Apollo was a major buyer in UK pension fund fire sale
US-based private capital group Apollo Global was a major buyer of assets sold by UK pension funds during a weeklong liquidity crisis caused by margin calls triggered by surging yields on UK government bonds.
Apollo’s Athene annuities business purchased $1.1bn in highly rated collateralised loan obligation funds sold by UK pension funds that faced an avalanche of collateral calls in the days and weeks after the unveiling of a “mini” Budget by former prime minister Liz Truss and chancellor Kwasi Kwarteng in late September.
The pension funds were highly invested in liability-driven investment strategies that use a variety of derivatives to increase exposure to UK government bonds, known as gilts, without necessarily owning them outright. When bond prices fell, counterparties demanded more cash as collateral to keep the arrangement in place.
Apollo’s comments came after the group reported third-quarter earnings results that exceeded analysts’ estimates.
The New York-based group reported record quarterly fee-related earnings of $365mn, a proxy for the money it receives from base management fees, and adjusted net income of $801mn, slightly beating the consensus estimates of analysts polled by Bloomberg.
Assets under management at the group reached $523bn as the firm raised $34bn in new investor commitments during the quarter, including $13bn from its Athene annuities unit.
Though Apollo’s annuities, debt origination and credit investing businesses are growing quickly, the firm warned that fundraising for traditional corporate buyouts has slowed.
This story originally appeared on: Financial Times - Author:Antoine Gara
