Apollo smashes $1bn on structured credit fund – exclusive

The US credit specialist has concluded fundraising for its third structured credit fund, closing on a figure ten times the size of its predecessor funds.

Apollo Global Management has raised $1.237 billion for the Apollo Structured Credit Recovery Fund III and held a final close, PDI can reveal.

The firm recently raised $337 million for the strategy, according to two filings with the US Securities and Exchange Commission.

The fund garnered commitments of $237 from 25 investors, completing its first sale on 21 November 2014, according to the first filing. A second shows that the US private investment firm raised another $100 million for the strategy.

The strategy raised $788 million as of 30 June according to Apollo’s second quarter results. A source close to the situation said that the $1.237 billion total is ten times the size of the firm’s previous structured credit funds.

SCRF I and II have $117 million in assets under management between them, according to Apollo’s second quarter results. Both funds had a total value of $885 million, at the end of June. Gross and net internal rates of return were 33 percent and 22 percent, as of that date.

Its third fund had total invested capital of $613 million, as at the end of the second quarter and a total value of $548 million. The report did not detail returns for the latest vehicle.

The University of Michigan committed $30 million to SCRF III in April 2014, according to documents from the endowment. The university, one of the largest in the US Midwest, was a previous investor in the strategy. 

The documents show that SCRF III is a New York-based fund, managed by a team formerly known as Stone Tower Capital and seeking to benefit from opportunities in the structured credit space. Capital from the fund is invested primarily in a diversified portfolio of collateralised loans obligations (CLOs), collateralised debt obligations (CDOs), various tranches of residential mortgage backed securities (RMBS), commercial mortgage backed securities (CMBS) and other asset-backed securities where it is able to find attractive risk-adjusted pricing. Apollo acquired Stone Tower Capital in 2011.

Other limited partners in SCRF III include US pension fund, the Michigan Department of Treasury, which committed $100 million according to PDI Research and Analytics, and sovereign wealth fund Alaska Permanent Fund Corp, as reported.

Apollo had total AUM of $17.2 billion in credit, as of 30 June.

This story was updated on 17 September to reflect that the filings cited do not reflect the overall total.