Apollo ‘Getting Closer’ To Wrapping Fund VIII

“We are getting closer to where we think we can have our first close,” Spilker told analysts on the firm’s first-quarter conference call on May 6. “Once we do that, we’ll be able to, obviously, give more details.”

Spilker demurred when an analyst asked about the fund nearing the $5 billion mark. “I don’t really want to comment on speculation in the industry,” he said. Launched in 2012, Fund VIII has a target of $12 billion, according to data from Thomson Reuters. Fund VII closed in 2008 with $14.9 billion raised.

During his prepared remarks, Spilker said: “There continues to be a lot of focus around fundraising for Fund VIII, our next flagship private equity fund.” Speaking more generally about the fundraising environment, Spilker said the New York firm — led by managing partners Leon Black, Joshua Harris and Marc Rowan — is drawing interest from limited partners because of its size and brand power.

“We’re seeing a bifurcation between the scaled, branded, better-run players and not,” he said. “And we’re in that category where, because of our historic track record, because of the trust that we’ve created with our LPs, because of the fact that many LPs want to do things more across the platform and consolidating their assets with fewer people, it’s actually become fundamental in fundraising. And it’s a big advantage that we think that we have relative to the entirety of the industry.”

Looking ahead, Apollo expects to deploy an additional $300 million of capital in Europe similar to an account that’s investing in mezzanine loans for core commercial real estate properties in larger U.S. metropolitan markets. The U.S. effort drew $250 million in new capital in the first quarter.

Apollo raised $1.2 billion in new capital during the quarter in its credit and real estate units, including $280 million for Apollo Tactical Income Fund; nearly $150 million by offering 8.8 million shares of its commercial real estate investment trust, Apollo Commercial Real Estate Finance Inc., or ARI, and $250 million for the previously mentioned mezzanine loan effort in the U.S.

As for merger and acquisition deal-making, Spilker said activity has been “lower than I think many of us would have guessed.” He added that deal activity should pick up at some point, but “we are just going to have to wait and see.”

All told, Apollo’s first-quarter profit increased by 72 percent, boosted by the sale of shares in cable operator Charter Communications Inc. and chemical firm LyondellBasell Industries NV.

Total economic net income after taxes, a measure of profitability including the mark-to-market value of its funds, jumped to $792.4 million from $462 million. Shares of Apollo touched an all-time high of $28.14 after the results. Apollo held its initial public offering on March 30, 2011, at a price of $19 per share.