Investment specialist Apollo Global Management acquired 10% of HMV’s debt from Allied Irish Banks last week which some are predicting could signal intention of a takeover. Retail Week takes a look at the company.
Who is Apollo Global Management?
Apollo is one of the largest private investment groups in the world describing itself as “contrarian, value-oriented investors in private equity, credit and real estate”. The 22-year old investment manager has a focus on distress purchases. Apollo is led by managing partners Leon Black, Joshua Harris and Marc Rowan who lead a team of 624 employees, including 250 investment specialists in bases in New York, Los Angeles, Houston, London, Frankfurt, Luxembourg, Hong Kong, Singapore and Mumbai.
What investments does it have?
The firm has investments across a multitude of industries from property to retail. In retail, Apollo acquired Aurum, the parent company of Goldsmiths, Mappin & Webb and Watches of Switzerland at the beginning of the month advised by DC Advisory. The deal is expected to complete in the first quarter of 2013. Apollo also owns Claire’s Accessories parent company Claire’s Stores.
Why is Apollo getting involved with HMV?
Analysts believe that last week’s acquisition of 10% of the entertainment specialist’s debt from Allied Irish Banks may be a powerplay ahead of a potential acquisition. HMV warned on Thursday it is “probable” it will breach its banking covenants early next year. A breach would put the retailer at the mercy of its lenders, which now includes Apollo. But, if this is the case, Apollo may need to buy more of the retailer’s discounted debt and it is believed that last week’s deal could be the first in a series in coming weeks.
It is understood that, although HMV is valued at just £10m on the stock market, buying its debt could be a cheaper way of acquiring the company. HMV still holds 16.1% of the entertainment market according to Kantar Worldpanel and a chance to invest cheaply in the 91-year-old brand.