Apollo’s Athene in $750m share issue, to support ACRA insurance-linked fund

Athene Holding Ltd., the life and retirement reinsurance firm that is majority owned by Apollo, has priced a $750 million issuance of preferred shares, the proceeds of which are set to partially fund deal commitments to its new Athene Co-Invest Reinsurance Affiliate (ACRA) vehicle.

The Athene Co-Invest Reinsurance Affiliate (ACRA) vehicle targets raising $4 billion in total for a strategy that will enable third-party investors to participate in private deals alongside Apollo’s insurance and reinsurance company Athene.

So ACRA works a little like an ILS fund or sidecar for Athene, giving third-party investors the chance to access insurance-linked returns from the Athene’s deal-flow.

Athene recently said that it had $1 billion of capital commitments already secured and ready to deploy as and when deal-flow for ACRA appears.

Now the firm is set to divert further capital raised from a new preference share offering to the ACRA strategy as well.

Athene said it has priced an issuance of 30,000,000 depositary shares, each valued at $25.00, for an aggregate public offering value of $750 million.

These depositary shares are going to be listed after issuance on the New York Stock Exchange (NYSE) under the ticker symbol “ATHPrA”.

Athene intends to put a portion of the capital raised towards funding commitments related to transactions undertaken by Athene Co-Invest Reinsurance Affiliate (ACRA), the company explained.

It’s all part of further diversifying the sources of capital that Athene has at its disposal for deals and corporate purposes, as it moves increasingly towards the creation of a platform approach to bringing new investor capital into its structure.

As much as 85% of the total offering is expected to be used to fund part of Athene’s $2 billion commitment to supporting ACRA deal-flow.

So this offering will effectively allow Athene to bring third-party capital in to support the commitments it has made to ACRA, potentially supporting as much as $637.5 million of Athene’s commitments to the insurance-linked investment vehicle.

“Launching a preferred stock offering is consistent with our flexible approach toward managing shareholder capital and opportunistically funding our operations with the most efficient capital available to us,” explained Jim Belardi, CEO of Athene. “We believe a preferred stock security will diversify our capital structure, receive favorable equity treatment from rating agencies, and preserve substantially all of our untapped debt capacity.”

Analysts said that the raise will provide Athene with a flexible capital boost for its ACRA ambitions, to the benefit of the company but also the other investors in ACRA as this will secure a considerable stake of the firms commitment to the insurance-linked investment vehicle.

Private equity and alternative investment specialist Apollo Global Management, LLC has recently been in the market raising third-party capital for insurance-linked fund strategies that are designed to capitalise on investor appetite for returns from the insurance and reinsurance market.

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