Wall Street Folly

• Geithner Said to Be Seeking TARP Extension Until Next October
• Greece Finance Minister Says No Risk of Default
• Jackson’s (W)Hole
• Morgan Stanley reshuffles to take on Goldman
• Morgan Stanley Ousts Petrick as Trading Chief, Promotes Porat
• Nomura to wind down Lehman fixed bonuses
• Apollo Investment plans to sell 10 million shares
• Barclays Says Lehman Brokerage Sale Gave It No ‘Secret’ Gain
• AIG General Counsel Kelly May Depart After Protesting Pay Limit
• Judge Approves CIT Group’s Restructuring Read the rest of this entry »

Tags: AIG, Apollo, Barclays, CIT, Dubai, GM, Lehman Brothers, Morgan Stanley, Nomura, Politics, Sovereign wealth funds, TARP, Tiger Woods, Tim Geithner, U.S. Treasury

• AIG’s Rescue Bedevils U.S.
• Start Date Is Critical in Ponzi Plan
• Madoff liquidator seeks fees of $22.1m
• Fed Said to Ask Stress-Tested Banks to Submit Plans on TARP
• Billions in Lehman accounts unfrozen
• Black’s Apollo Revives Plan for New York Stock Exchange Listing
• U.K. Bankers Chafe Under the Microscope
• Nomura Fined $2.9 Million for Mis-marking Derivatives
• Murdoch courts trouble if he blocks Google on news Read the rest of this entry »

Tags: AIG, Apollo, Bernie Madoff, Carl Icahn, Fed, GM, Google, Lehman Brothers, Leon Black, Microsoft, Nomura, Politics, ponzi schemes, Rupert Murdoch, TARP

• Wall Street Reacts With Skepticism, Anger on Moves to Cut Pay
• Pay Master Navigated Some Conflicting Demands
• Fed Hits Banks With Sweeping Pay Limits
• Citigroup Taxpayer Ownership Doesn’t Prevent Lobbying
• CIT and Goldman Strike a Deal on Debt
• Apollo Pulls Off a Turnaround With Funds
• After a Decade-Plus Together, Calpers Reviews Apollo Ties Read the rest of this entry »

Tags: Amazon, Apollo, Apple, Autos, Bonuses, Calpers, CIT, Citigroup, Compensation, Fed, GM, Goldman Sachs, Lobbyists, Nokia, Revolving Door

• Goldman Sachs Cuts 2009 S&P 500 Forecast, Sees ‘Near Term’ Drop
• Swaps Need Regulation After Bank Losses, Gensler Says
• Wall Street Banks Vacate Towers Pushing Empty Space to Record
• Apollo May Invest $150 Million in Realogy After Loss

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Tags: Apollo, CDS, Distressed, Politics, Real Estate

With the buyout market effectively shut down, private equity firms necessarily must look elsewhere for returns.  Apollo's focus will be on its roots: debt investing.  They've apparently had little problem attracting money in this market, having finished raising nearly $15 billion in December; the fund is already around 20-25% invested, mostly in credit.  Apollo CEO spoke at the SuperReturn converence in Berlin.  According to Reuters:

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Tags: Apollo, Distressed, Leon Black, Private equity

Texas justice coming after huge Huntsman victory?:  Delaware Chancery Court Judge Stephen Lamb ruled that Apollo’s Hexion
Specialty Chemicals has to complete its merger with Huntsman Corp even though
Black & Co argued that the combined company would be insolvent and that a
decline in Huntsman’s business voided the deal.

Worse for Black, after the Delaware court ruling he could be personally on
the hook for $2 billion in damages in a separate Texas lawsuit where Huntsman is
suing him for fraud if this case isn’t somehow settled. According to the NY Post:

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Tags: Apollo, Leon Black, M&A, Private equity

The chase for distressed debt is getting more and more crowded as Apollo is
the latest to raise money.  It’s looking for over $2 billion for new
fund that will buy troubled loans from European banks. 

Other players involved in the distressed debt market include Blackstone, which raised a separate $1.3bn (£697m) fund to invest in the area, and Carlyle, which raised $1.35bn.
 
  According to recent figures from Private Equity Intelligence, distressed debt funds raised 38pc more capital in the first six months of the year globally, bringing in a total of $33bn.

Apollo seeks £1.1bn for distressed debt
- Daily Telegraph

Tags: Apollo, Blackstone, Carlyle, Distressed, Hedge funds, Private equity

Just as we thought they would do: Linens ‘N Things abandoned any thoughts of a prepackaged bankruptcy and filed voluntary chapter 11 today.   They’ll be closing 120 stores. GE Capital, its secured lender before the filing, is supplying the $700 million of debtor in possession financing.

We hear that Apollo and the bondholder steering committee, of which Apollo is a member –the company was scarfing up tons of bonds before the company filed to protect its equity position in the event of debt for equita y deal — were at odds.  The committee naturally wanted Apollo to pony up more cash to inject into the company and they weren’t so thrilled with that idea.

