Apollo gets $6bn of commitments for Athene’s ADIP II sidecar
Investor and private equity giant Apollo Global’s CEO Marc Rowan has hailed the completion of its latest successful capital raise for a new vintage of the life and annuity focused reinsurance sidecar structure for reinsurer Athene as “the largest equity sidecar in the industry.”
With some $6 billion of investor commitments at its final close he’s not wrong. The Athene Dedicated Investment Program II, or ADIP II, sidecar will provide Apollo’s life and annuity focused reinsurance subsidiary with a significant amount of third-party capital backed firepower to help it further grow its business.
It’s even more impressive when you consider that at its first close, the ADIP II program had raised commitments of $2 billion from investors.
As we said, Apollo and Athene had ambitions to outstrip the success of ADIP I and ACRA 1, which secured over $3.2 billion in investor committed capital.
Now, with some $6 billion of investor commitments announced for ADIP II, it’s clear that fundraising goal has been more than achieved.
Marc Rowan, Chief Executive Officer at Apollo said, “Athene’s compelling profitability is attracting significant amounts of third-party capital to support continued growth following the highly successful fundraise for ADIP II – the largest equity sidecar in the industry.”
The commitments will be invested directly alongside the company into Athene Co-Invest Reinsurance Affiliate Holding 2 Ltd., or ACRA 2, which is a consolidated subsidiary of Athene and acts as the reinsurance sidecar.
As we reported, AM Best rated the Athene Co-Invest Reinsurance Affiliate 2A Ltd. and Athene Co-Invest Reinsurance Affiliate 2B Ltd., two vehicles domiciled in Bermuda that are the structures that will undertake the reinsurance arrangements, alongside Athene, channelling the ADIP II funding into the reinsurance business.
Apollo’s Athene will start to deploy the ADIP II third-party capitalised sidecar capacity alongside its own, in writing new life and annuity reinsurance deals.
The way ADIP II is structured, Athene Life Re retains a good share of the economics, at 40%, ensuring alignment with the third-party investors backing the sidecar vehicle.
Impressively, the third-party capital from the sidecar structures has become a significant growth driver for Athene.
Apollo reported that, “Third-party capital enables Athene to grow in a highly capital efficient manner and supported 35% of Athene’s gross new business volume in the second quarter.”
The ADIP sidecar program not only enables Athene to leverage the appetite of third-party investors to participate in the economics of reinsurance deals it underwrites, but it also provides a significant source of additional assets under management for Apollo.
While the committed capital is just the start, as Athene deploys it and gets the premium float back from the long-duration life and annuity reinsurance business, it also adds to Apollo’s investment firepower.
To give you an idea of the scale of that asset management side of the opportunity, at the mid-point of 2024, ADIP program invested assets reported by Apollo stood at more than $69.25 billion, with some $9.26 billion of inflows via the ADIP sidecar program just in the first-half of this year.
Apollo also reported a gross IRR of 24% for ADIP I investments, as of the middle of this year.
As we’ve said before, these ACRA / ADIP sidecars provide Athene with firepower for doing more and larger reinsurance deals, while delivering long-term investment float assets that Apollo can manage.
All this while leveraging investor appetite to participate in the returns of its business, which is a very efficient way to fund this kind of growth for the pair.
