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ICICI Venture, Apollo Global to end joint venture AION Capital
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Homegrown private equity firm ICICI Venture, a unit of ICICI Bank, and US-based Apollo Global Management Inc. are ending their nine-year-old joint venture and plan to make investments separately.

The joint venture, AION Capital Partners Ltd, “has matured since its inception” and the two partners “jointly agreed” to scrap their partnership as of April 1, a spokesperson for ICICI Venture told VCCircle.

“Apollo and ICICI Venture are free to pursue future investment opportunities independently,” the spokesperson said, adding that Apollo affiliates will continue to advise AION with inputs from ICICI Venture until it exits its investments.

An Apollo representative said the firm remains committed to India having been an investor here for 12 years. “We continue to see opportunities for private equity, credit and real estate investments and will continue to invest in India from our various funds, including our global flagship fund.”

The representative also said that Apollo will look for the right exit opportunities from the AION fund, but its focus will be on “building value” in each of the portfolio companies. “Some of the investments in the fund are still relatively new and we continue to work with their management teams to grow them.”

Mumbai-based Utsav Baijal currently heads Apollo’s private equity and credit businesses in India. Baijal, who joined Apollo’s New York office in 2008, is a senior partner and managing director, his LinkedIn profile shows. Delhi-based partner Nipun Sahni, who joined Apollo in 2015, is responsible for real estate investments, Apollo’s website shows.

The two PE firms had formed AION Capital in 2011. AION raised $825 million for its first special situations-focussed fund. Overall, the AION fund invested in 12 companies. Eight of these dozen were minority investments, whether via debt or equity capital. The remaining four were buyouts.

AION has exited at least half of these 12 companies. Its current investments include Monnet Ispat, Future Lifestyle Fashions and Interglobe Technologies. (For more on AION Capital’s investments and strategy, click here.)

Bloomberg first reported Apollo and ICICI Venture’s plan to end their joint venture.

The decision to end the joint venture comes as a surprise since both partners had planned a second AION fund. In fact, AION Capital had done initial fundraising as well, although it never announced a first close. Apollo had made an anchor commitment of $50 million to the second fund, according to regulatory disclosures filed in November.

In India, Apollo invested mostly via AION in high-yield structured credit and in distressed companies. It made only a handful of direct investments in India. The PE firm had made its maiden bet in India in 2009 when it backed Essel Group’s direct-to-home service firm Dish TV. Two years later it committed money to two Welspun Group firms.

A person familiar with the matter told VCCircle on the condition of anonymity that Apollo wants to expand its credit portfolio in a way that brings it directly in competition with ICICI Bank, prompting both firms to part ways.  

In fact, the New York-headquartered firm had said in its investor presentation last month that its growth strategies include building a private equity and credit platform in India. At the time, Apollo had also recorded a $2.3 billion net loss for the January-March quarter as investment income slumped in the wake of the pandemic.

For Apollo, credit investment is its largest business. The firm managed total assets worth $319 billion as of March. Of this, the credit portfolio accounted for $210 billion. The rest of Apollo’s assets are in private equity and real estate verticals.

A credit business would pitch Apollo in direct competition with American peers such as KKR, Blackstone and Bain Capital, apart from other global investors such as Hong Kong-based Baring PE Asia and Canadian pension fund CDPQ. These foreign firms apart, a number of Indian alternative asset firms also operate in the private debt market.

Many investment firms are expanding their private credit business in India, as banks struggle with a growing pile of bad loans and turn cautious in lending. The problem of toxic debt is likely to worsen as the coronavirus pandemic threatens to push India into its deepest recession ever.

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