Apollo: 'We source investments across all geographies, including Latin America'

David Sambur (pictured left) and Matt Nord (right), partners and co-heads of Private Equity at Apollo Global Management, discuss private equity trends, Latin American investors, ESG and more. 

BNamericas: What major global trends are you seeing in private equity?

Sambur: This year, we anticipate that GPs [general partners] who successfully maintained discipline throughout the growth-chasing environment of the last decade will be well-positioned to go on the offense. While most GPs pull back in volatile markets such as the one we’re currently experiencing, we believe Apollo is well positioned to ‘lean in’ to capture attractive investment opportunities in 2023.

Nord: In the near term, we expect thematic challenges in the current market environment to persist – namely a lack of traditional financing for LBOs [leveraged buyouts] and recessionary concerns driving decision-making. But we believe that even with this backdrop, nimble, patient sponsors – particularly those capable of structuring creative financing solutions – can find exciting opportunities to invest.

BNamericas: Is Apollo currently looking at private equity opportunities in Latin America?

Nord: Apollo’s private equity franchise seeks to generate superior risk-adjusted returns while working creatively with management teams to transform companies, and we source investments across all geographies, including Latin America.

Despite our limited private equity investment activity in Latin America to date, we're evaluating a number of attractive opportunities in the region with the potential to deploy additional capital in Latin America over the coming years.

BNamericas: And are you seeing interest from Latin American investors?

Sambur: We have seen strong uptake from Latin American investors across our private equity strategies, particularly given the potential to earn outsized returns amid the volatility that parts of the region have experienced in recent years.

Additionally, as alternatives continue to democratize and become more available to individual investors, we expect to see strong demand for alternative products developed by our Global Wealth business, given the potential for more attractive returns relative to public markets.

BNamericas: How does Apollo approach ESG and what are some of the initiatives your private equity franchise has put in place?

Nord: Apollo has had a longstanding commitment to sustainability and fundamentally believes that ESG integration can help to unlock financial and societal value. Building on this history, last year Apollo launched its Sustainable Investing Platform which aims to deploy US$50bn in clean energy and climate capital through 2027 across asset classes. 

We have also implemented a number of additional initiatives across our private equity franchise, including the launch of a supplier diversity program, and a target to reduce median carbon intensity by 15% over the projected hold period for certain new investments in the flagship private equity strategy. Apollo private equity has also achieved its 30% board diversity goal across our managed funds’ applicable portfolio companies. We're constantly looking for new initiatives to expand opportunities for our employees at Apollo and across our funds’ portfolio companies.

BNamericas: How has Apollo private equity been able to transact throughout market cycles and with the current lack of debt financing?

Sambur: In 2022, we deployed a significant amount of equity capital across a number of attractive opportunities, including buyouts of Tenneco, Novolex and Atlas Air, as well as a strategic investment in Legendary Entertainment, among others, demonstrating a strong ability to flex across strategies. In March 2023, Apollo-managed private equity funds agreed to acquire Univar Solutions, a leading global specialty chemicals and ingredients distributor, in an US$8.1bn transaction. The deal includes a committed debt financing package of more than US$4bn from a group of nine banks, demonstrating Apollo’s ability to get deals done amid volatile markets.

As financing markets effectively shut towards the latter half of 2022, Apollo’s flexible toolkit and creative financing capabilities, as well as our ability to leverage the full Apollo platform, allowed the firm to continue to transact. Apollo-managed funds’ US$5bn acquisition of Atlas Air is an example of our ability to provide a creative structuring solution given the breadth of our platform, whereby we spoke for 70% of the total transaction value, even when traditional modes of financing were constrained.

BNamericas: What differentiates Apollo from other GPs amid such a crowded fundraising environment? 

Sambur: Apollo’s private equity franchise has a 30+ year track record of strong performance across market cycles by maintaining the firm’s focus on ‘purchase price matters.’ While many firms rode the wave amid 14 years of declining interest rates and rising valuations, Apollo maintained its discipline of investing in defensive sectors, using lower leverage and conservatively marking its portfolio. As a result, portfolio valuations have risen in our most recent fund driven by Ebitda growth and free cash flow generation. 

Nord: And our private equity platform creates value by engaging with portfolio companies from the very beginning of our relationship – offering expertise, support and resources to position companies for growth. 

Apollo Portfolio Performance Solutions (APPS) applies the scale and expertise of Apollo to help build better companies by leveraging capabilities including talent management, digital transformation, advanced data analytics, ESG reporting and more. Our success is predicated on the success of each business within our funds’ portfolio and providing management teams with top resources is an essential element of the Apollo private equity ecosystem.