Banks

RBS share drop accelerates on stress test flop

Stressed. Shares in Royal Bank of Scotland have accelerated their losses this morning, falling over 4.5 per cent after the state-backed lender came in bottom of the heap in the Bank of England’s latest stress tests. RBS failed the toughest ever stress tests carried out by the BoE, with results this morning showing the lender’s […]

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Capital Markets, Financial

BGC Partners eyes new platform to trade US Treasuries

BGC Partners plans to launch a new platform to trade US Treasuries early next year, in a bid to return to a market in the middle of evolution, according to people familiar with the plans.  The company, spun out of Howard Lutnick’s Cantor Fitzgerald in 2004, sold eSpeed, the second-largest interdealer platform for trading Treasuries, […]

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Financial

Sales in Rocket Internet’s portfolio companies rise 30%

Revenues at Rocket Internet rose strongly at its portfolio companies in the first nine months of the year as the German tech group said it was making strides on the “path towards profitability”. Sales at its main companies increased 30.6 per cent to €1.58bn while losses narrowed. Rocket said the adjusted margin for earnings before […]

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Currencies

Renminbi strengthens further despite gains by dollar

The renminbi on track for a fourth day of firming against the dollar on Wednesday after China’s central bank once again pushed the currency’s trading band (marginally) stronger. The onshore exchange rate (CNY) for the reniminbi was 0.28 per cent stronger at Rmb6.8855 in afternoon trade, bringing it 0.53 per cent firmer since it last […]

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Currencies

Nomura rounds up markets’ biggest misses in 2016

Forecasting markets a year in advance is never easy, but with “year-ahead investment themes” season well underway, Nomura has provided a handy reminder of quite how difficult it is, with an overview of markets’ biggest hits and misses (OK, mostly misses) from the start of 2016. The biggest miss among analysts, according to Nomura’s Sam […]

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Categorized | Financial

Apollo plans $7.8bn flotation of Athene


Posted on November 28, 2016

Private equity group Apollo Global Management has fired the starting gun on a long-awaited stock market flotation of Athene, hoping investors will value the pensions group at as much as $7.8bn in a listing that could rank among the five largest in the US this year.

Bermuda-based Athene revealed plans on Monday to float at between $38 to $42 per share, which would invigorate a tepid market for new stock issues. Only $22bn has been raised through US initial public offerings this year, the least since 2003, according to the data provider Dealogic.

At the top end of the range, the float would raise $998m for the selling shareholders in Athene. The company itself would not receive proceeds.

Athene manages $87bn worth of total assets and specialises in so-called fixed annuities, tax advantaged retirement policies in the US that offer savers minimum guaranteed returns.

Valuations of life and pension companies have been under pressure as ultra-low interest rates have made it harder for them to generate adequate returns on the investments they make to cover their commitments. Several insurers have quit the annuity business in recent years.

Still, the sector has rallied since the US election this month, as hopes have mounted that Donald Trump’s reflationary policies will end the era of depressed bond returns.

Athene began operating in 2009 to capitalise on dislocation in the annuity market following the financial crisis.

It went on to make a series of acquisitions as other operators faltered, including purchasing the US operations of Aviva during a restructuring of the UK insurer.

By the third quarter of this year, Athene had become the seventh-biggest fixed annuity provider in the US, according to LIMRA Secure Retirement Institute.

The expansion of the business, whose funds are managed by Apollo and whose US subsidiaries have headquarters in Iowa, has attracted regulatory scrutiny.

Ben Lawsky, New York’s former superintendent of financial services, questioned whether what he described as the “short-term” interests of private equity groups ensured “long-term security for policyholders”.

Athene is run by Jim Belardi, who is chief investment officer as well as chairman and chief executive.

The flotation plans would value the business at a premium of as much as 27 per cent premium to book value, stripping out accumulated other comprehensive income — a common way of valuing companies in the sector.

Despite the recent rally, the S&P 500 life and health insurance index still trades at a discount to book value.

In its filing, Athene said it planned to take advantage of the ageing population.

“The number of individuals reaching retirement age is growing rapidly while some traditional retirement funding sources have declined in the wake of the financial crisis and the ensuing prolonged low interest rate environment,” it said.

“Our tax-efficient savings products are well positioned to meet this increasing customer demand.”

The company also said that while consumer appetite for variable annuities had been in decline, demand for the fixed variant of the product had been rising.

Athene added that it had become less profitable for traditional lenders to hold certain illiquid and complex asset classes, and maintained there was an “opportunity for knowledgeable investors to acquire high-quality assets that offer attractive returns”.

Advisers on the float are led by Goldman Sachs, Barclays, Citigroup and Wells Fargo Securities.