Apollo And Athene To Merge Into $29 Billion Financial Conglomerate

Not since Clash of the Titans have Greek deities of this stature collided in such spectacular fashion.

Yesterday Apollo Global Management announced a deal to merge with its affiliate, Athene Holding, morphing the asset manager into a financial conglomerate with a market cap of nearly $30 billion.

Partners In Dime

Founded in 1990, Apollo is one of the largest asset managers in the world with upwards of $450 billion in assets under management.

Like the Greek gods themselves, Apollo and Athene have a history. Apollo helped establish Athene as a player in the fixed-annuity business during the depths of the financial crisis. The logic was clear — in exchange for its assistance Apollo would get the call to manage Athene’s fixed income assets that support the annuities themselves.

The plan worked well, if not too well, and Apollo made a fortune off an extremely fruitful fee agreement for asset allocation services. Some Athene shareholders took objection with the arrangement — multiple lawsuits ensued — and Apollo was accused of “looting” the insurance holding company with “exorbitant” fees.

Yesterday’s transaction will bring both companies fully under the same roof, eliminating the potential for controversy altogether:

• The all-stock transaction values Athene at roughly $11 billion, and Athene shareholders will own 24% of the combined company.
• Apollo expects the transaction will help double its earnings forecast next year.

the takeaway

For Apollo, the deal comes just weeks after founder and CEO Leon Black announced plans to step down in the wake of revelations that he made larger-than-expected payments — totaling $148 million — to disgraced financier Jeffrey Epstein.