Apollo to Buy More of Athene as Insurer Eliminates Supervoting Structure
November 13, 2019 by Miriam Gottfried and Dave Sebastian
Apollo Global Management Inc. APO 1.11% is buying an additional 18% stake in insurance company Athene Holding Ltd. ATH 1.26% as part of a complex deal that will eliminate the private-equity firm’s supervoting power with the insurer.
Athene will take a 7% stake in Apollo and will convert to a single-class share structure, with one share equaling one vote, from the existing multiclass share structure, the companies said Monday.
Apollo is paying a total of $1.55 billion in cash and stock for the Athene stake and will own 35% of the insurer after the deal. Under the current structure, the private-equity firm owns 17% of the company but has 45% of the vote.
The move is part of an effort by Apollo and Athene to broaden the ownership of the insurer, which both companies believe trades below its true value. Prospective shareholders have said that the misalignment between Apollo’s ownership of shares and its outsize voting power has prevented them from owning its stock. Converting to a single-class share structure will also make Athene eligible to be included in more indexes.
“When we went out to many of the analysts of [Apollo’s] stock and asked why we were being undervalued so much relative to our peers, the number one reason that came up consistently—to the tune of as much as three multiples—was because of this perceived misalignment,” said Apollo Chief Executive Leon Black on a conference call with analysts to discuss the transaction. “One of the major reasons for this transaction, from our point of view, is to correct that misperception.”