Complicating the bankruptcy, now that Apollo owns a significant bond position, they’re now setting up to clash heads with Linens’ other equity sponsors: Silver Point Capital and NRDC Real estate advisors…

Linens files for Chapter 11, to close 120 stores – Reuters

Tags: Apollo, Bankruptcy

Could this be heading for liquidation?: According to the NY Post, sales have taken a dive at the Leon Black / Apollo LBO, and their cash position is getting worse.  Large vendors are being paid up front to keep shipments going.  That prepack that they were trying to do (of which we were skeptical) is sounding like a no-go….

The Clifton, NJ, home-furnishings chain’s
comparable sales – or sales at stores open at least a year, a closely watched
measure of retail performance – are down 5 percent since the start of the year,
according to internal company documents reviewed by The Post.

That’s sharply lower than the 1 percent
drop Linens ‘n Things reported during last year’s fourth quarter, and includes a
steeper-than-expected first-quarter comparable-sales decline that’s closer to 6
percent, documents show. While trends improved slightly in April, sources
chalked it up to a calendar quirk that affected the timing of Easter.

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Tags: Apollo, Bankruptcy, LBO / MBO, Leon Black

Chapter 11 Watch:  Apollo’s ill-conceived Linens ‘N Things LBO  is entering a new stage today: It’s not paying the coupon that’s due on its $650 million Floating Rate Notes.  Ya, they have a 30 day grace period and say they’re working on a consensual prepackaged Chapter 11 plan, but you know what happens to retailers at the mere whiff of credit problems: they death spiral into bankruptcy.  How come Leon Black & Co didn’t start their discussions months ago on a prepack?  Maybe then they would have had a prayer of getting one done.  Barring a miracle, we don’t see that happening.  We await the bankruptcy filing with eager anticipation. Here’s the press release.

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Tags: Apollo, Bankruptcy, Distressed, Leon Black

There’s been speculation for months and months — now Leon Black’s Apollo Management is going the IPO route issuing 29.8 million class A shares.  Black, and his co-founders, Josh Harris and Mark Rowan, Drexel alums who founded the firm after Drexel imploded,  naturally stand to bank large. (But probably not as large as Steve Schwarzman et al banked when Blackstone took their firm public at nearly the top of the market.  The shares currently trade privately at around $14 / share on Goldman’s private over the counter exchange (GSTrue).  Apollo sold shares in a private transaction to Goldman, JP Morgan and Credit Suisse in a private offering in August at $24/share, so they’re under water.  Oops.  It’s not clear exactly whose shares will be sold into the offering since the table of "Selling Shareholders" isn’t yet filled in.

In its 406-page securities filing, Apollo
shrugged off worries about an economic downturn and its inability to do
traditional limited buyouts, instead embracing the period as a time of
opportunity. "Investors should understand that we may significantly
increase the pace of investment when the ‘prevailing wisdom’ is to sell and may
decrease the pace of investment or sell large portions of our funds’ portfolios
when the ‘prevailing wisdom’ is to buy," the filing states.

The partners at Apollo make a base cash salary of $100,000 a year, but have a
windfall as part of the reorganization of the firm in July in preparation for
capital-raising. Although individual compensation is not yet broken out,
Apollo’s partners will get stock and restricted stock units valued at a total of
$986 million. The firm’s restricted-stock units have long vesting periods of six
years, which is about twice the normal length of such units on Wall Street.

IPO for Apollo Management - Wall Street Journal

Here are some excerpts from the S-1 filing, including shareholdings of the principals:

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Tags: Apollo, Blackstone, IPO, Leon Black, Private equity

Could the debt market really be stabilizing?  Shortly after the market closed, the Financial Times reported that Citigroup was close to a deal to sell $12 billion in loans to Apollo, TPG and Blackstone….

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Tags: Apollo, Blackstone, Citigroup, Credit Crunch

We’ve brought you the OfficeMax dancing elves of Wall Street, of Hedge Funds and now we present to you the dancing elves of Private Equity.  Watch Blackstone’s Steve Schwarzman, KKR’s Henry Kravis, Apollo’s Leon Black and J.C.Flowers & Co’s Christopher Flowers….

Prior Post: The Dancing Hedge Fund Elves

Tags: Apollo, Blackstone, Henry Kravis, Humor, KKR, Leon Black, Private equity

Back in July Apollo was said to be in discussions to sell a minority stake to the Abu Dhabi Investment Authority. It’s a done deal now according to Apollo head Leon Black:

"We recently sold 9 percent of our
  firm to the Abu Dhabi Investment Authority (ADIA)," Black said, speaking
  at The Deal’s M&A Outlook 2008 conference in New York.

