Apollo goes ahead with IPO, but cuts price

Apollo Global Management, the private-equity firm headed by Leon Black, has bounced back so well from some embarrassing leveraged buyouts that it now plans to go public, like its rivals Blackstone Group and Kohlberg Kravis Roberts.

Leon Black

New York-based private equity giant Apollo Global Management has pressed ahead with its planned initial public offering (IPO), but cut its price range compared to earlier estimates.

The firm will now seek to sell 26.3 million shares at between $17 and $19 each, and will trade under the ticker symbol APO, according to a filing with US regulators.

Earlier reports put it on the point of announcing an $18 to $20 per share range last week, but the filing was delayed as stock markets tumbled after Japan’s earthquake and nuclear accident. At the mid-point of the new range, the offering will raise $473m.

Eighteen million shares will be sold by Apollo itself, with the remaining 8.3 million coming from existing stakeholders including Goldman Sachs, which is also among the underwriters.

The shares on sale represent only a fraction of the firm’s total equity, which is valued at $2.1bn. It has $67bn in assets under management.

Founders Leon Black, Josh Harris and Marc Rowan retain majority ownership of Apollo and control the company through a single Class B share, giving them 81 per cent of voting rights.

In a separate filing on the same day, Apollo Residential Mortgage, an investor in residential mortgage-backed securities and managed by an Apollo subsidiary, filed for an IPO, hoping to raise $300m.

When it goes public, Apollo will join two of the biggest private equity firms – Blackstone, which went public in June 2007, and KKR, which followed in July last year. Peers like Carlyle, TPG and Oaktree Capital Management are expected to follow.

Leon Black's Apollo Global Management is likely to score nicely in its initial public offering. Here's how it stacks up against two big rivals.

	Recent	EPS		P/E	Tangible	Mkt
Company/Ticker	Price	'10E	'11E	'11E	Book / Share	Val (bil)
Apollo Global/APO	$18.00*	$3.00	$2.00	9.0	$4.00	$6.4
Blackstone/BX	18.56	1.26	1.59	11.9	4.35	21.0
KKR/KKR	17.64	1.90	2.09	8.4	8.38	12.2
*Mid-point of IPO pricing range. E=Estimate. Sources: Bloomberg; Company reports; Barron's

Although the firm has had some notable failures, its overall private-equity record is excellent.
Managed	Total	Fee-	Historic
Assets	(bil)	Paying (bil)	Performance*
Private Equity	$38.8	$27.9	26%
Capital Markets	22.3	16.5	NA
Real Estate	6.5	2.7	NA
Total	67.6	47.1
*Annualized return since 1990 inception. NA=Not Available. Source: Company reports