Such deals are often frowned upon by private-equity investors. The worry is that one fund might overpay or underpay, which could put one group of investors at a disadvantage. In this case, the advisory boards of the two funds approved the move.
“We worked with fund investors, independent advisers and multiple new co-investors to reach a fair and attractive transaction for both funds,” said Apollo spokeswoman Joanna Rose. “This was a unique transaction for Apollo and we are proud to continue supporting the company and its mission.”
Cash Stockpile
The firm built LifePoint through the acquisition of three regional hospital chains in 2015, 2016 and 2018, and the company now operates 87 hospitals in small towns across the U.S. Apollo has said it can operate hospitals more efficiently by merging them.
Technology and infrastructure upgrades are among a number of improvements LifePoint has made on Apollo’s watch, according to the private-equity giant, which is marketing the health-care firm as a socially responsible investment in its pitch to raise an inaugural impact fund.
LifePoint has emerged from the pandemic in a position of strength even as many rural hospitals have struggled to survive. Its cash stockpile grew significantly during the crisis as the company tapped debt markets.
Apollo told Fund IX investors that they stood to gain from their investment in LifePoint, as the hospital chain was sitting on more than $2 billion of cash that could be used to expand the business through acquisitions.
In June, LifePoint took a step toward executing on that strategy by striking a deal to buy hospital chain Kindred Healthcare.
“This is a great outcome for both funds,” Apollo wrote in its report that month, “with a successful realization for Fund VIII and an opportunity for Fund IX to back a proven management team in continuing to invest in local health care, build the platform and generate attractive returns.”
This article was provided by Bloomberg News.