These statements are subject to certain risks, uncertainties and assumptions, including risks relating to Apollos dependence on certain key personnel, Apollos ability to raise new Apollo funds, the impact of COVID-19, the impact of energy market dislocation, market conditions, and interest rate fluctuations, generally, Apollos ability to manage its growth, fund performance, the variability of Apollos revenues, net income and cash flow, Apollos use of leverage to finance its businesses and investments by Apollo Funds, Athenes ability to maintain or improve financial strength ratings, the impact of Athenes reinsurers failing to meet their assumed obligations, Athenes ability to manage its business in a highly regulated industry, changes in Apollos regulatory environment and tax status, litigation risks and Apollos ability to recognize the benefits expected to be derived from the Merger. Apollo will have 578M of shares outstanding post-merger - slide 18 of the same presentation. The main business of post-merger APO will be retirement services, a product in high demand and with better optics than private equity. 15 minutes unless otherwise indicated (view Zawacki expects these firms "will remain very active in the pursuit of inorganic growth both in the form of traditional M&A and reinsurance solutions," but he added that in the longer term, the outlook "comes down to whether Apollo's thesis about the implications of marrying two undervalued franchises in an undervalued sector is proven correct. IR@apollo.com. NEW YORK - January 3, 2022 - Apollo and Athene today announced the successful completion of their merger under Apollo Global Management, Inc. (NYSE: APO), a high-growth alternative asset manager with asset management and retirement services capabilities. This theoretical argument is supported by multi-year Apollo's results. Upon closing of the merger, current Apollo shareholders will own approximately 76% of the combined company on a fully diluted basis, and Athene shareholders will own approximately 24%. Unfortunately, the fact that Apollo only had a minority stake in Athene, coupled with the complexity of past transactions and the current control structure, meant that the market was not recognizing the full value of the two companies relationship. The success of this partnership could be playing a role in Apollo's peers' desire to crack the insurance market. Athene focuses on retirement savings solutions and has deep expertise in the . Athene sits on Apollo's balance sheet as a $2.5 billion asset that generates no earnings, as a result of "accounting history and an accounting nuance," Rowan said during the analyst call. Athene and Apollo Merger Presentation. Private-equity fund holdings are marked-to-model, a necessity given the nature of their business, but a practice that provides pricing information that can never be as good as the price-discovery process of public markets. Ph. In reality, it is even more controlled: at least until 2021, APO was allegedly tightly ruled by Mr. Black alone with all others, including shareholders, Board, management having a very limited say. Joanna Rose Private-equity giant Apollo announced the acquisition of the portion of Athene Holding it doesn't already own in an all-stock transaction that values the insurance-and-retirement services firm . Meanwhile, the stock has not been very popular. Post-merger and with better governance, APO will become eligible for the S&P 500 inclusion. NEW YORK and HAMILTON, Bermuda - March 8, 2021 - Apollo (NYSE: APO) and Athene (NYSE: ATH) have entered into a definitive agreement to merge in an all-stock transaction that implies a total equity value of approximately $11 billion for Athene. 1 Significantly scale our front endto originate more assets across Yield, Hybrid and Opportunistic investment strategies 2 Derive as much value as possiblefrom assets we originate in a way that is consistent with our long-term strategy Capital to drive transactions Move faster to secure investment opportunities and drive terms Analysts Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. Together we articulated an attractive plan to generate $15 billion of deployable capital over the next five years and more than double our fee-related earnings. Apollo Global: Athene Merger Is The Right Strategy - Seeking Alpha Amongst the usual talk of demographic trends and the harnessing of unique abilities that these things tend to contain were some slides and passages that demonstrated managements focus and concentration is exactly where it needs to be. (212) 822-0491 Or find and follow Reinsurance News on social media. The earnings will become less volatile due to a relatively lower share of carry. Will the merger create a financial empire? Please disable your ad-blocker and refresh. Long-term, the merged company is attractive far beyond this. Those retirement savings products favorite by risk averse customers. Everything will be under one roof with a unified decision-making process. With the announcement of the deal, Apollo released a presentation explaining the rationale for the merger. Apollo Asset Management will continue to be led day-to-day by its Co-Presidents This presentation is being made in respect of the proposed transaction involving Tango Holdings, Inc., a Delaware corporation and a direct wholly owned subsidiary of Apollo ("HoldCo"), Apollo and Athene. Dcouvrez comment nous utilisons vos donnes personnelles dans notre Politique de confidentialit et notre Politique relative aux cookies. "Any time you have a double-digit return, like [a] mid-teens return structure, I think you're going to get a fair amount of investors interested," O'Hara added. (Source: Bloomberg) Seeking Alpha's Disclosure: Past performance is no guarantee of future results. Material buybacks are likely. When this merger was originally announced in March 2021, the deal terms valued Athene at roughly $11 billion and suggested the combined company could be valued at $29 billion. 