Apollo will take a minority stake in Mubadala Capital, and together with other new strategic shareholders is expected to commit $5 billion to its strategies at the initial close. The stake was reported at nearly 10%.
Gulf sovereign wealth has usually been the buyer in its dealings with Wall Street's alternative asset managers. On Monday, an American manager bought into a Gulf one.
Apollo Global Management said it will take a minority equity stake in Mubadala Capital, the alternative investments arm of Abu Dhabi's Mubadala Investment Company. Apollo will also commit capital across Mubadala Capital's strategies. Other strategic investors will join as minority shareholders, and together with Apollo are expected to commit an aggregate $5 billion to those strategies at the initial close.
Mubadala Capital's core alternatives business manages more than $60 billion across five strategies. Mubadala Investment Company remains the majority owner.
The size of Apollo's stake was not disclosed. CNBC reported it at nearly 10%, citing people familiar with the matter, and Apollo declined to comment on that figure. The price, the valuation and the identity of the other investors were not disclosed.
Two deals in one
The transaction combines two kinds of capital. One is ownership: a stake in the management company itself, which earns the fees on its funds. The other is commitments: $5 billion going into the funds those managers run.
Pairing them gives Mubadala Capital a set of shareholders who are also clients, and gives Apollo a share of the economics of a Gulf-based manager.
Apollo shares rose 2.1% in early afternoon trading.
Part of a pattern
The deal was one of three on Monday in which large pools of capital bought into, or recommitted to, asset managers. Japan's Meiji Yasuda said it plans to raise its commitment to Man Group's strategies and may buy about 5% of the firm. Earlier in the day, Abu Dhabi's Alpha Dhabi committed $1 billion to Alpha Wave Global's next fund, partly by recycling distributions.
Two readings
One reading is that this is a strategic fit. Apollo gains a foothold in a Gulf platform majority-owned by Mubadala, while Mubadala Capital gains a global name on its register and fresh commitments to grow its funds.
The other is that the undisclosed terms make it hard to judge. Without the price, the valuation or the full list of investors, outside shareholders cannot tell how much Apollo paid for that access, or how much of the $5 billion is new money.
What to watch
Any disclosure of the stake size and valuation, the names of the other strategic investors, and commentary in Apollo's third-quarter results on Nov. 3.