Apollo abandons its status of partner and becomes a society

Apollo Global Management announced on Thursday that it would drop its partner status and become a company, following rivals of private equity firms Blackstone and KKR, who chose to pay more taxes in order to simplify their structure and attract more investors.

The investment group estimates that the corporate tax will represent between 7 and 9% of the profits it would otherwise have made, with less impact in the first year. But he is convinced that a broader stake could mitigate the volatility of its share price.

Apollo shares rose 5% in pre-market trading in New York.

Analysts go further, arguing that publicly traded private equity firms could benefit from ever higher market valuations if they could attract a portion of the $ 6.8 billion currently held by pbadively managed funds, despite the slowdown profits due to having to pay more taxes.

Since the largest publicly traded private equity firms as limited partnerships ten years ago, their income was largely exempt from corporate income tax, with US authorities dealing with it. Money like it's been earned directly by the shareholders themselves.

But the smart structure also made their actions difficult to own. Investors have been forced to complete complex tax forms in several US states, a requirement that applies even if they hold shares indirectly, through an index tracking tool or a common fund placement.

As a result, valuations of private equity firms have stagnated, pbadive funds, which now handle 4.5 times more money than in 2007, according to the Investment Company Institute, have refused to buy the shares.

Since Donald Trump's tax reforms have reduced corporate income taxes by 35 to 21 percent, a growing number of investment groups have decided that complexity is more damaging to the price of their shares than submitting it to the collector.

Last year, Ares became the first major alternative badet manager to become a corporation. KKR followed quickly, and Blackstone announced a similar move last month after studying the progress of its rivals.

The movements seem to bear fruit. In the year since KKR announced the discontinuation of its partnership structure, mutual funds and other institutional investors have increased their stake in the company from 21 % to 35%.

The company benefited from a rise in its share price before falling back into the December market defeat; its shares are now about 15% higher than the day before the announcement of the move.