10/19/2021 | 04:41pm EDT Athene Balance Sheet Tutorial: Asset Portfolio Risk & Stress Considerations October 2021 Disclaimer This presentation does not constitute an offer to sell, or the solicitation of an offer to buy, any security of Athene Holding Ltd. ("Athene"). To value stand-alone APO we used 6-10% of its FGAUM from Q1 21 earnings materials. Much of that projected growth will come from the merger and While controversial rumors have persistently surrounded Mr. Leon Black, the founder, the former Chairman and CEO, and the controlling shareholder (together with two other Managing Partners - Messrs. Marc Rowan - the current CEO, and Joshua Harris), the success is beyond any doubt. Scott Kleinman I primarily manage my own funds and consult a limited number of friends and clients. I wrote this article myself, and it expresses my own opinions. ATH's adjusted equity on Mar 31, 2021, in billions is $17.3 less $2.02 of AOCI less $1.28 of APO stake. Apollo's merger with Athene highlights PE's rush for permanent capital Data delayed PDF Apollo and Athene to Merge in All Stock Transaction Investor Presentation Understandably, shareholders were furious. 13, 2022. The slide below shows Athenes performance since its 2016 IPO, highlighting strong EPS growth, solid EPS levels, as well as strong growth in book value per share; the numbers are contrasted with the firms share price performance which is lackluster, to say the least. Jan. 14, 2022. This combination is a competitive differentiator and a growth accelerant, bringing expected benefits to all of our shareholders, policyholders and important stakeholders.. Athene : Apollo Completes Merger with Athene and Finalizes Key Je kunt je keuzes te allen tijde wijzigen door te klikken op de links 'Privacy- en cookie-instellingen' of 'Privacydashboard' op onze sites en in onze apps. In addition, Apollo expects the enhanced trading profile of its stock to attract a broader and diversified investor base over time. Though we do not see any particular reason for it, this risk always exists and is reflected in approximately a 5% arbitrage spread (the effective spread is actually smaller due to APO's dividends payable before the merger). Apollo and Athene are expected to close their all-stock tax-free merger in early 2022. Apollo and Athene to Merge in All Stock Transaction Investor Presentation The Apollo-Athene Merger Will Unlock Value (NYSE:APO) This risk will not go away shortly but the 12-year history of close and successful cooperation between both companies moderates the perils of integration and cultural clash. Adding 2% of dividend yield, we come up with about 17% of total annual return long-term on top of short-term appreciation related exclusively to re-rating of Athene. It gave up its dual class share structure and adopted a one share one vote plan. The risk here is that the asset manager's "culture" will prevail and start affecting underwriting decisions. FRE is much bigger than carry, more stable, and quickly growing (at about 21% CAGR since IPO in 2011). The all-stock deal for Apollo and Athene went through after former Apollo CEO Leon Black stepped down from his role. Athene and Apollo Merger Presentation - Athene Holding EX-99.8 - SEC.gov The only daily news program focused exclusively on technology, innovation and the future of business from San Francisco. Asteward@athene.com. The mid-point of this range is about $74 which implies 37% of ATH appreciation in 7 months or so. Communications@apollo.com, Amanda Carstens Steward As a result of the merger, the combined entity Apollo Global Management, Inc., led by Chief Executive Officer Alternative asset managers "thrive off the illiquidity premium and ability to add value over long periods of time," O'Hara said, adding that the insurance theme is likely to remain a focal point for several or more years to come. What's not to like about Apollo's purchase of Athene? Jim Belardi However, differently from "Hedge Fund Re", Athene's results have been outstanding. 3rd January 2022 - Author: Steve Evans Apollo has now completed its merger with life and retirement reinsurance company Athene Holding Ltd., creating a company with an implied market capitalisation of around $43 billion. While their stocks trade with multiples in the high-teens and mid-twenties, Apollos TTM PE languishes in the mid-single digits making the current changes imperative. I wrote this article myself, and it expresses my own opinions. Merger and governance changes will simplify Apollos corporate structure. The combined entity, Apollo Global Management, Inc., will be led by Chief Executive Officer Marc Rowan. For years, Brookfield Asset Management Inc. (BAM) was dogged by criticisms of the way in which its byzantine structure prevented investors, who are after all the owners of the firm, from fully understanding how it was being managed. Apollo claims that it is not taking additional credit risks (as compared with investment-grade bonds) with Athene's assets. As noted before, APO is trading close to the mid-point of its regular trading range and APO investors are not expected to suffer much if the merger fails. Based on strategies, APO divides its business into three segments: credit ($329B AUM at the end of 2020), private equity ($81B), and real assets ($46B). APO plans to convert to a full C-Corp with a One Share/One Vote structure subject to regulatory and shareholder approvals. Effectively, this merger puts the issue to rest. But each firm has its own spin on how to execute on the strategy, with some investing heavily off their own balance sheet, while others opt for a general partner/limited partner style relationship or have co-invested alongside another investor. (515) 342 6473 2026. Is this happening to you frequently? The company's value should be the function of its two major assets. This press release does not constitute an offer of any Apollo fund. View this Presentation PDF Format Download (opens in new window) PDF 1.30 MB Listen to this Presentation Audio Format Download (opens in new window) Watch this Presentation Video Format Download (opens in new window) . The table does not account for 3 additional quarters of separate earnings before the merger that is likely to increase the combined company's value. I wrote this article myself, and it expresses my own opinions. Apollo's management is focused on making the right changes to ensure index