Apollo is practiced at the art of acquiring assets of failed financial institutions. In fact, the company marks its origin with deals to buy bonds from the failed Executive Life Insurance Company in 1991.
In the midst of the recent banking crisis, Apollo CEO Marc Rowan was quoted by the Financial Times about its interest in FDIC assets from failing banks:
“’The opportunity for us is to continue to be a conduit for investors to take investment-grade type, safe yield opportunities from the banking system to the investment marketplace to maintain diversification of our financial system,’ Marc Rowan, Apollo’s chief executive and co-founder, told the Financial Times.”[1]
Apollo CEO Marc Rowan
Mr. Rowan sounds like a statesman here, but Apollo’s strategy is to profit from the FDIC’s bank seizures and distress in the banking industry.
Silicon Valley Bank
According to The Financial Times, Bloomberg, The New York Times and The Wall Street Journal, Apollo was interested in acquiring portions of the former Silicon Valley Bank’s assets.
In March, we urged the FDIC in a letter to the agency “not to sell assets of the former Silicon Valley Bank to Apollo, as long as Apollo affiliates remain creditors to the failed bank’s parent company, SVB Financial Group. Our research shows that as of December 31, 2022, Athene’s insurance companies, which are wholly-owned by Apollo, owned $145 million of debt obligations of SVB Financial Group.”
“Simply put, we believe it would be bad policy to sell Silicon Valley Bank assets at a potential discount to Apollo entities now, when FDIC may have to recover funds later from the parent company in competition with Apollo entities in its Chapter 11 case.”
UFCW letter to Federal Deposit Insurance Corporation, March 29, 2023
PacWest Bancorp
Pacific Western Bank was another opportunity for Apollo to invest in bank distress.
On March 22, 2023, Pacific Western Bank announced an infusion of liquidity from ATLAS SP Partners, which is majority owned by Apollo.[2] According to a Pacific Western Bank press release:
“‘The Bank has seen validation from the private sector as well, having secured $1.4 billion in fully funded cash proceeds from ATLAS SP Partners through a new senior asset-backed financing facility, which unlocked liquidity from unencumbered, high-quality assets in an expeditious manner.’”[3]
Pacific Western Bank press release, 3/22/2023
Asset-backed financing is another method for Apollo to be in line to acquire assets from a stressed bank.
[1] Financial Times, Buyout titans weigh purchases from Silicon Valley Bank loan book, 3/14/2023 https://www.ft.com/content/43f8e0ca-f0fb-4ecb-b568-a242398643bc
[2] https://www.apollo.com/media/press-releases/2023/02-08-2023-232310341
[3] https://www.globenewswire.com/news-release/2023/03/22/2632229/13824/en/Pacific-Western-Bank-Provides-Further-Update-and-Details-on-Financial-Strength.html 3/22/2023