Apollo Global Management said today it agreed to acquire Stone Tower Capital, an investment firm that manages 12 CLOs, for an undisclosed sum.
Apollo will merge Stone Tower, which runs a total of $17 billion in corporate credit funds, separate accounts and CLOs, into its capital markets business. Stone Tower’s expertise includes senior loans, high yield bonds, long/short credit, private debt, CLO liabilities, CLO equity, RMBS, CMBS and other ABS.
The transaction will boost the assets that business manages to approximately $39 billion and total assets under management at Apollo as a whole to $82 billion.
It is Apollo’s second acquisition of a CLO manager; in June the firm said it acquired Gulf Stream Asset Management, a firm that at the time managed some $3 billion in 10 CLOs.
In addition to adding scale, Apollo’s latest deal adds several new credit product capabilities, the firm said. It said the transaction is consistent with its strategy of “expand the depth and breadth of its global integrated investment platform and meet the growing secular demand for comprehensive alternative investment solutions.”
The deal is expected to close in the first quarter of 2012.
It is just the latest example of consolidation among CLO managers as they seek economies of scale, with more expected to follow. Highland Capital Management is advanced talks about the sale of its European CLO business, according to a person familiar with the matter. Invesco has also reportedly put its European CLO business on the block.