Apollo Global Management Inc. APO is planning to sever its ties with ICICI Bank Ltd. IBN, as the former intends to begin a credit investment business in India, per Bloomberg.
Apollo Global had set up Aion Capital with ICICI Ventures, the bank’s private equity arm, in 2011. As of Mar 31, 2020, Aion Capital holds assets under management of $660 million and offers a net internal rate of return of 5%, as per recent filings.
Per people familiar with the matter, Apollo Global will not pump any further capital into the venture and has also made ICICI aware of its intentions.
The partnership between the companies had matured. Both companies had mutually agreed to change their relationship from Apr 1, 2020, per a statement by ICICI. Apollo global will advise the fund until the end of its term but both companies are free to explore other opportunities independently.
With the exit from this venture over the next few years, Apollo Global will join its global peers like KKR & Co. Inc. KKR and The Blackstone Group Inc. BX to have its independent operations in India.
At its May investor presentation, Apollo Global shared views about the prospects of private equity, credit and real estate scenario of India. The firm plans to invest in the country through its global flagship fund, and build a private equity and credit platform in India.
With India considering a new category of alternative investment fund, wherein the fund will acquire stressed assets from banks and shadow lenders, this is the right time for a global player like Apollo Global to cash in on this opportunity. The fund will be given the opportunity to directly buy the stressed assets from the books of the banks and shadow lenders, according to people familiar with the matter.
However, currently, investors can have access to these bad loans only through the securities issued by asset reconstruction companies.
Shares of Apollo Global have appreciated 6.5%, so far this year, compared with the 3% decline recorded by the industry.
The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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