In 2013, Apollo finished raising its largest fund since the financial crisis, bringing in $17.5 billion from third-party investors. Its previous fund, which was raised in 2008, generated a net internal rate of return of about 30 percent through end-2015.
“It’s now a tale of two markets,” Ethan Vogelhut, executive director at Adveq Management, an investor in private-equity funds, said in an interview. “If you’re a top decile performer, regardless of size, then you have a far stronger hand in negotiating terms.”
Cases in point: Denver-based Excellere Partners and Harvest Partners, based in New York. These mid-market buyout firms were able to arrange better terms with investors, asking them to hand over as much as 25 percent and 30 percent of profits to managers respectively, according to people familiar with the matter. Representatives for the firms didn’t respond to requests for comment.
Excellere’s previous two pools and Harvest’s most recent fund are ranked in the top quartile of peers raised in the same year and of a similar size, according to data compiled by Bloomberg.