Athene Holding Ltd will be acquired by Apollo Global Management Inc in an all-stock deal worth $11 billion which will result in adding an annuities provider to Apollo that had helped the company to become one of the largest corporate credit investors of the world.

Athene has been paying annuities provider to Apollo for over a decade now. Apollo has a 35 per cent stake in Athene. Asset allocation services are provided to Apollo by Athene as well as directly managing a portion of Athene’s assets across its investment platform mainly in its constantly growing credit business.

However, the stocks of Athne had been underperforming the wider insurance sector after it went public in 2016 which prompted place a bid for the company’s assets.

According to the estimates of Apollo, the merger which would be tax free will enhance its earnings by more than 100 per cent compared to 2020. Under the accounting rules, the existing stake in Athene did not add on to the earnings of the company even though it accounted for 40 per cent of the assets under management of Apollo and about 30 per cent of the fee-related income of the company.

Marc Rowan, Apollo’s incoming chief executive officer, told an analysts’ call he acquisition will result in the integration of Athene’s business and assets into Apollo’s. That will give both the companies a boost to earnings according to a much simpler ownership structure going forward.

“This transaction is about coordination, not consolidation. There is no plan to consolidate the businesses. There is no need to consolidate the businesses,” said Rowan, who helped set up Athene in 2009.

Apollo was also founded by Rowan 31 years ago. The New York-based firm was to be run by Rowan following the announcement of the board Chairman Leon Black in January of him stepping down as chief executive by July. That decision was preceded by an independent review of his ties to the late financier and convicted sex offender Jeffrey Epstein.

The insurance space has been the focus of buyout firms in the last year with significant acquisitions done by KKR & Co, Blackstone Group and Sixth Street Partners.

About 76 per cent of the new combined company will be owned by the existing Apollo shareholders while the rest will be owned by shareholders of Athene.

The deal is expected to be completed in January 2022.

The changes in its structure that would allow forming a simpler, more transparent corporate structure was approved by the simpler, more transparent corporate structure, Apollo also said. That simpler structure is expected to be set up by January next year, the company added.

The private equity firm said last month it would look in to changing its corporate governance structure, getting rid of shares with special voting rights that currently give Black and other co-founders effective control of the firm.

Athene is also the partner insurance company of Apollo and possessed total assets worth $202.8 billion at the end of 2020. The company has operations in the United States, Bermuda, and Canada.

(Adapted from FinancialPost.com)