Apollo’s Eighth Flagship Fund Books A $1.6 Billion Gain After Selling Its Majority Stake In LifePoint Health To Another Apollo Fund

What goes around comes around, especially in the world of private equity, where business is often times drummed up by passing the same assets between well known PE funds. In this case, Apollo Global Management knew the company it was shuffling assets to very well.

Apollo has booked a cool $1.6 billion gain for its 2013 buyout fund after selling its majority stake in LifePoint Health – to itself.

The company’s 8th flagship fund completed the sale – to its 9th flagship fund – after investing $975 million in the company, Bloomberg reports. In April, Apollo’s $24.7 billion flagship buyout fund put up $2 billion, alongside of $600 million in investor capital, to buy the LifePoint stake. 

Apollo spokeswoman Joanna Rose tried to address the optics of the deal by stating: “We worked with fund investors, independent advisers and multiple new co-investors to reach a fair and attractive transaction for both funds. This was a unique transaction for Apollo and we are proud to continue supporting the company and its mission.”

LifePoint was one of several PE backed firms that received government relief during 2020 as a result of the pandemic. Many lawmakers were skeptical of the relief, suggesting the money should have come from investors instead of the government. LifePoint received a $1.64 billion lifeline that included “almost $650 million in grants and $991 million in loans,” the report noted.

U.S. Representative Bill Pascrell, a New Jersey Democrat, told Bloomberg: “Private equity’s growing reach into our health-care system is concerning precisely because private equity’s mission to reap enormous profits often stands in direct conflict with the Hippocratic Oath. We need greater transparency and more cutting oversight of these private-equity firms.”

LifePoint spokeswoman Michelle Augusty responded: “All grant aid we received has been applied to LifePoint’s communities and only partially offset the $1.1 billion in extraordinary expenses and lost revenue that we incurred.”

LifePoint emerged from the pandemic “in a position of strength,” Bloomberg noted. The company added debt during the pandemic as its “cash stockpile grew”. 

It’s not the only PE firm to make a move in for-profit hospitals that caught eyes this year. Cerberus Capital Management and Leonard Green & Partners sold their interests to insiders at Steward Health Care, Bloomberg reported. Cerebus made $800 million on their investment after paying $246 million to enter the position in 2010.