Apollo to Offer $1 Billion of Stock to Boost Athene Growth

Apollo Global Management Inc. said it would sell as much as $1.15 billion of convertible stock aimed at helping its Athene unit seize on market turbulence.

(Bloomberg) — Apollo Global Management Inc. said it would sell as much as $1.15 billion of convertible stock aimed at helping its Athene unit seize on market turbulence. 

The alternative investment firm said Monday it intends to use the proceeds to “capitalize on attractive opportunities available in the current market environment.” The shares dropped 3.2% to $83.55 at 4:53 p.m. in late New York trading. 

Apollo leaders have vowed to “play offense” as the rapid rise in interest rates has caused deal volumes to plummet and forced some regional banks to sell assets at a loss. 

On Thursday shares of Apollo hit an all-time high after the company reported a record profit, with higher interest rates and strong inflows powering results at its Athene annuities business. Athene contributed almost 80% of adjusted net income in the second quarter, reflecting Apollo’s continuing tilt toward credit and insurance.

“We now have line of sight to more than $60 billion of organic inflows this year, and we are leaving by some estimates between $10 billion and $20 billion of annual originations on the table,” Chief Executive Officer Marc Rowan said on an Aug. 3 earnings call, when speaking about its Athene business.

The mandatory convertible preferred stock will convert into common shares in about three years, unless earlier converted. 

Apollo said in a regulatory filing that, depending on market conditions after pricing the offering, it may conduct a transaction to redeem the outstanding preferred stock held by Apollo Asset Management Inc. The subsidiary held $575 million as of June 30. 

The mandatory convertible preferred stock will be junior to other additional debt in terms of dividend rights, as well as distribution rights in the event of liquidation, winding-up and dissolution, Apollo said.

(Updates with context from earnings call in fifth paragraph.)

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