congratulate! fellow hfa management team., page-28

I love it and am not suprised. Apollo is the grey-haired older guy that LHP and HFA need sitting in the room to give them credibility. Doing a deal with Apollo opens up the coffers for AUM to flow in. There is no way that they would sell this company now for .40, that would be insanely stupid. They could easily raise a $1B-$2B next year, throw decent performance into the mix and you can add another $500M to $1B in assets. What will that do to the stock price of a scalable business, whose expenses are essentially fixed. Every dollar raised is a dollar more in income, with the debt paid down, what does that equate too? A substantially higher stock price.

I wonder what the end game is for Apollo? If they do a deal, they have a pre-determined exit plan. On paper it doesn't look like such a big investment for Apollo, however, when the deal is done they will own 40% of a company that will potentially have north of $8B in AUM at the end of next year. Apollo currently has around $50B in AUM but in private equity (i.e. illiquid). All of a sudden a FOF that operates through managed accounts (liquid) diversifys their business greatly. Not only that it gives them great access to managers for co-investments.

I think Apollo is going to raise a bunch of assets for LHP and then buy the whole thing back in 2 years or earlier depending on what they do with the IPO.