Apollo Global Management Inc. is trying to woo wealthy investors to one of its newest private market funds and keep them there with a rare offer — a bonus if they stick around for three years.
At first glance, the S3 Private Markets fund rolled out by Apollo last year has an unusually high all-in cost of 6.6% that investors must pay to participate, according to offering documents. But if they invest early and stay for at least 36 months, they can claim a 3% bonus, according to people familiar with the fund.
As an additional sweetener, S3 Private Markets won’t charge a performance fee — unlike most funds of its type that take gains when returns clear a certain hurdle. That would bring down the overall cost of Apollo’s new fund close or equal to the market average. While some managers have offered these types of fee structures, they’re unusual for “semi-liquid” funds like S3 Private Markets, a genre that offers investors an option for monthly or quarterly withdrawals.
Apollo is using the novel structure to court a wider audience of wealthy clients beyond just the super-rich to capture billions of dollars in fees that are still up for grabs. So far, affluent investors have invested only a tiny percentage of the estimated $150 trillion they hold in private markets, spurring pushes by other firms such as BlackRock Inc. and State Street Corp. to open up alternative assets to everyday investors.
A representative for New York-based Apollo declined to comment.
Conventional fees for semi-liquid funds are typically lucrative. Managers could expect to net a management fee of about 1.5% and take a 12% to 15% cut of gains, provided they reach a 6% to 8% hurdle rate.
S3 Private Markets is led by a trio of former BlackRock dealmakers, partners Steve Lessar, Veena Isaac and Konnin Tam, who left that firm in 2022. They’re investing in secondary deals across private equity and credit and aim to take advantage of the illiquidity premium, according to the fund’s prospectus.
Apollo, which manages $30 billion for global wealth channels — and amassed almost half of that in 2024 alone — told investors it plans to raise an additional $150 billion in the next four years, and said the segment could account for half of its overall third-party fundraising.
Prospective investors have until late June to participate in a so-called early-bird round for Apollo’s S3 fund, said the people, who weren’t authorized to speak publicly.
Written by: Laura Benitez @Bloomberg
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