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Friday 15 November 2019

Apollo lines up resale of boom era mortgages

Buyer linked to US insurer Athene

Equity giant: Leon Black, chairman and CEO of Apollo Global Management
Equity giant: Leon Black, chairman and CEO of Apollo Global Management
Donal O'Donovan

Donal O'Donovan

US private equity giant Apollo is planning to re-sell Irish mortgages it bought five years ago in one of the first of what became a wave of loan sales, the Irish Independent understands.

The sale is to an entity backed by US insurance firm Athene, which Apollo has previously been accused of "looting" by charging hundreds of millions in fees for managing its assets. Apollo yesterday struck a deal to lift its stake in Athene.

In a letter seen by the Irish Independent, Apollo unit Tanager notified borrowers their mortgage will be sold for a second time, with a deal likely to close by year end.

The complex deal will see some of what was a €322m mortgage portfolio bought by Tanager in 2014 sold to a newly incorporated Irish company IRMT BW1.

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The ultimate buyer is not named in the letter. The Irish Independent understands that loan servicing firm Pepper will have legal title to the mortgages following the sale, but is not the ultimate beneficiary.

Paperwork filed with the Companies Office here shows that Athene Annuity Life Assurance registered a charge this month against the assets of IRMT BW1. That would indicate that it is ultimately financing the structure.

Pepper has been servicing the home loans on behalf of Tanager and will continue to be the servicer following the sale that's now in the works.

Apollo declined to comment.

Apollo's Tanager unit bought a portfolio of Irish mortgages from Lloyds Banking Group for less than half their face value in a deal struck back in 2013 when the UK bank was exiting the Irish market by selling off the assets of its Bank of Scotland (Ireland) subsidiary.

Tanager later gave borrowers a chance to buy back their own home loans at a knock-down price of as little as 60cents in the euro, and some of the loans will have been repaid since the 2014 sale, so it is not clear how big a portfolio is now being sold on.

Meanwhile, Apollo has a complicated and at times controversial relationship with Athena. In a legal action that started in June this year US investor Central Laborers Pension Fund accused Apollo of "looting" Athene through "exorbitant" fees - which added up to $400m (€360m) last year for managing a $13bn portfolio of assets.

The claim was rejected by Apollo and the case was dropped in August.

Yesterday, Apollo said it was lifting its stake in Athene to 35pc from 17pc in a $1.55bn deal, while at the same time simplifying the Athene stock structure into a single class of voting shares.

Apollo had historically controlled an outsized share of Athene voting rights through a multi-class share structure.

Yesterday's deal ends Athene's multi-class structure and means one vote per share for all investors, diluting Apollo's historic control in favour of minority shareholders.

Irish Independent

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