Apollo Global Management Inc. raised about $5.4 billion for a vehicle that enables investors to cash out of private funds early, spurred by a sluggish dealmaking climate.
The fundraising for Apollo’s S3 Equity and Hybrid Solutions fund surpassed its target, according to a statement Thursday. It’s the firm’s debut secondaries fund.
The new vehicle brings the total raised across the firm’s Sponsor and Secondary Solutions platform — dubbed S3 — to almost $10 billion since it launched in 2022, Apollo said.
The strategy, run by Apollo’s S3 Private Markets group, involves buying stakes in private markets portfolios from investors such as pensions that are looking to cash out early. The deals are typically at discounts to the fund’s reported asset value.
Secondaries strategies can also involve buying stakes in funds that invest in general partners, or offering net-asset-value loans. In addition, the funds can back so-called continuation vehicles that allow managers to roll over assets from old funds to new ones.
Fund investors, known as limited partners, have been waiting for the longest stretch in 12 years to get cash back from their private equity investments, according to Pitchbook data. As a result, buyout firms are increasingly turning to creative alternatives to help LPs cash out, such as borrowing against their portfolio companies or using continuation funds.
Heightened volatility sparked by President Donald Trump’s trade war is likely to further dampen dealmaking, as private equity firms hold out for more stable markets before attempting to exit investments. That could spur demand from investors for liquidity, providing an opportunity for secondary buyers.
“We often see better quality assets hit the market during these times,” said Konnin Tam, who leads S3 Private Markets along with Veena Isaac and Steve Lessar.
The secondary market will hit record levels this year with deal volume in the range of $162 billion to $182 billion as private markets continue to expand and LPs look for liquidity, according to Evercore Inc. That’s expected to lure increased capital to the strategies, with about $216 billion of dry powder ready to deploy, Evercore’s data show.
“We’re seeing LPs who have never used the secondary market look at it and other options for the first time, which is contributing to its growth,” Tam said in an interview.
Written by: Laura Benitez — With assistance from Jeremy Hill @Bloomberg
The post “Apollo Raises $5.4 Billion Fund for Secondhand PE Deals” first appeared on Bloomberg