Apollo prioritizes yield, hybrid strategies in Asia - AVCJ Forum

Of Apollo’s $472 billion in assets under management, about $5 billion are in Asia. The firm has bulked up its presence in the region in recent months, appointing Matt Michelini, a senior partner, as Asia head and recruiting a team from Commonwealth Bank of Australia to cover Asia Pacific credit.

On the investment side, Apollo has acquired stakes in commercial real estate financier MaxCap and investment manager Challenger in Australia, and in Hong Kong-based insurer FWD Group. The firm also backed India’s JSW Cement and Singapore’s Global Schools Group via its hybrid strategy, which is a cross between debt and equity.

“I think you will see us go there as we have begun to already through financial services, specifically retirement services,” Rowan told the AVCJ Private Equity & Venture Forum, pointing to the FWD and Challenger deals, as well as several reinsurance transactions in Japan.

“The maturation and regulatory change that is taking place in financial services will lend itself to our retirement services and financial services practice and to our yield business and I would expect that to be the most active part of the ecosystem there. Although, at the moment, it’s all about real estate credit in Asia and being a lender given the fallout from what is happening in China.”

Rowan also shared his thoughts on a seemingly counterintuitive investment environment over the past two years, which “have been off the charts in terms of level of activity,” despite high valuations and plentiful liquidity. COVID-19 has played a catalytic role, creating a climate of robust demand and compelling technological trends that translate into exciting investment opportunities.

“On the other hand, a lot of that seems priced in,” Rowan observed, adding that the unifying element of Apollo’s recent deals – and the ability to identify value – was complexity.

The $5 billion acquisition of Yahoo from Verizon was cited as an example. Apollo picked up a portfolio of assets, ranging from the core Yahoo websites to Engadget, that amount to the world’s third-largest internet property. This followed a protracted effort by Verizon to establish itself in online media through the purchase of AOL and Yahoo. Verizon retains an 11% interest in the business.

Apollo plans to clean up Yahoo by disposing of unwanted assets – Yahoo Japan has already been sold off – and then monetize the company’s vast ecosystem through partnerships with the likes of gaming, gambling, and financial information providers.

Rowan noted that Apollo’s willingness to engage in complexity and highly structured transactions allows it to buy growth, making transactions less beholden to multiples arbitrage. This is consistent with the firm’s broader positioning as a “responsible growth” or “creative value” investor.

“The days of shrinking yourself to greatness or cutting yourself to greatness passed almost two decades ago. It is almost always about finding that which someone else for some reason was not willing to invest in, not willing to focus on, or not willing to resource, and taking advantage of that opportunity as opposed to a restructuring opportunity, a layoff opportunity,” Rowan added.

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• Topics
• North America
• Credit
• Restructuring
• Asia
• USA
• Apollo Global Management
• AVCJ Events