|Bid||27.16 x 800|
|Ask||27.32 x 1800|
|Day's Range||27.09 - 27.33|
|52 Week Range||15.33 - 27.93|
|Beta (5Y Monthly)||1.52|
|PE Ratio (TTM)||N/A|
|Forward Dividend & Yield||1.59 (5.91%)|
|Ex-Dividend Date||Aug 28, 2020|
|1y Target Est||N/A|
(Bloomberg) -- Apollo Global Management Inc. is facing a client revolt that could choke new investments into its funds, as questions persist about co-founder Leon Black’s ties to convicted sex offender Jeffrey Epstein.Cambridge Associates, an influential consultant to investors including pensions and endowments, may stop recommending Apollo, according to people with knowledge of the matter. Already, the Pennsylvania Public School Employees’ Retirement System has informed Apollo it won’t consider additional investments for now.The developments follow months of pressure on Apollo from investors seeking more definitive answers about what Chief Executive Officer Black has described as professional ties to Epstein, who was awaiting trial on sex-trafficking charges involving underage girls when he was found dead in jail last year. Interest in their relationship heightened anew last week when the New York Times reported Black had wired at least $50 million to Epstein after his 2008 conviction for soliciting prostitution from a teenage girl.Black and Apollo are now trying to dispel the cloud over the company, which depends on multibillion-dollar fundraisings to fuel its earnings and has already seen its stock take a hit. At Black’s urging this week, a panel of board members hired law firm Dechert LLP to independently examine the 69-year-old’s account of his ties to Epstein, whom Black has said he turned to for financial matters, such as taxes, estate planning and philanthropy.“Leon requested and welcomes the third-party, independent review,” a spokesperson for Black said in an emailed statement Wednesday. He “is confident that the outcome will put the matter behind Apollo in validating what he has previously communicated publicly.”Apollo is “firmly committed to transparency,” a company spokesperson said in an email. “Leon has communicated directly with our investors on this issue and we remain in open dialogue.”There’s been no allegation that Black’s dealings with Epstein broke the law. Representatives for Apollo have repeatedly said Epstein never did business with the firm. Still, the worry among shareholders is that clients may halt inflows of new money.“Anything they can do that involves outside observers to nip that narrative in the bud in my view will be great for the stock,” said Patrick Davitt, an analyst at Autonomous Research. “I am kind of wondering why they didn’t do this in the first place. This could have gotten the monkey off their back a long time ago.”The Pennsylvania retirement system said it had planned to have a meeting with Apollo sometime this week, but after the Times published its story on Oct. 12, the pension plan held the meeting by phone the next day. It later suspended new investments. “PSERS is closely following the ongoing legal issues and the newly launched internal Apollo investigation,” it said in a statement without elaborating on its concerns. The Financial Times earlier reported the decision. Cambridge, which advises on about $410 billion in assets, told clients its deliberations were prompted by lingering questions over Black and Epstein’s ties. A representative for the firm declined to comment.Some other investors, speaking on the condition they not be named, said they didn’t understand what financial services could warrant $50 million in payments to Epstein. A college dropout, he lacked conventional training in areas such as taxes and estate planning.Apollo’s stock slumped in the wake of the newspaper’s report, shedding 14% by Tuesday. It jumped as much as 6.3% on Wednesday after the firm disclosed the board’s review. The shares ended the day up 2.6%, and are down 13.5% in 2020.Clients’ FrustrationsPension systems, often more exposed to political pressures, are known to be repelled by negative news involving their investment partners. Some have been raising concerns with Apollo for more than a year over the headlines generated by Black and Epstein’s relationship, according to people with knowledge of those talks.Two investors said they pressed Apollo for more information about their ties but were disappointed with the lack of detail. The firm’s representatives tried to assure some clients by suggesting journalists digging into the situation would already have found wrongdoing if any occurred. Representatives also noted Black wasn’t the only one who had done business with Epstein. Some clients said they were offered the possibility of questioning Black directly.Gerald O’Hara, an analyst at Jefferies Group covering Apollo’s stock, said he’s been fielding calls from investors nervous that the situation at Apollo could spiral further. But even then, private equity fund clients typically agree to have their money locked up for years. The risk isn’t to existing funds, it’s to Apollo’s ability to attract new money.“This could certainly have an impact on future fundraising rounds,” O’Hara said. Bloomberg reported in April that the firm aimed to eventually raise $20 billion across several new funds to take advantage of dislocations in credit markets as well as private debt.Black’s RegretsThe two men had been acquaintances since at least the early 1990s. From time to time, Epstein met with Black at Apollo’s New York offices, and he pitched personal tax strategies to the firm’s executives, Bloomberg has reported.Apollo conducted an internal review into its involvement with Epstein to ensure that any ties went no further than the firm’s co-founder, people with knowledge of the matter said last year. That included examining emails and records to determine there was no connection between the company and Epstein, one of the people said.