Day at the Apollo—Strategic Moves

By Scott Baltic,Contributing Editor

Marc Rowan, Apollo

Apollo Global Management L.L.C. has agreed to acquire a majority interest in AR Global Investments, L.L.C., a new company that will own a majority of the ongoing asset management business of AR Capital, an asset management firm focused on income solutions for retail investors, Apollo announced Thursday.

Second, Apollo will acquire for $25 million RCS Capital’s wholesale distribution business, which will become part of AR Global, and finally Apollo has entered into a strategic relationship with RCS Capital’s retail advice business, Cetera Financial Group.

The creation of AR Global reportedly more than doubles Apollo’s CRE AUM (to about $27 billion), increases the capital managed by Apollo in permanent capital vehicles (to about $95 billion), expands its investor base, and diversifies its investment offerings, while the other two moves will boost Apollo’s retail distribution capabilities.

AR Capital provides yield-oriented funds to the retail clients of its wealth management partners, primarily in the independent broker-dealer channel, and has broadened its focus in CRE strategies including net lease, healthcare, retail, office and hospitality properties.

“We believe AR Global will be well positioned to benefit from the growing trend among retail investors to seek yield-oriented investment solutions and at the same time drive meaningful growth for Apollo,” Marc Rowan, co-founder & senior managing director of Apollo, said in a prepared statement. “AR Capital participates in a sector that is in a state of transition due to both changing regulations and the evolving needs of investors.”

AR Global’s board of directors will consist of six Apollo representatives (co-founders Josh Harris and Marc Rowan and Anthony Civale, Stephanie Drescher, Martin Kelly and John Suydam) and the four partners of AR Capital: Peter Budko, William Kahane, Nicholas Schorsch and Michael Weil.

In addition to acquiring RCS Capital’s wholesale distribution business, Apollo will purchase $25 million in newly issued preferred stock in RCS. Bill Dwyer, the CEO of RCS’s wholesale business, will continue to lead the company following the acquisition, which is expected to close within 60 days.

Last year, RCS Capital went on a shopping spree that included acquisitions of Validus Strategic Capital Partners, owner of SC Distributors L.L.C., and of Strategic Capital Advisory Services and Cetera Financial Group.