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The giant Apollo bets 1 billion in Italy with corporate reorganizations, NPLs and real estate

25 March, Milano Finanza

Apollo Global Management had 249 billion dollars of assets under management in the private equity, credit and real estate sectors at the end of 2017, reporting a growth of 30% compared to 2016. Now the company decided to bet on Italy. Since the beginning of the year, Apollo has announced three partnerships with Italian professionals, focusing on NPL, corporate organizations and real estate operations for a total budget of nearly 1 billion. Once these investments will be completed, another tranche of investments will certainly follow. Andrea Moneta, senior advisor Italy and operating partner financial services for Apollo, stresses that “considering the leverage, Apollo’s investment capacity is nearly double the equity that it has decided to commit in this first phase. There are no set thresholds and the investments in terms of equity might increase further”. Apollo has great expectations for Italy: “We’ve realized that in order to work effectively in these sectors is necessary to have a local network with a deep knowledge of the market and of the players. For this reason, we’ve availed ourselves of high-profile professionals to create partnerships”, adds Moneta.

The latest agreement announced concerns real estate. The partnership has been closed with Realty Partners, guided by the managing partners Umberto Vitiello and Luca de Ambrosis Ortigara together with Vincenzo Buonocore and Fausto Maria Monachesi. Thanks to this agreement, the company will start a completely new phase. Born in 2003, focusing on asset management, investment and real estate, the company was founded by Malfatto, Vitiello and de Ambrosis, all coming from Pirelli Re. The company was owned by minority shareholders such as Aedes and Fondiaria Sai. After a couple of years of activity, Malfatto and Vitiello temporarily returned to Pirelli Re to start its relaunch plan, while de Ambrosis left to work on other projects. Vitiello had then come back to Realty to manage its investment portfolios, some of which were also personally invested with some quotas referred also to de Ambrosis.

In the meanwhile, this latter had started its own investment and real estate management business that saw him in the last two years as a co-investor along with Borletti and Aedes of the development project for the outlet The Market in San Marino. De Ambrosis, during this period, also worked with Apollo as advisor for a portfolio of commercial portfolios for over 300 million owned by the fund ReItaly, managed by Bnp Paribas sgr. The portfolio featured important assets such as Bicocca Village in Milan and 45⁰ Nord entertainment Center in Moncalieri (Turin), along with a series of supermarkets leased to important names of the French mas retail. De Ambrosis tells: “I met Roger Orf, head of Real Estate for Europe and Apollo senior partner, while working on this portfolio and, a couple of months later, Roger offered me to collaborate in something more important. I spoke about it with Vitiello, and we’ve decided to take this opportunity, continuing in this way our long-time partnership”. Realty Partners continues de Ambrosis, “has an exclusive advisory mandate with Apollo in order to identify investment opportunities, for single operations amounting to 20-30 million. The plan is to manage the assets after their acquisition, promoting them through reconversions, reorganizations and replacements on the market. The Realty team will manage and coordinate the whole industrial process from the acquisition to the sale. The assets might come from divestitures, ordinary and extraordinary, acquisitions from real estate companies and from investments in secured NPLs backed by real estate. Our return objective is a double digits Irr”.

Regarding the structure of the operations, de Ambrosis explains that “they will be carried out through dedicated special vehicle companies, capitalized with funds managed by Apollo and by Realty Partners itself”. What is the funding capacity? “Around 500 million”, replies de Ambrosis.

The Realty Partners team, however, will not act separately from the other two teams with which Apollo has recently started similar partnerships. On the contrary, de Ambrosis explains, “we’ve already started working together on quite complex dossiers of significant dimensions. In fact, these operations concern various players, such as companies specialised in NPLs, corporate reorganizations, and relaunch of real estate assets. Together, we’ll be able to create a single offer and, more importantly, to act faster. The equity required for the operations is not a problem.

Regarding the other agreements, a couple of days ago Apollo has announced to have destined 300 million to invest in Italian companies currently struggling financially or defaulting through a new investment platform named Apollo Delos. An Italian team will take care of selecting the investment  opportunities on the Italian market, working on an exclusive advisory contract with Apollo, and it will operate through the newly-constituted Apeiron Management Spa, whose capital it fully owned by the partners, guided by the Ceo Alessandro Fracanzoni, formerly working for Credit Suisse and already Apollo advisor on the Italian deals, including the Danieli Hotel in Venice. That deal was closed in January with an agreement with Danieli Property, the company of the developer Giuseppe Statuto, which paid to Apollo a 94 million instalment of the debt the fund purchased from Mps last summer.

The investments will be carried out through debt or through a mix of debt and equity (unlikely only equity) of Italian companies, with investments between 5 and 50 million, but bigger investments are not to be excluded should the opportunity arise. The main investment targets will be stressed and distressed opportunities, insolvency proceedings and bed loans of Italian companies.

Whereas in January Apollo announced the investment in the new fund Special Opportunities I, managed by Dea Capital Real Estate sgr, which will invest in NPL portfolios mainly secured, for gross amounts comprised between 50 and 100 million. The fund has a final collection target of 250 million, and it has just announced the first closing for 200 million, 90% underwritten by Apollo (through the fund Apollo European Principal Finance Fund III) and the remaining 10% by Dea Capital.

For what concerns private equity, in October 2014 Apollo bought in Italy Carige Assicurazioni and Carige Vita, later re-named Amissima, but it hadn’t closed any other investments after then, “Regarding the private equity sector, Apollo is not considering partnerships with local players as it did with NPL, distressed credit and real estate. A local presence is not required for this type of deals”.

Source: Milano Finanza

Translator: Cristina Ambrosi

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