Apr 24, 2017

Private equity's push into public stocks

Richard Drew / AP

Apollo Global Management may increase its investors' exposure to public equities, per a Bloomberg review of marketing materials for the firm's next flagship buyout fund (slated to close in May). Specifically, Apollo would allocate up to 10% of the $20 billion+ targeted vehicle to listed stocks on the open market, doubling the 5% allocation on its current fund.

Why? The idea is to form so-called toeholds, or small stakes that may lead to future takeover opportunities.

Argument: Apollo's Josh Harris told the Oregon Investment Council: "The public markets for the first time in our history are affording us many, many diamonds in the rough."

Translation: Harris is basically suggesting that while the public markets have richly rewarded strong performers, it's effectively shunned challenged companies, thus leading to a bifurcated market (overvalued vs. undervalued, rather than properly valued on either side).

Counterargument: Limited partners are being asked to pay big control-oriented fees for non-control positions.

Unique? Nope. For example, KKR can invest up to 15% of its new North American buyout fund in listed stocks. We've also seen it a bunch in retail stocks, from firms like Golden Gate and Sycamore Partners buying stakes.

Caveat: It's possible that the allocation increase won't actually be in the final Apollo fund documents. Such terms are fluid until the close.

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Coronavirus dashboard

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  1. Global: Total confirmed cases as of 7 p.m. ET: 782,319 — Total deaths: 37,582 — Total recoveries: 164,565.
  2. U.S.: Leads the world in confirmed cases. Total confirmed cases as of 5 p.m. ET: 161,807 — Total deaths: 2,953 — Total recoveries: 5,595.
  3. Federal government latest: The White House will extend its social distancing guidelines until April 30.
  4. State updates: Rural-state governors say testing is still inadequate, contradicting Trump — Virginia, Maryland and D.C. issue stay-at-home orders to residents, joining 28 other states.
  5. Business latest: Ford and General Electric aim to make 50,000 ventilators in 100 days.
  6. In photos: Navy hospital ship arrives in Manhattan.
  7. What should I do? Answers about the virus from Axios expertsWhat to know about social distancingQ&A: Minimizing your coronavirus risk.
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First U.S. service member dies from coronavirus

Photo: Yasin Ozturk/Anadolu Agency/Getty Images.

The Pentagon on Monday announced the death of a member of the New Jersey National Guard who tested positive for the coronavirus.

Why it matters: It's the first U.S. service member — active, reserve or Guard — to die from the virus, according to the Pentagon. The guardsman passed away on Saturday after being hospitalized for the novel coronavirus on March 21.

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