US private equity firm Apollo Global Management has bought a 50% stake in MaxCap, potentially enabling the Australian real estate debt specialist to compete with local banks.
The price of the transaction was not disclosed, but IPE Real Assets has learnt that the deal values MaxCap “north of A$300m” (€187m)
Wayne Lasky and Brae Sokolski, who founded MaxCap 15 years ago, have each sold 25% stakes to Apollo.
They will continue to run the business, with no change in personnel, under the MaxCap brand.
Lasky told IPE Real Assets that the deal was “industry-defining” as it enabled the firm to compete directly with traditional lenders in the A$300bn commercial real estate debt market.
“Apollo has given us the chance to challenge the anachronistic notion that the banks will always be the primary source of real estate credit [in Australasia], and to capitalise on the real tectonic shift in credit formation [coming] from super and pension funds, insurers and family offices,” he said.
“You have US$18trn of global supply of negative-yielding bonds, so it makes sense for that changing formation of credit to be searching for yield. The Australasian commercial real estate lending market is where there are excess returns.”
Since its inception, MaxCap has written more than 450 transactions valued at A$12bn, of which A$4bn is currently under management. Over that period, Laksy said, it had delivered full principal and interest to investors, which included Dutch pension fund investor APG and AustralianSuper.
“We have A$6bn of qualified forward deals in the pipeline,” he said. “Previously, we would be constrained in meeting that market demand. Apollo will greatly assist us in removing the shackles with respect to capital constraints.”
Lasky said MaxCap intended to cater to the full spectrum of the commercial property credit market, including core lending. Until recently, its focus had been on opportunistic deals and a few value-add deals.
“As well as bringing capital from its own sources and from its investor clients, Apollo brings its experience of managing market cycles in the mature credit markets of North America and Europe,” he said.
Credit makes up the largest proportion of Apollo’s assets under management. In the second quarter of 2021, credit represented US$331bn of total assets under management of US$472.8bn.
Apollo’s Athora and Athene insurance investments provide a big differentiator for Apollo, said Lasky, because they provide a source of permanent capital.
Philip Mintz, Apollo’s senior partner for real estate, said: “MaxCap is an industry leader and we’re excited to provide capital and strategic support to help accelerate their business and increase our activity in Australia.”
MaxCap’s strong track record of origination, and its performance, had made it “a partner of choice for investors and borrowers alike”, he said, adding that Apollo funds’ investment in MaxCap was the latest extension of Apollo’s investment origination platforms.
Apollo recently invested in Foundation Home Loans, a specialist UK mortgage lender, and established a strategic agreement with Victory Park Capital in the US to invest in asset-backed credit facilities for emerging companies.
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