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The reluctant Apollo boss enters the public arena

Marc Rowan has never betrayed any sign of wanting the top job at Apollo Global Management. But the billionaire’s abrupt decision to return to the company just weeks after an indefinite sabbatical was, in a sense, character.

Investing during an economic boom, he said a few years ago, is “a little boring. You didn’t have to stand out by doing something spectacular. But in times of chaos, Rowan has been in his element, blinding his rivals on Wall Street with imaginative ways to turn the mess to his advantage.

Now Rowan must position Apollo to take advantage of the chaos in the financial markets, while also taming a more menacing type of upheaval within his own business.

His predecessor as chief executive Leon Black will relinquish the title by the end of July after revealing he had paid $ 158 million to the late pedophile Jeffrey Epstein – far more than previously known – although counsel for Apollo’s counsel have cleared him of his involvement in Epstein’s criminal activities.

The results so troubled fellow Apollo co-founder Josh Harris that he urged Black to step down as chairman and CEO at a board meeting in late January, according to people familiar with the conversation.

Black has refused to relinquish the presidency, the people said. And he surprised Apollo insiders by choosing Rowan, 58, as the company’s next leader instead of Harris, whom he had praised for building a better, more modern Apollo. Some within the company say the younger co-founder may have angered Black by appearing to covet the job too openly.

With that decision, Black – and ultimately Harris – trusted an accomplished financial engineer who was perhaps the brightest mind in Apollo, but who was pretty indifferent about the position until no later than July. , he started an indefinite “semi-sabbatical” away from the insurance business he had been building for Apollo for 11 years.

“Looking back, taking a sabbatical in the middle of a pandemic is a very bad idea,” Rowan said in an interview with analysts on Feb. 3.

A master financial engineer, Rowan was quicker than most Wall Street people at understanding the earthquake forces behind the 2008 crisis, and he quickly built innovative financial structures that produced huge profits for Apollo.

‘The original idea of ​​my founding partner’

Athene Holding, an insurance company that Apollo built in 2009 to take advantage of the disruption of the financial crisis, is a monument to this talent. The insurer now accounts for about two-fifths of the $ 455 billion Apollo manages for investors, turning annuity payments from policyholders into senior loans for everything from suburban homes to hospitals and airliners. “It was the idea of ​​my founding partner, Marc Rowan,” said Black.

But the sense of triumph was marred by an acrimonious split between Rowan and his lieutenant Imran Siddiqui, who was instrumental in launching Apollo’s insurance subsidiary with Rowan. Siddiqui left Apollo in 2017 after a horrific split with his mentor which resulted in an arbitrator ordering Siddiqui to return $ 15 million in Apollo-related assets. Separately, some Athene shareholders complained that Apollo had too much influence over the insurer, ultimately winning additional investments and other governance reforms from the private equity firm.

Assets under management column chart (in billions of dollars) showing that Apollo's growth was driven by its debt activities

As part of the leveraged buyout business he inherited from Apollo, Rowan’s biggest deal, the $ 27 billion takeover of Harrah’s Entertainment in 2008, nearly ended in disaster for him and his company.

When parts of Harrah’s casino empire went bankrupt in 2015, hedge fund creditors, including Appaloosa Management and Elliott Management, took a hard line. In a scathing courtroom defeat in 2016 that drove the fight to its worst, Rowan and other Harrah administrators were ordered to hand over bank statements and other personal financial details to establish if they could satisfy the potential multi-billion dollar judgments that could follow if they were found to have fraudulently moved assets out of the stricken entities.

Harrah eventually returned to her health, in part thanks to Rowan’s relentless trading in the years following the financial crisis. By that time, the casino group and its private equity owners had settled the bankruptcy case for nearly $ 6 billion, and Harrah’s, renamed Caesars Entertainment, was largely under a new owner. Black later admitted that Apollo “stumbled” and overpaid for the Las Vegas company.

Marc Rowan’s biggest buyout deal was Harrah’s Entertainment’s $ 27 billion buyout in 2008, which nearly ended in disaster for him and Apollo © George Rose / Getty

‘And then they go to lunch’

Unlike his two best partners, Rowan has been reluctant to enter the public arena. While Black’s flamboyant art purchases and patronage of cultural institutions made him a recognizable figure at auction houses and galas, and Harris seemed to appreciate his status as owner of the Philadelphia 76ers and other teams. sports, Rowan’s personal investments have attracted little attention. They include a profitable investment in the Beats headphone brand, real estate assets in Manhattan’s Tribeca neighborhood, and restaurants on Long Island in New York State.

Yet Rowan donated $ 50 million to the Wharton School, where he studied in the 1980s, and has advocated a form of diversity that he recognizes in pots with “liberal” ideals. Recounting his experience as a university curator, he told a panel at the Aspen Ideas Festival: “I’m still the one [saying], “What about political diversity?” And then they move on to lunch.

Disappointed by such indifference, Rowan teamed up with the Aspen Institute and the Anti-Defamation League to endow a fraternity of bringing together “problem solvers” of all political stripes. He told the Aspen panel: “Let’s discuss abortion from both sides. Let’s discuss gun rights on both sides. “

Sometimes he gave financial weight to certain points of view. Last September, he donated $ 248,000 to the Trump Victory Fund, according to federal election documents. He has long been active in philanthropy in Israel, part of a broader interest in Middle Eastern politics. Over ten years ago, he paid a personal visit to Syrian President Bashar al-Assad, urging him to make peace with Israel. In 2013, he gave $ 250,000 to the Foundation for the Defense of Democracies think tank, according to statements from his foundation. The donation aligned him with a group known for its hawkish views, which recently said “the ayatollahs are smiling” at the prospect of US President Joe Biden of reviving a nuclear weapons deal with Iran.

Rowan once recalled that when he arrived in 1985 at Drexel Burnham Lambert, the investment bank where he had met Black, he said to himself, “My God, I’m too late. All the money has already been earned.

He struck a different chord last week, predicting that “we’re going to see more change in our industry over the next 5 years than we have in the past 10. [presenting] interesting opportunities for us to invest [and] perhaps unexpectedly increasing our deductible. “

Now, embracing a leadership position he has never sought, Rowan must exploit the conflicting egos of his co-founders and once again find opportunities out of order.

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