Apollo raises $17.5bn for Fund VIII

Greg Gille
10 January 2014

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Apollo Global Management has bucked the trend of large-cap players downsizing their funds compared to pre-crisis efforts: the firm has amassed $17.5bn for its latest global vehicle after a little more than a year on the road.

The vehicle was launched in November 2012 with a $12bn target, but this was subsequently raised in view of investor demand; the firm most recently upped its target to $17.5bn after the summer of last year.

According to its Q3 2013 report, Apollo had received commitments of up to $12bn as of September, pointing to a strong push as the year drew to a close to reach the $17.5bn mark.

This makes Apollo Investment Fund VIII the largest private equity vehicle raised in the post-crisis years, although it won't top the all-time record: Blackstone raised $22.7bn in 2007.

Apollo's previous vehicle, Apollo Investment Fund VII, closed on $14.8bn, just short of its $15bn target, in mid-December 2008. The fund took about 16 months to raise. From its inception through to the end of September 2013, it generated an annual gross and net IRR of 38% and 29% respectively.

The GP has therefore been able to comfortably top its previous effort, which is no mean feat in the current fundraising climate. Others in the large-cap space went down a different route, with Apax Partners raising €5.8bn for its latest vehicle in June last year after a two-year fundraising period – a far cry from the firm's €11.2bn previous effort. Permira meanwhile cut its latest fund's target at the beginning of last year, lowering it to €4-5bn instead of the initial €6.5bn. The GP held a €2.2bn first close in April after more than 18 months on the road.

However, funds predominately targeting the US market have been able to capitalise on strong investor appetite last year, with Carlyle raising $13bn and KKR understood to have attracted $8.3bn so far.

Investors
Apollo and several of its investment professionals committed $880m to the fund – making the GP contribution a sizable 5% of overall commitments.

According to Apollo, Fund VIII also attracted the usual assortment of LPs, with backers including public pensions, sovereign wealth funds, corporate pensions, endowments and foundations, funds-of-funds and high-net-worth investors.

Investments
According to Apollo, the fund will stick to the firm's existing strategy: focusing on distressed investments, corporate carve-outs and opportunistic buyouts.

People
Leon Black is the chairman and CEO of Apollo Global Management.