Sign up for our daily briefing
Make your busy days simpler with Axios AM/PM. Catch up on what's new and why it matters in just 5 minutes.
Catch up on coronavirus stories and special reports, curated by Mike Allen everyday
Catch up on coronavirus stories and special reports, curated by Mike Allen everyday
Denver news in your inbox
Catch up on the most important stories affecting your hometown with Axios Denver
Des Moines news in your inbox
Catch up on the most important stories affecting your hometown with Axios Des Moines
Minneapolis-St. Paul news in your inbox
Catch up on the most important stories affecting your hometown with Axios Twin Cities
Tampa Bay news in your inbox
Catch up on the most important stories affecting your hometown with Axios Tampa Bay
Charlotte news in your inbox
Catch up on the most important stories affecting your hometown with Axios Charlotte
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.