Apollo World Administration’s shares rise with CEO Black’s resignation

Β© Reuters. FILE PHOTO: Leon Black has stepped down as CEO of Apollo Global Management, LLC and speaks at the Milken Institute’s 21st Global Conference in Beverly Hills

(Corrected this Jan. 26 story to remove the erroneous notice that Brown is not a member of the CalPERS investment committee.)

By Chibuike Oguh and Jessica DiNapoli

NEW YORK (Reuters) – Apollo Global Management (NYSE πŸ™‚ Inc shares rose more than 7% on Tuesday after CEO Leon Black stepped down in what was viewed by investors as support for the private equity firm’s fundraiser .

Black said Monday that he would step down after an investigation into his ties to the late financier and convicted sex offender Jeffrey Epstein.

The independent review by the law firm Dechert LLP found that Black was not involved in Epstein’s criminal activities. But it concluded that Black paid Epstein $ 158 million for advice on tax and estate planning and related services between 2012 and 2017, a decision Black regretted.

Apollo executives said in October that some investors suspended commitments to the buyout company’s funds while awaiting the results of the review. Apollo said Monday that despite the controversy, assets under management rose by $ 22 billion to $ 455 billion in the fourth quarter of 2020.

Analysts said Tuesday that the completion of the review and the acquisition of Black as CEO by Apollo co-founder Marc Rowan could cause some investors to take commitments to Apollo’s funds that they had previously suspended.

“The news clears up a lot of uncertainty,” Citi analysts wrote in a note. “Overall, we see the update as positive for investors, but may not be complete enough to fully intervene.”

Morgan Stanley (NYSE πŸ™‚ Analysts wrote that Rowan’s work in building Apollo’s insurance business was “the main growth engine for the company.” The analysts added that changes in the governance structure, including the removal of special voting rights for founders, would have a positive impact on the share price.

Margaret Brown, a director of the California Public Employees Retirement System (CalPERS), said she continued to want the $ 400 billion retirement plan, the largest in the United States, to consider suspending future investments in Apollo.

“I will raise the issue in a closed session with the board and hope to have a discussion in an open session,” said Brown.

A majority of the CalPERS board would have to approve such a decision.

“We expect and require the companies and executives with whom we do business to act ethically and prudently at all times,” CalPERS said in a prepared statement.

CalPERS declined to comment on whether or not they will approve a new investment in Apollo’s fund.

Despite Tuesday’s surge, Apollo stocks are down 10% over the past 12 months. By comparison, shares in Peers Blackstone Group (NYSE πŸ™‚ Inc and KKR & Co (NYSE πŸ™‚ Inc are up 5% and 29%, respectively.

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