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Apollo backs buyout of US Aviva assets by Athene Holding

2 Jan 2013

Apollo Global Management has agreed to spend up to $100m backing portfolio company Athene Holding’s purchase of UK insurer Aviva’s US annuity and life insurance operations.

The sale, which was reported to be valued at about $1.8bn by Reuters, is far less than the $2.8bn Aviva paid for the unit in 2006.

The deal is expected to close this year, according to Apollo, which created Athene in 2008 with former SunAmerica Life Insurance president James Belardi and ex-Bear Stearns Insurance Solutions Group head Chip Gillis.

The firm said it established Athene to address the growing need for tax-efficient savings vehicles to support retiring baby boomers, such as retail fixed and equity indexed annuity products.

Apollo senior managing director Marc Rowan said, “Jim Belardi and his team have done an outstanding job of building Athene into a leading retirement services company.

“The acquisition of Aviva USA will add significant scale to Athene’s existing business.

“We look forward to continuing to provide Athene with additional asset management services as the company continues to grow and reinforce its leadership position in fixed annuities.”

Aviva, Britain’s second-largest insurer, is attempting to sell or close more than a quarter of its operations as part of a dramatic overhaul of its structure aimed at winning over investors concerned with its weak share performance.

Apollo emerged as the lead bidder for the US assets in November, ahead of Harbinger Capital Partners and Guggenheim Partners.

The three firms have been buying unwanted units from life insurers since 2009 to gain access to a stable source of funds for investment management operations.

Apollo has also begun fundraising for its latest buyout vehicle, which at $12bn would equal the largest private equity fund currently being raised by Warburg Pincus.

The firm’s previous buyout vehicle – its seventh – raised $14.7bn in 2008.

To date it has posted a 35 per cent gross IRR, while its $10bn 2006 predecessor is running a gross IRR of nine per cent, according to public disclosures.

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