Athene Holding Ltd., the insurer controlled by Apollo Global Management LLC, is gearing up for more acquisitions by raising $500 million from investors.
Athene will probably fund deals by raising equity “in the near-term,” according to a document on the website of an Apollo affiliate. The insurer said yesterday it would raise the funds through a private placement by seeking at least $5 million from each investor.
Athene Chief Executive Officer Jim Belardi has built the company by acquiring sellers of annuities, completing the purchase of Aviva Plc’s U.S. life and annuity business in October. The firm is betting it can do a better job of generating profits from investing assets that back obligations to customers.
“We would expect that as more blocks of business come up for sale that they would be looking,” Tana Higman, an analyst at Fitch Ratings, said in an interview today. The private placement helps “keep their powder dry if any other transactions come up this year.”
Apollo, led by billionaire Leon Black, and Guggenheim Partners LLC are among investors increasing bets on retirement products. Insurers including Hartford Financial Services Group Inc. and Canada’s Sun Life Financial Inc. have been retreating from annuities after being burned by stock market fluctuations and low interest rates.
There is “growing interest of private-equity firms in the life insurance and annuity business,” according to a report on the industry’s 2014 outlook by Deloitte LLP. “Such capital market players see an opportunity to leverage their asset management skills and improve their returns by tapping into a large pool of capital while diversifying their portfolios.”
Athene has about $60 billion in assets after paying about $1.6 billion for the Aviva unit, according to its website. The Bermuda-based firm has purchased other insurers including Liberty Life Insurance Co. from Royal Bank of Canada, and Presidential Life Corp.
“When it’s appropriate for meeting our returns, we will continue to acquire companies,” Belardi said on a conference call in November.
The private placement will be for equity in Athene, said a spokesman for the company.