Apollo to pull back on separate accounts

The firm has formed a $600m customised account with a large pension system, and could launch its next flagship buyout fund later this year, according to firm president Marc Spilker.

Apollo Global Management, which has been working hard over the past few years to build strategic relationships with institutional investors, will slow down its pace going forward to focus more on tending to the customised relationships it has already formed.

“We continue to see opportunities to enter into partnerships at the strategic level,” the firm’s president Marc Spilker said during the first quarter earnings call Tuesday. “Having raised a lot of money, we’re focused on investing it. The expectation is we’ll slow and make sure we consolidate the money and manage it well.”

Apollo has been focused on building strategic relationships with institutional investors for several years, and most recently formed a $600 million credit investment-related strategic account with a city pension system, Spilker said. Dow Jones reported late Tuesday the New York City pension system had formed a $600 million separate account with Apollo, though that could not be independently verified.

Having raised a lot of money, we're focused on investing it.

Marc Spilker

Last year, the firm formed a $3 billion customised account with the Teachers’ Retirement System of Texas for investments across asset classes. The firm announced the account alongside Kohlberg Kravis Roberts, which formed a similar, $3 billion account.

Along with building separate accounts, the firm has been on a fundraising spree recently, amassing $800 million for its debut natural resources fund, $1.5 billion for its second European non-performing loan fund and closing its first-ever US real estate fund on $713 million.

The firm, which gave a fundraising update during its first quarter earnings call Tuesday, is preparing to launch its eighth flagship buyout fund probably later this year, Spilker said during the call.

Apollo’s economic net income from private equity rose by $28.8 million to $311.2 million as of the first quarter of 2012, a 10 percent increase compared to the first quarter of 2011. Business revenues for private equity were $92.9 million in the first quarter compared to $80.6 million during the same time period last year. The increase in revenues was driven by higher advisory and transaction fees.

During the first quarter, the firm had $122.1 million of realised carried interest income, $89.5 million of which was generated by Fund VI, the firm said in its earnings statement.