Friday, January 23, 2009

Apollo Has Raised Money as Its Recent Investments Scrape The Floor

Former Drexelite and PE legend Leon Black has struck gold after panhandling in front of the headquarters of Calpers and The Teacher Retirement System of Texas for 16 months. Bloomberg reports that a name is sure to get you far, $15 billion dollars worth of far, even as your existing investments are worth exactly 0 cents on the dollar. With such pristine investments as Realogy, Linens N Things, Harrahs, Claire's, Momentive and many more, we can only surmise that the investment memorandum had a 90 page biographical section focusing on Leon's prior phenomenal record, and the only mention of his last three year LBO track record was hidden deep in the 2 or 3 risk factors on the back cover. "For all the private equity funds, Apollo has returned 28% through March 31" states Bloomberg. We assume that would be March of last year and does not include the performance of the most recent Apollo LP Fund 6 or whatever it is at latest count.

After buying $15 billion of debt last year at what it then claimed were all time low prices, the firm lost even more as the value of this purchase proceeded to lose another 20-30%. “We were probably a little early,” Black told the audience today. “We’ve been traversing our way through that.”

We are curious if anyone has any clue as to where Apollo is currently marking the equity value on their existing fund investments, and how long it will take regulators to go after so-called "Level 3" assets, which are probably evaluated by call centers in Calcutta.

Additionally, Apollo seems to be raising a $500 million hedge fund to trade copper, gold and mining stocks. We assume that is because the fund is convinced there is no way these investment can trade any lower... Deja vu?
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