“With the benefit of hindsight -- and knowing everything that has come to light about Mr. Epstein’s despicable conduct more than 15 years ago -- I deeply regret having had any involvement with him,” Black said in a letter to Apollo’s limited partners dated last week.(Updates with share price moves in 12th paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Apollo Global Management Inc. and Platinum Equity are testing the strength of the junk bond market with one of the riskiest types of financings that will allow the private equity firms to fund payouts.Aspen Insurance Holdings Ltd., which Apollo bought in 2019, is selling $500 million of payment-in-kind toggle notes, which gives the borrower the option to delay interest payments until the bond’s final maturity, according to people familiar with the matter.The debt, expected to price later this week, will let the buyout firm take a $238 million dividend, give the company the same amount for liquidity, and pay fees related to the deal, according to a copy of the offering memorandum shared with investors and seen by Bloomberg. Early pricing discussions for Aspen’s five-year notes are in the high-7% range, and Jefferies Financial Group Inc. is leading the sale.Platinum, meanwhile, is marketing a $500 million PIK toggle for label company Multi-Color Corp., said the people, who asked not to be identified because the transaction is private. Early pricing discussions for the five-year offering, also slated to price this week, is 12% if interest is paid in cash, and an additional 0.75 percentage point if paid with more debt. Bank of America Corp. is leading the sale. The entire proceeds will be used for the payout and related expenses, according to a copy of the offering memorandum.Representatives for Apollo, Aspen, Bank of America and Jefferies declined to comment. Representatives for Multi-Color and Platinum didn’t respond to requests for comment.Red HotThe private equity firms are hitting the market at a time when investors are snapping up all sorts of risky deals, including debt for companies hoping to stave off bankruptcy such as Ligado Networks LLC’s recent $3.85 billion PIK offering. The leveraged loan market has also seen a surge in dividend recapitalizations.Portfolio managers are being spurred to seek out higher-yielding assets amid expectations that the Federal Reserve will keep rates low to support the economy during the Covid-19 pandemic.Junk-bond yields, meanwhile, have dropped to 5.28% and are close to record lows. That’s driving private equity firms to cash in on some of their investments by yanking dividends out of corporations to cut their risk and realize gains sooner.But the stakes are high for potential buyers of the debt. As well as running the risk of not getting paid interest, they could also get relatively little back in the event of a restructuring since both the Aspen and Multi-Color bonds are issued at holding company levels, which are lower in the pecking order for repayment if the businesses fail.“PIK toggles are usually God’s way of saying to take a step back,” said Leland Hart, co-chief investment officer at Alcentra. “It does show you’ve got appetite for different strata of risk in the market, which is ultimately healthy,” he added.Back AgainPlatinum, the Beverly Hills, California-based firm backed by billionaire Tom Gores, has long taken advantage of red-hot debt markets to help cut its equity risk in the companies it buys. In February, it sold $460 million of PIK toggle notes to recoup more than half of its 2018 investment in Husky Injection Molding Systems, which makes manufacturing equipment for plastics packaging.Platinum agreed to buy Cincinnati-based Multi-Color in a deal valued at $2.5 billion in 2019, and merged it with a company it already owned. The firm financed the purchase with $2.6 billion of debt, some of which struggled to sell amid concerns about the deal’s high level of indebtedness and estimated cost savings.The company’s 6.75% and 10.5% bonds have since soared to around 107 and 108.5 cents on the dollar respectively, according to Trace data, and the business has overall performed well since the buyout. Multi-Color has realized tens of millions of dollars in cost savings and expects revenue to increase by up to 2% year-over-year for the quarter ended on Sept. 30 despite the impact of Covid-19, according to bond documents.Read more: Platinum-owned label maker offers riskier PIK bonds for payoutPIKs can turn out well if the debt is paid off from the proceeds of a sale or an initial public offering. Pharmaceutical research company PPD Inc. did just that earlier this year, turning a quick profit for investors that bought the debt that funded a $1 billion dividend to the company’s sponsors Hellman & Friedman and Carlyle Group.Still, Multi-Color’s holding company debt load will be 7.9 times a measure of its earnings following the deal, according to bond documents.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Black wrote to Apollo's fund investors last week that he regretted making payments to Epstein for what he called "professional services," but has denied any wrongdoing or inappropriate conduct related to his business and social relationship with him. Black, whose net worth is pegged by Forbes at $7.8 billion, was responding to a New York Times story that reported he had wired between $50 million and $75 million to Epstein over the last decade. On Wednesday, the $57 billion Pennsylvania Public School Employees Retirement System (PSERS) said it would not consider any new investments in Apollo funds after speaking with the buyout firm about Black's involvement with Epstein.