M&A

23 November, 2009

Apollo moves towards NYSE, revenues rise

* Revenues jump to $213.7 mln for quarter

* Fund VI IRR declines from 2008 numbers

* Filing part of long-pursued plan to list on NYSE

By Megan Davies

NEW YORK, Nov 23 (Reuters) - Private equity firm Apollo Global Management [APOLO.UL] said in a regulatory filing on Monday that revenues jumped higher over the third quarter, as it moves closer to following rivals onto the New York Stock Exchange.

The firm, however, showed it took a hit since the financial crisis on one of its largest funds, the $10.5 billion Fund VI. Apollo started investing in the fund, which has investments in companies such as gaming firm Harrah's Entertainment and real estate broker Realogy, in July 2006.

The fund had a net internal rate of return (IRR) of 21 percent as of March 31 2008, but IRR of zero at the end of September 2009, according to the filing. The fund has returned more than $2.4 billion to investors, the filing said.

IRR is a measure of the value of a private equity fund's realised investments plus the current carrying value of its unrealized investments.

The data is part of an updated filing Apollo made regarding its planned move to the NYSE. Apollo filed with the U.S. Securities and Exchange Commission in April 2008 -- before the market slid -- to register securities already traded on a private exchange and said it planned to list them on the NYSE.

The filing on Monday refreshes those plans to list its shares, making it the latest to plan on a public route. Blackstone Group was the trailblazer, going public in 2007, and rival Kohlberg Kravis Roberts & Co (KKR.AS) recently listed on Euronext. KKR is also expected to move to the NYSE in due course.

The figures showed a turnaround in income and revenues -- which Apollo breaks down as fee income and carried income. Revenue for the three months to Sept. 30 was $213.7 million, compared with a $310.3 million loss the same period the previous year.

The differing IRR numbers for Fund VI partly reflected the impact of the global economic downturn on its investments, the fact that it is early in the life of the fund and also the impact of applying mark-to-market valuations, Apollo said.

Private equity firms are obliged to value their companies as if they were to sell them today, rather than years in the future when they may be sold.

In a recent letter to investors, dated Oct. 22, Apollo said that Fund VI had a total value of more than 100 percent of original cost, up from a low of 61 percent of cost at the market's nadir.

Apollo did not list an IRR value for its latest fund, Fund VII, a $14.7 billion fund which it started investing in January 2008 in the midst of the current economic downturn.

Apollo invested in a number of companies during the private equity boom, and has also been active in buying their debt.

Apollo said in the filing its most successful private equity funds were initiated during economic downturns.

Fund V, which has $3.7 billion of committed capital, and was invested IN during the economic downturn of 2001 through late 2003, generated a net IRR of 46 percent, Apollo said.

In total, the company has around $13.4 billion of uncalled capital commitments -- or "dry powder" to spend. ((megan.davies@thomsonreuters.com ; +1 646 223 6112; Reuters Messaging: megan.davies.thomsonreuters.com@reuters.net)) ((For more M&A news and our DealZone blog, go to www.reuters.com/deals))

Source: http://www.reuters.com