IPO VIEW-After Apollo Global, the deluge

* Apollo IPO could pave way for others

* Could echo 2007 alternative asset manager IPO spurt

* Bankers actively pitching Oaktree, Carlyle for IPOs

* Pension funds, endowments chasing post-crisis returns

By Clare Baldwin and Alina Selyukh

NEW YORK, March 25 (Reuters) – Private equity firm Apollo
Global is set to go public next week, and if the sale goes
well, a gaggle of alternative investment managers could
follow.

Bankers are holding discussions with firms including
Oaktree Capital Management [OAKCP.UL] and Carlyle Group
[CYL.UL] about going public and are watching to see how Apollo
does, sources familiar with the situation said.

Apollo, which hopes to raise about $473 million in its IPO,
missed the first great wave of private equity firms going
public, which started in 2007 with the Blackstone Group
(BX.N: Quote, Profile, Research).

But with debt markets exuberant and the stock market open
to initial offerings, the profit picture for private equity
firms looks stronger than it used to. Hedge funds are
benefiting, too.

“It’s a pretty opportune time to come public,” said Michael
Kim, an analyst who covers asset managers at investment bank
Sandler O’Neill & Partners LP.

“The private equity industry is cyclical and certainly what
we’ve seen over the last six months has been a pretty nice
recovery across almost any metric.”

It’s been a long road for Apollo, which first filed its
public listing registration papers in April 2008, soon before
capital markets melted down.

The credit crunch trapped private equity firms without new
capital. They had trouble both financing leveraged buyouts and
selling companies they already owned.

But the picture for private equity firms has improved over
the past year.[ID:nLDE7221V6]

The Standard & Poor’s 500 index (.SPX: Quote, Profile, Research) has gained more than
14 percent over the past 6 months and more than 90 percent
since troughing in early 2009, as the global economy stepped
back from recession. Junk bond prices have surged by more than
65 percent since mid-March 2009, according to Merrill Lynch
indexes.

Buyout firms are taking advantage of the stock market
rebound to take some of their large portfolio companies public,
such as HCA Holdings Inc (HCA.N: Quote, Profile, Research), Kinder Morgan Inc (KMI.N: Quote, Profile, Research) and
BankUnited Inc, (BKU.N: Quote, Profile, Research), which have been some of the biggest
IPOs of the year.

PITCH, WAIT, WATCH

Blackstone Group blazed the trail for private equity firms
going public in 2007 with its own high profile IPO — timed
just before the market started to collapse.

Alongside it were hedge funds Och-Ziff Capital Management
Group LLC (OZM.N: Quote, Profile, Research) and Fortress Investment Group LLC (FIG.N: Quote, Profile, Research),
which all made their debuts on the New York Stock Exchange in
the space of a year.

Rival asset managers such as Apollo and Kohlberg Kravis
Roberts & Co [KKR.UL], which had also been planning to list,
watched in the wings as their chance evaporated.

Since the economy and market started recovering, private
equity firms have returned to look at going public.

KKR, which originally filed for a U.S. IPO in 2007, listed
in Amsterdam instead. It moved its shares to the New York Stock
Exchange in July.

Going public gives firms a currency to incentivize more
junior employees and gives the firm, as a whole, currency for
acquisitions
.

Investors in the firms have had a mixed experience. With
the market collapse, shares of Blackstone, Och-Ziff and
Fortress have tumbled — 40 percent, 49 percent and 70 percent
from their IPO prices, respectively — but KKR has done
exceptionally well: its shares have climbed 70 percent since
they started trading.

Apollo, whose expected price range puts it at a steep
discount to its rivals, could be another blockbuster. If it is,
it could tip the balance for those laying in wait. (For
Breakingviews commentary, see: [ID:nN22290065])

“There is a material advantage to being public in terms of
cost of capital and access to capital,” one source said. “I
think it’s fair to say that beyond just Apollo and Oaktree,
over the next six to 12 months, we could see more asset
managers look at going public.”

Carlyle in February hired NASDAQ OMX Group Inc (NDAQ.O: Quote, Profile, Research)
Chief Financial Officer Adena Friedman. A source previously
told Reuters that the firm could file for an IPO this year.
[ID:nN14107560]

Carlyle and Oaktree declined comment.
(Additional reporting by Megan Davies; Editing by Gary Hill)

IPO VIEW-After Apollo Global, the deluge