Apollo acquires annuity firm Athene Holding for $11bn

The deal is expected to close in January 2022, companies said

Athene Holding signage is displayed outside of the New York Stock Exchange. Athene was formed in 2009, and has emerged to be one of the top fixed-annuity providers in the US. Bloomberg

Apollo Global Management agreed to acquire Athene Holding in an all-stock deal that values the annuity firm at about $11 billion.

The deal is expected to close in January 2022, the companies said Monday in a statement. Apollo was already the annuity seller’s biggest shareholder, with the firm and related entities owning a 35 per cent stake.

It’s a move that combines two businesses providing products and services in high demand – investment returns and retirement income, the firms said in the statement. The deal is “substantially accretive”, more than doubling Apollo’s reported earnings last year, they said.

Apollo shares climbed 4.9 per cent to $52 at 7.54am in early New York trading.

The private equity firm established Athene in 2009 and has built it into one of the top fixed-annuity providers in the US.

In 2016, the insurance firm raised just over $1bn in an initial public offering. Athene has become an essential fixture in Apollo’s financial apparatus, and private equity rivals have since sought to build up their own insurance businesses.

“This merger is all about alignment between Apollo and Athene, amongst Apollo’s stockholders and with our limited partners,” Marc Rowan, an Apollo co-founder and its incoming chief executive, said in the statement. “For Apollo and Athene, we will have total alignment to optimise our strategy and allocate capital efficiently.”

Monday’s surprise announcement came weeks after Apollo unveiled a major overhaul, with co-founder Leon Black relinquishing his chief executive post no later than July amid fallout over his business ties to Jeffrey Epstein.

As part of the changes, the firm also said it would have more independent directors and convert to a new stock structure with just one class of voting rights.

Athene was perhaps Mr Rowan’s greatest triumph for Apollo. Taking a page from Warren Buffett’s play book, he devised the insurance company to throw off vast sums that Apollo could then use for investments. Athene is one reason that Apollo today is the envy of the private equity business.

Under the terms of the deal, each Athene common share will be exchanged for 1.149 shares of Apollo common stock, with Apollo shareholders owning about 76 per cent of the combined company once the transaction is completed.

In 2019, the two deepened their ties with further investments in each other. The insurer allows the private equity firm to collect money from annuity holders – what’s known as “permanent capital” – and invest the assets in the credit funds, distressed debt and buyouts for which Apollo is better known.

Athene chief executive Jim Belardi has said that his business, after generating record growth last year, was focusing on large, complex transactions.

“We have a track record of those kinds of deals, and we like our chances,” Mr Belardi said last month. “We want people knocking on our doors.”

The combined company will be led by Mr Rowan, while Athene will continue to be led by Mr Belardi and his current management team. Four Athene directors will join the combined company’s board, including Mr Belardi.

Apollo also said on Monday it plans to convert to a full C-corp, with a one-share, one-vote structure by January, and that the deal will allow the stock to be eligible for inclusion in more market indexes, including the S&P 500.