Apollo Preps Next Global Buyout Fund

Apollo Global Management is planning for its next global buyout fund, LP and banking sources told sister Web site peHub. Apollo is expected to market sometime in the near future for its latest mega fund, the persons said. Sources declined to specify a target for the firm.

This shouldn’t be so surprising, except that Apollo closed its last big buyout fund in late 2008. That pool, Apollo Investment Fund VII LP, raised $14.7 billion.

This means that the New York buyout shop has had three full years to do deals. Apollo, at of the end of March, had invested 60 percent of Fund VII, one LP said. However, a review of Apollo’s fourth quarter earnings reveals that Fund VII is about 72 percent invested as of Dec. 31. “With what Apollo is reserving and what they’ve invested to date, they’ll be ready to go pretty soon,” the source said.

Buyout firms usually begin marketing once funds are about 70 percent invested. One source said Apollo is looking to go out next year but the fundraising could come sooner. It’s also not clear how much Apollo will be looking to collect. “I would be surprised if they’re not trying to raise at least [$15 billion] again,” the LP said.

Fund VII has performed well for Apollo. The pool has a net IRR of 22 percent and a gross IRR of 31 percent as of Dec. 31, the Apollo release said. (The California Public Employees’ Retirement System, by comparison, says Fund VII has a net IRR of 12.5 percent, according to Sept. 30 data.)

Apollo has the flexibility to go between buyouts and distressed investing. With Fund VII, the firm focused on distressed transactions that have done well, the source said.

The quick time to fundraisings isn’t new for the New York buyout shop. Apollo closed Fund VII in 2008. Before that, Apollo collected $12 billion for Fund VI in 2006. (Fund VI, curiously, has a net IRR of 4.3 percent, CalPERS data says.)

Apollo won’t be the only mega shop out fundraising. Bain Capital is considering raising $6 billion to $8 billion for a new global buyout fund but it’s unclear when the firm will go out marketing. The Carlyle Group is also out marketing for its latest global buyout fund. Kohlberg Kravis Roberts & Co. is also out fundraising, and Providence Equity Partners is still working to complete another fund.

An Apollo spokesman declined comment.

(Luisa Beltran is a senior writer for peHub.)