Apollo goes after Wall Street’s core

One scoop to start: The sports investment firm owned by Saudi Arabia’s Public Investment Fund has entered the sale process for EuroLeague, as Europe’s top basketball competition seeks to sell a minority stake at a €1bn valuation.

In today’s newsletter:

• Apollo builds its investment-grade debt business

• Berlin caught off guard in Commerzbank stake auction

• KKR-backed Axel Springer nears a break-up

Apollo pushes into banks’ hunting ground

When the biggest companies in the world need to raise a few billion dollars, they call bulge-bracket banks such as JPMorgan or Citigroup. Jamshid Ehsani wants to make sure Apollo gets on that very short list.

Ehsani is a longtime executive at Apollo who thinks large-cap, investment-grade companies will increasingly need something beyond a credit facility or unsecured bonds.

Apollo in recent years has done unique, multibillion-dollar deals with the likes of Intel, AB InBev and Sony Music, to name a few companies that raised cash with a private capital solution.

DD’s Sujeet Indap and Eric Platt have the details on Apollo’s “high-grade capital solutions” strategy where the firm constructs debt investments out of cash flow waterfalls for respective clients.

They describe an effort that increasingly looks like a sellside investment bank where Apollo executives are eagerly trying to pitch corporate treasurers and chief financial officers.

Of course, the effort is about Apollo’s Athene annuities business which needs creative securities that generate outsized yields.

Apollo so far is the only alternative capital firm with the scale and firepower to pitch megacap companies. But investment grade doesn’t always mean risk free.

Intel’s fortunes have collapsed since the Apollo announcement.

There were some close calls. Apollo intensely pursued a deal with Boeing, the cash-strapped aircraft manufacturer, but the company ultimately declined. Now, that looks like a bullet dodged with Boeing about to lose its investment-grade status.

The difference between being an investment bank and an asset manager is that banks don’t typically hold on to much of what they underwrite. Apollo will instead be eating its cooking much more often.

Berlin gets blindsided by UniCredit transaction

While UniCredit has long circled Commerzbank as a potential target, the possibility of a full-blown takeover seemed distant.

Last week that changed when a slice of the German government’s stake in the bank went up for sale. The Italian lender — led by experienced dealmaker Andrea Orcel — pounced.

When JPMorgan Chase helped to advise on the 4.5 per cent stake sale, its bankers invited the Milan-based bank to participate, giving it the impression that Berlin had welcomed its interest.

But a scoop from the FT shows that top officials in Berlin were blindsided by UniCredit emerging as the successful bidder. Now, UniCredit is the second-biggest shareholder, only behind the German government itself with its remaining 12 per cent stake.

The sale has had some unfortunate knock-on effects for the Berlin establishment, putting officials in an awkward position as they face public opposition to the sale of a strategic asset ahead of next year’s federal elections.

Ahead of the auction, Berlin was in a bind. The government wanted to sell the stake in smaller portions to financial investors, but EU rules barred it from discriminating against strategic bidders.

Orcel, UniCredit’s chief executive, moved quickly. By the time of the auction last Tuesday, he had accumulated a 4.5 per cent stake through derivative transactions that fell below the disclosure threshold.

Now, UniCredit and the German government seem to disagree on what actually went down.

Orcel told Bloomberg TV last week that the government was “well aware” of UniCredit’s existing stake by the auction, adding that “they were at least neutral on us building the stake” to 9 per cent.

But one of the people briefed on government discussions said: “Nobody [in the top echelon of the government] wanted to invite UniCredit.”

Now M&A fans will watch on to see who makes the next move.

Media giant Axel Springer nears a break-up

After a turbulent five years in the media business owning Axel Springer — the parent company of Politico and Business Insider — private equity giant KKR appears to be heading for the exits.

German billionaire Mathias Döpfner — who has been chief executive of Axel Springer since 2002 — and KKR are nearing a deal to split up the media giant.

The break-up would give the private equity firm the company’s lucrative classifieds business, which is valued at more than €10bn (about $11bn). Meanwhile, Döpfner would get more control over the media outlets he’s overseen for more than two decades.

The supervisory board has already discussed the proposed structure of the deal — which values the company at €13.5bn — at several previous meetings. It’s set to hash out the structure yet again at a meeting on Thursday.

In addition to the English-language brands, Axel Springer also owns German tabloid Bild and its broadsheet sister, Die Welt.

While Döpfner is mainly after the media assets, he’s also set to keep a minority stake in the classifieds business, which includes jobs platform StepStone and real estate advertising unit Aviv.

The private equity giant took Axel Springer private in 2019 in a deal that valued the publisher at €6.7bn. Together with the Canada Pension Plan Investment Board, KKR owns a 48.5 per cent stake in the business.

KKR is on the verge of extricating itself from Axel Springer’s news business just as the company has been plagued with controversies.

Perhaps the most unpleasant for KKR because of its proximity to Wall Street was a recent spat between hedge fund boss Bill Ackman and Business Insider after it published claims of plagiarism against his wife.

Döpfner has pushed further into the English-language media market recently, with board seats at Netflix and Warner Music Group. (He’s also become friends with X owner Elon Musk.)

Having Axel Springer’s media brands under his exclusive purview could allow him to expand even more in the English-speaking media scene.

Job moves

• King Street Capital Management has hired Jeff Rosenbaum as a partner, where he’ll focus on infrastructure and energy, among other sectors. He was most recently at NextEra Energy Investments and previously worked at Elliott Investment Management.

• BlackRock is setting up a division to expand in private credit called global direct lending, which will be led by Stephan Caron, who is head of European middle-market private debt, according to an internal memo seen by DD. Jim Keenan, global head of the firm’s private debt business, and Raj Vig, co-head of US private capital, will both leave next year.  

• Pretium has brought on Mark Hudspeth as a senior managing director and head of capital markets. He previously worked for Blackstone.

• Lars Windhorst’s investment firm Tennor has hired David Weiler as chief legal officer and partner. He previously worked at the Royal Group.

• Trafigura has hired Jiri Zrust for the newly created post of global head of operational assets. He will join in early October from CVC Capital Partners, where he was a partner and head of infrastructure.

Smart reads

Selling alts The race is on as investment firms jostle to sell alternative assets — including products from private equity and private debt firms — to wealthy individual investors, the FT writes. Critics warn there could be big risks.

Tech tyranny Tech companies have been able to create a sort of private state above the authority of the public one, Harper’s writes. But antitrust cases could test the limits of their reach.

‘Fallen angel’ Despite operational and financial troubles, Boeing is likely headed towards a $10bn share offering, Lex writes. Will investors bite?

News round-up

Shein faces greater political scrutiny ahead of planned London IPO (FT)

BP puts $2bn US onshore wind business up for sale (FT)

Harland & Wolff appoints administrators to wind up company (FT)

Citigroup strips COO of responsibility after $136mn fine (FT)

Taiwan regulator blocks hostile bank takeover to clear way for rival deal (FT)

India’s top shadow bank lists housing finance arm in blockbuster $782mn IPO (FT)

Boeing imposes hiring freeze and purchasing cuts to conserve cash (FT)

Amazon orders staff back to the office five days a week (FT)