Apollo surpasses $2.5bn for European distressed fund

The New York-based asset manager’s third NPL fund purchases non-core assets.

Apollo Global Management has raised $2.58 billion for its European non-performing loan fund, according to US Securities and Exchange Commission filings.

The New York-based investment behemoth set a $3.5 billion target for the European Principal Finance Fund III, which invests in distressed or repossessed real estate assets alongside NPLs from European financial institutions, as Private Debt Investor reported.  Launched last May, the fund targets the UK, Ireland, Spain, Germany and Italy.

The firm declined to comment on the fundraise. 

Apollo seeks fund-level net returns of around 15 percent, according to a memorandum on the fund from the Pennsylvania Employees Retirement System last September. Apollo will make a 2.5 percent commitment to the fund, which has a four-year investment period.

The Lapithus Group, the administrator for the second fund, will manage the EPF III with a hurdle rate of 8 percent.

The Pennsylvania public pension made a $200 million commitment to the fund in October, as PDI previously reported. The State of Wisconsin Investment Board also committed $50 million, according to PDI data.

EPF III will contemplate 30 to 35 investments requiring $100 million to $300 million of equity per transaction, the PSERS documents show. The investment-hold period would range from two to four years. The firm will likely hold its final close in early 2017.

Apollo generated €3.6 billion for its EPF II fund, surpassing its €3.3 billion target, according to PDI data. The fund was said to target 20 to 25 transactions, San Bernardino County Employees’ Retirement Association documents show. SBCERA committed $25 million to the fund.

EPF II has a six-year life following its final close with a four-year investment period. EPF II generated a 9.9 percent net internal rate of return as of 30 June, according to the PSERS documents. PSERS committed $200 million to the fund.

Carried interest for the fund is 20 percent on an investment-by-investment basis and 1.75 percent management fee on gross committed assets during the investment period. After the investment period ends, the fund will employ a 1.75 percent management fee on unrealised investments, according to the SBCERA documents.

Apollo established the first EPF in 2007, and closed on $1.4 billion, under its $2 billion target, according to PDI data.