Apollo to close Fund X in ‘low-$20bn range’

Apollo Global Management expects to wrap up fundraising for its 10th flagship vehicle over the summer, the firm revealed on its first-quarter 2023 results on Tuesday. It expects to raise less than the $25 billion it set out to gather initially.

Apollo had secured approximately $16 billion as of end-March for Fund X, co-president Scott Kleinman said on the call accompanying the earnings results.

“We experienced solid demand from repeat investors off the back of very strong Fund IX performance, which appreciated 23 percent in 2022 and 8 percent in the first quarter. We have… investors in the final stages of documentation, and currently expect total commitments to be in the low-$20 billion range, with a final close expected over summer,” Kleinman said.

Kleinman noted on Apollo’s third-quarter earnings call last year that the firm was keeping fundraising for the vehicle open until the first half of 2023, citing the fact that investors were facing allocation constraints due to the impact of the denominator effect and a crowded fundraising market. The firm had gathered $14.5 billion for the vehicle as of end-December.

Apollo is among a set of managers including Carlyle Group, Blackstone and TPG that are on the fundraising trail and appear to be collecting less capital for their latest flagship offerings than they did for their predecessors. Carlyle CFO Curt Buser said on the firm’s Q1 results on Thursday that the firm expects its buyout vehicles to be smaller than its predecessors, having raised $14.4 billion for Carlyle Partners VIII as of end-March against the $22 billion it is reportedly seeking.

Blackstone has gathered $15.5 billion as of end-March for BCP IX against an undisclosed target; the fund’s predecessor raised $26.2 billion against a $25 billion target in 2019. TPG, meanwhile, said it was “too early to tell” whether it will reach its fundraising targets.

Kleinman noted on the call that Apollo’s core PE business is “operating in the right size,” adding that the business is sitting in the $20 billion “sweet spot” which gives the firm firepower to execute on transactions such as public-to-private deals and distressed opportunities.

“Right now, our execution capacity is sized to that level,” he added.

Fund X has committed or invested approximately $6 billion of capital as of the end of the first quarter, Kleinman said. Latest transactions include the $8 billion acquisition of chemical company Univar Solutions and the $5 billion acquisition of aluminium products manufacturer Arconic.

Apollo gathered $57 billion of fresh capital across strategies in the first quarter. Nearly 80 percent or $45 billion of inflows came from its asset management business, including $37 billion related to the February acquisition of Credit Suisse’s securitized products group, as well as through capital raised for Fund X, credit-focused separately managed accounts and wealth products, among others, according to the firm’s earnings statement.

Despite the challenging fundraising environment, Apollo chief executive Marc Rowan said the firm is set to exceed the $130 billion of capital it raised in 2022, with some sizeable closings in the second quarter.

“I would expect a near record of asset management fundraising in Q2. I believe purchase price resonates now more than ever,” Rowan said.

Apollo’s total assets reached $598 billion, up 17 percent year-on-year.

(This has been updated to correct Scott Kleinman’s title: he is co-president, not CFO. -Ed)