Apollo Global Management Inc. has leaned heavily on its limited partners as it expanded its relationship with its soon-to-be wholly owned insurance company, Athene Holding Ltd.
Apollo's limited partners have invested more than $2.5 billion in Athene, from its formation in 2009 to its initial public offering in 2016, Apollo noted in a March 8 LP letter about the companies' pending merger. That investment generated two-to-four times their investment, the letter said.
Apollo's limited partners also have provided the capital for Apollo's acquisition of a minority stake in European insurance company Athora.
And Apollo limited partner and strategic account capital also fueled Apollo's formation of MidCap Financial, which lends to small- and medium-sized businesses.
Apollo formed MidCap, in part, to satisfy Athene's need for yield, said Marc Rowan, New York-based Apollo co-founder and senior managing director in a conference call after its merger with Athene was announced.
Apollo's limited partners and strategic accounts own about 70% of MidCap, which has also provided yield for Apollo's other limited partners.
Athene was also "useful" in Apollo's acquisition of General Electric Co.'s infrastructure business, "which is important to our LPs and strategic accounts," Mr. Rowan said.
Apollo's executives declined to be interviewed because the merger is still pending. The deal is expected to close in January 2022.
Apollo's combination with Athene is expected to create a company with a $29 billion market capitalization, making it eligible for inclusion in the S&P 500 index.
Apollo reported $455.5 billion in assets under management as of Dec. 31. Athene currently makes up 40% of Apollo's AUM and generates 30% of its fee-related earnings. At the same time, Apollo manages 100% of Athene's assets, causing stock analysts to raise concerns with instability and dependence of both companies on each other, Mr. Rowan said.
Apollo already owned about 35% of Athene and the merger will result in Apollo owning the rest of the company, Mr. Rowan said.