Earnings releases at Apollo (NYSE: APO) and KKR (NYSE: KKR) give us a snapshot of where the industry’s titans are deploying capital. After taking a look at Blackstone (NYSE: BX) results last week, here’s an overview of where other top plays stand.
Among the big takeaways from Apollo’s earnings call today? Fundraising was robust, clocking in at $13 billion to match the firm’s 4Q haul. That brings the company’s total dry powder to $50 billion.
Yet deployed capital remained below analyst expectations, with $2.7 billion invested versus $2.5 billion in 4Q and $5 billion in the same quarter last year. Recent deals include a club deal with Vici Properties Inc. to acquire Las Vegas Sands Corp. for $6.25 billion, a $5 billion take private of Michaels Companies, and a $5 billion acquisition of Yahoo from Verizon Communications Inc. (NYSE: VZ) announced earlier this month.
That ranks Apollo squarely amongst rivals like Blackstone yet to deploy large sums in deals. As the landscape of pandemic-created opportunistic valuations changes, could the uptick in PE deals at the end of last year remain a thing of the past?
KKR, its smaller rival with $367 million in 1Q AUM, points the way. The firm had an outstanding fundraising quarter. KKR brought in more than twice its 1Q20 figure at $15 billion of capital. Despite the impressive haul, investment came in at $7 billion, still shy of the $9.8bn 4Q deployed capital.
What’s next for the large private equity players?
Looking forward, the Las Vegas Sands deal may indicate Apollo will continue to pursue post-Covid recovery travel plays. Remember, Blackstone argued that consumer savings and stimulus would lift travel industries as well in its recent earnings call describing strategic themes for the year ahead.
Dealbook is reporting the Yahoo deal could provide Apollo with a platform to claim greater sports betting market share and create subscription services.
KKR noted in its annual letter that its focus on opportunistic deals would position the company to reap large rewards. That thesis appears vindicated by fee related earnings that top expectations at $364 million.
With large fundraises and discriminating investment criteria, PE are well poised to chase a few chosen opportunities.