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Dream A Little Dream: The Apollo IPO

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You are forgiven if you were struck with a sudden rush of déjà vu when the Financial Times reported this morning that Apollo had hired JP Morgan and Goldman Sachs to underwrite its “expected IPO.” After all, this is exactly the story that was reported way back on April 3 by CNBC’s Charlie Gasparino. And on April 4th by the Wall Street Journal and the New York Post.
Way back in the bad old days of April, Gasparino, Wall Street Journal reporters Kate Kelly and Robin Sidel and New York Post reporter Zachary Kouwe all reported the details the Financial Times reported today. But almost immediately after the story was broken on CNBC, questions arose about whether Apollo would go for a public offering or attempt to raise money through a private placement. Some even doubted that Apollo was planning any sort of offering at all.
The New York Times' DealBook was a prominent skeptic. At 1:30 in the morning on Wednesday, April 4th, DealBook announced that there was no Apollo IPO being planned.

Apollo Close to an I.P.O.? Only in Banks’ Dreams
Stop the presses! Leon Black’s Apollo Management is planning to go public!
That’s what CNBC proclaimed late Tuesday in a report that was eagerly picked up by other news outlets. A Wall Street Journal story even identified Goldman Sachs andJ.P. Morgan Chase as being “retained” to work on the offering.
One problem: It’s not true. Apollo is not going public next month, nor the month after that — and probably not the month after that either.

Even the Wall Street Journal expressed doubts about its own story. As we wrote at the time:

Questions remain open. First and foremost: Is this really going to happen? Team Kelley & Sidel cite unnamed “people familiar with Apollo’s thinking” who then cite unidentified people in “Apollo’s executive ranks” who deny that an IPO is “in the works.” Team Kelley & Sidel treat this as “Apollo distancing itself” from the IPO talk—and the boys at the Junior Journal (also known as the Journal’s M&A blog, Deal Journal) read this as a straight forward denial.
But it’s clearly anything but a straight forward denial! Denying something through double blind, unquotable paraphrase is tantamount to, well, admitting it. No one at Apollo, Goldman or JP Morgan seems willing to take responsibility for the denial. Something they could easily do if there was no IPO in the works. This might be “distancing” but one senses Apollo is only backing up while getting ready to charge into an IPO.

The story seemed to shift weekly in the months that followed. One week Apollo was going to do a private placement. The next week an IPO. The next week both. Or neither. And the reporting basically broke into two camps, with DealBook taking the “probably not an IPO” side and CNBC taking the “they’re totally doing an IPO” side.
So what caused all the confusion? It seems that Apollo itself had a prominent role in sowing the seeds of uncertainty. In the Journal’s story, denials about the IPO are said to come from Apollo’s “executive ranks.” DealBook followed it’s initial skeptical article with two more on April 5th, citing “people close to the firm.”
But while unnamed Apollonians were denying that an IPO was in the works, bankers at Goldman and JP Morgan were busy telling reporters that they were working on the IPO. We have no idea who Gasparino’s sources for the story were but it’s clear from Kelley and Sidel’s reporting that bankers were telling them an IPO was coming. And when we did our own reporting, we discovered bankers who were all too willing to spin a yarn about how a certain bank (ahem, Goldman) wasn’t shut out of the Blackstone IPO—it was conflicted out because it was already at work on the Apollo offering.
We’re not sure what moral to draw from this story. And, actually, we’re not even sure that the Financial Times story really means the Apollo IPO will ever happen. There’s many a slip between a cup and a lip, as they say, and that’s not even taking into account the war that certain lawmakers are trying to start with private equity.
But it’s probably not a bad idea to exercise a little skepticism when private equity honchos start talking about their plans. It wasn’t too long ago that Steve Schwarzman, for instance, was complaining that KKR had ruined the IPO chances of private equity when they offered shares in a large fund to the public. It was DealBook, if we recall correctly, who described Schwarzman as “uninspired by the notion of a buyout firm I.P.O. anytime soon.”
“I think the public markets are overrated,” Schwarzman said.
A little more than two weeks later, the world learned that Blackstone was indeed working on an IPO.