Apollo chief says sold nine percent of firm to Abu Dhabi - Reuters

Tags: Apollo, Leon Black, Private equity

Sounds like the list of suitors for Northern Rock is getting longer as Apollo
and Blackstone are said to have expressed interest;  However, NR may try to
go it alone with the help of a big Citigroup loan;  if that’s the case, the
board of directors might be keeping their jobs;  NR prices itself out of
many mortgage deals by offering sucky terms; If NR is sold junior bondholders could
take a hit

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Tags: Apollo, Banks, Blackstone, Citigroup, Credit Crunch, Distressed, Northern Rock

Not a total surprise given how suckily Blackstone has traded:  We hear that Leon Black’s Apollo Management went ahead with its planned private share issue, and trading is off to a disappointing start.  The shares, changing hands on Goldman Sachs’ new GS TruE (GS Tradable Unregistered Equity) electronic exchange, were expected to be sold in the $27 – $30 range, but the shares are trading around $25.50.

Tags: Apollo, Goldman Sachs, GS TruE, Leon Black, Private equity

Goldman and JP Morgan both came up with the short end of the stick in the Blackstone IPO and KKR’s upcoming one.  Citigroup and Morgan Stanley landed the roles as co-lead underwriters in those deals.  This time GS and JPM are getting a piece of the action as co-leads in the upcoming Apollo IPO:

JPMorgan and Goldman Sachs have lined up
key roles advising Apollo Management on its expected IPO, the first signs of a
comeback by other Wall Street banks after the early dominance of Morgan Stanley
and Citigroup in the battle to underwrite private equity floats…

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Tags: Apollo, Blackstone, Citigroup, Goldman Sachs, JPM Chase, KKR, Lehman Brothers, Morgan Stanley

Private equity fees paid to Wall Street are on pace to set yet another record.  In the first half of this year, Blackstone Group  led the pack, spending $685.4 million, Apollo Management was #2 at $407.5 million, KKR was #3 at $334.8 million and CVC Capital Partners stood at #4 with a $309.1 million bill.  And with that kind of spending, private equity is looking for ways to keep more of those fees in house.  So they’re starting to imitate Goldman Sachs and its ability to play both sides.  That’s not good news for the Wall Street banks (or their bonus pools):

The windfall is occurring in a year when
private-equity firms announced about $670 billion of takeovers, more than double
the total at this time last year, according to Bloomberg data. Blackstone, the
New York-based firm founded by Stephen Schwarzman and Peter G. Peterson that
sold shares to the public last month, spent $685.4 million on financial advice
in the first half, Freeman & Co. said.

“They’re paying these fees because business is very good,” said Matthew
Rhodes-Kropf, a finance professor at Columbia University’s Columbia Business
School in New York. “Paying the fees gets you better deal flow. Everyone wants
to be the first call” when a company goes up for sale, he said.

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Tags: Apollo, Blackstone, Bonuses, Fees, Goldman Sachs, investment banking, KKR

Apollo Talks With Arab Fund Barbarians on the Sofa – Has Henry Kravis gone soft? Goldman, JPMorgan out in the cold for second private equity IPO NEWSMAKER-Blackstone’s president faces major test

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Tags: Apollo, Blackstone, Goldman Sachs, Henry Kravis, JPM Chase, KKR, Leon Black, Private equity

Leon Black, founder of Apollo Management LP, said executives of the New York-based buyout firm were examining whether to sell shares to the public, a step being taken by rival Blackstone Group LP.

“We’re looking at this, as is every other private-equity fund,” Black, 55, said today during a panel discussion at the Milken Institute Global Conference in Beverly Hills, California. Any setback to equity markets, trading at record highs, would likely come from a “geopolitical” crisis, he said.

Apollo is also considering the private sale of shares, which would raise capital while avoiding the scrutiny that comes with an initial public offering, two people familiar with the talks said April 5. A private placement wouldn’t preclude an IPO, and would allow Apollo to gauge the success of Blackstone’s offering before going ahead with its own, they said.

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Tags: Apollo, IPO, Leon Black

• Apollo Explores Sale of 10% Stake In a Private Deal
• Apollo puts out feelers for float
• Equity Firm Is Seen Ready to Sell a Stake to Investors

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Tags: Apollo, IPO, Leon Black

but it’s taking its time according to the Financial Times…:

Apollo Management, the US private equity group run by Leon Black, is looking closely at an initial public offering – but appears unlikely to move rapidly towards a filing with US regulators.

According to people familiar with the matter, Apollo has gone as far as working with Goldman Sachs and JPMorgan to potentially arrange a syndicate of banks to underwrite the deal.

However, insiders at the private equity firm, one of the most closely guarded in US finance, indicated that while Apollo was not ruling out a stock market listing, it had decided against one for the time being.

Apollo works with banks to examine IPO – Financial Times

Tags: Apollo, IPO, Leon Black

Buy-out group nobility, including Steven Schwarzman of Blackstone, Henry Kravis of Kohlberg Kravis,  David Rubenstein of Carlyle, David Bonderman of Texas Pacific and Leon Black of Apollo Management are in Frankfurt for the Super Return conference (Feb 20-23) where they’re scheduled speakers…

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Tags: Apollo, Blackstone, Carlyle, Henry Kravis, KKR, Leon Black, Private equity