Goldman Sachs Take on the Apollo Global Management (APO) Management/Governance Changes
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Goldman Sachs analyst Alexander Bolstein reiterated a Buy rating and $57.00 price target on Apollo Global Management (NYSE: APO) after the company announced several management and governance changes.
1) The independent review into Chairman and CEO Leon Black found no evidence of involvement in Epstein’s criminal activities at any time
2) Chairman and CEO Leon Black will retire as CEO effective on or before 7/31/2021, but remain APO’s Chairman with Marc Rowan to succeed as CEO
3) Significant improvement in the firm’s governance
- separation of the CEO and Chairman positions
- addition of four new independent directors
- Co-Presidents Scott Kleinman and James Zelter being named to the Board
- a proposed change into a “one share, one vote” structure
The analyst stated "Stepping back, we believe the combination of these announcements should be a net positive for the stock, as APO evolves into a more “institutionalized” public company. The resolution around the Epstein review (with a high degree of transparency as the report has been made public) should remove a meaningful overhang on the stock as APO shares have underperformed peers (ARES, BX, CG, KKR) by ~900 bps since the reporting by the NYT (10/12/2020) resurfaced. Furthermore, we expect that under Mr. Rowan’s leadership the firm’s emphasis on Insurance-related growth will remain central to the stock, with potentially new growth opportunities (both organically and inorganically). Lastly, a full C-Corp conversion with a “one share, one vote” structure likely creates S&P500 eligibility for APO, which (if included) we estimate could drive HSD% demand from index funds (as a % of APO’s total shares outstanding) with incremental benefits from the Active community benchmarked to S&P indices."
Shares of Apollo Global Management closed at $48.30 yesterday.
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