with Agilon and Belron respectively.
So the unique thing about CVC has been the consistency of returns at scale. All of the mature funds have been 2x net+. CVC have also been very good at generating liquidity across their funds in a tough economic environment of the past 18 or so months - that hasn’t gone unnoticed by the LPs.
Completely off-topic, but do you have any thoughts on PAI?
In the process with them and super curious to hear, how they are perceived.
Because it's the alternatives era ~ oh oh oh, build with Blackstone!
Using the numbers CalPERS releases, the net MOIC on committed capital is 1.26x over four years, or about a 6% CAGR on the assets. S&P has generated a 16% compounded total return, or about 2x on a 3bps liquid product over the same time. Moreover, only 24% of the value is actual cash out and Apollo generally buys bad companies that trade for less than whatever they hold it on the books (e.g., Rackspace...didn't sell a single share post-IPO, lost like 95% of the remaining value). So you can probably take a hacksaw to those numbers even further. Maybe the product just isn't that great?
I think the junior partners who came up under the original 3 just think because they're at APO that every shitty deal will pull through like the good old days. Just not the case, who in their right mind would buy Michael's or Shutterfly...
For sure, though I wonder if it isn't just more structural. The deal partner on MIK was also responsible for Sprout's and Hostess...all very good transactions but from a different time. Problem with large cap PE is that at some point the biggest companies are pretty optimized and funds are stuck with an adverse selection problem. Retail definitely one of those categories. PE deployed max capital with leverage at the peak and APO in much worse businesses than most...
Is everyone still not very overweight on privates because they've been slower to be marked down?
So naturally less LP appetite for private equity right now?
Public markets are like 2% below ATHs, not really a factor anymore.
Anymore --- but when did they start raising? You don't raise that much $ in 2 months? lol
Idk, Russell 2000 still about 17% off ATH (2021 YE). Large cap PE more comparable to these assets w.r.t. to size and business quality (much worse). And highly levered of course. If APO were to float its portfolio at current markets, the equity would probably trade down materially.
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