inclusion. Apollo-Athene Merger Creates Key Financial Player, Explained I have no business relationship with any company whose stock is mentioned in this article. Apollo, together with certain of its related parties and employees, owns approximately 35% of the outstanding Athene class A common shares. APOLLO GLOBAL: THE NEW BERKSHIRE HATHAWAY? Although management believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that these expectations will prove to have been correct. To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. EX-99.2 - SEC.gov Here's what Apollo gets out of the deal. Hosted by Emily Chang. NEW YORK, Jan. 03, 2022 (GLOBE NEWSWIRE) -- Apollo and Athene today announced the successful completion of their merger under Apollo Global Management, Inc. (NYSE: APO), a high-growth alternative . People may receive compensation for some links to products and services on this website. Earnings are primarily derived as either fee-related (FRE in the form of management fees, transaction fees, and advisory fees less related expenses) and performance fees ("carry"). announced their merger. Global Business and Financial News, Stock Quotes, and Market Data and Analysis. But while most firms focus on ramping up their exposure to insurance, trend leader Apollo Global Management Inc. is metamorphizing its business due to its early entry into the market. PD=Previous Day. The terms of an all-stock tax-free transaction are straightforward: Athene's shareholders will get 1.149 shares of APO in exchange for 1 share of ATH. Here's what Apollo gets out of the deal. The future doesnt just happen, we make it. It isn't just Black that caused a raucous for Apollo. Get this delivered to your inbox, and more info about our products and services. Source: Apollo Global Management, Inc. Investor Presentation. However, ATH will face a 10% dilution of its earnings due to incremental taxes after the merger (slide 21 of the. Athene: Robust Fundamentals But Pending Apollo Merger Caps Upside Apollo Global Management Inc.s (NYSE:APO) proposed merger with Athene Holding Ltd. (ATH) was the logical next step in Apollos permanent capital push. Given the record amounts of dry powder and the ferocious competition for quality assets currently being seen in the private equity space, a shift to credit may be a good idea. Athene and Apollo have seen tremendous mutual benefit from our longstanding strategic relationship, and now with full alignment our value will be significantly stronger than the sum of our parts, said "Apollo and Athene are world-class franchises that have flourished as strategic partners . I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. . In the case of Carlyle and Fortitude Reinsurance Company Ltd., which is a more diversified insurance company with a broader range of products, not just annuities or life insurance, Lee said: "They may think, well, there's other things out there, and we're not interested in building an origination capability, but we think we can manage a broader array of insurance blocks more effectively.". Before the merger announcement, investors considered Athene as a captive insurer providing assets under management for Apollo. Discarding the extreme values in the last row, APO's value appears to be within 6-10% of its FGAUM. With their ability to provide permanent capital, opportunity to deliver a steady stream of fees, as well as a tool to drive growth, insurance businesses have been hot targets for the alternative asset giants over the past few years. Summing up, ATH is primarily a spread business not unlike what life insurers and other retirement specialists are doing but with faster asset growth and excess investment returns. The alignment of interests should be helpful internally as well as it simplifies decision-making. Specifically, APO manages all of Athene's investments and fosters Athene's growth by finding and facilitating acquisitions of retirement liabilities. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Si vous souhaitez personnaliser vos choix, cliquez sur Grer les paramtres de confidentialit. Its doing so by adding fixed annuity insurance assets, i.e. The Blackstone Group Inc., KKR & Co. Inc. and Carlyle Group Inc. are among those who have made acquisitions in the space over the past 12 months. While Apollos focus on developing a permanent capital base with a greater focus on credit origination holds promise, it clearly wasnt being reflected in the stock price. In its design, the business is simple: ATH accepts liabilities like annuities of various kinds and other retirement commitments related to future payments. Apollo Asset Management will continue to be led by Co-Presidents Scott Kleinman and Jim Zelter, while Athene will continue to be led by CEO Jim Belardi. Apollo merges with retirement services company Athene in $11b deal There are several important risks to keep in mind. The all-stock transaction implies a total equity value of roughly $11 billion for Athene. Vous pouvez modifier vos choix tout moment en cliquant sur les liens Paramtres de confidentialit et des cookies ou Tableau de bord sur la confidentialit prsents sur nos sites et dans nos applications. Management continues to expect the transaction to be credit ratings positive for all rated entities within the combined company. equity charge into growing AUM through the purchase of fixed annuity insurance assets to give it a more or less permanent capital base. Sacrificing several points of potential return one can reduce the risks by buying APO instead of cheaper ATH. Q1 2022 results are very impressive. As soon as investors recognize the full alignment of interests between both parties, Athene's rerating should follow. All Rights Reserved. Top Global Insurance & Reinsurance Brokers, CoreLogic integrates with Databricks Marketplace to expand accessibility, AM Best upgrades ratings of Odyssey Group Holdings subsidiaries, Barnett Waddingham advises Chubb Trustees to insure 1bn of liabilities with Standard Life. This field is for validation purposes and should be left unchanged. The company's shares were up nearly 19% in premarket trade, while Apollo was up 4.7%. 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