Apollo investor halts new commitments over Leon Black’s Epstein ties

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One of many greatest US public pension funds has frozen new investments with Apollo World Administration, as rising considerations about founder Leon Black’s relationship with the late paedophile Jeffrey Epstein take a toll on the $414bn non-public fairness group.

The Pennsylvania Public College Workers’ Retirement System mentioned it had a dialogue with Apollo final week following reviews that Epstein had acquired no less than $50m in funds from Mr Black since 2008, when Epstein was convicted for soliciting intercourse from a minor.

“After that telephone dialog, PSERS’ Funding crew knowledgeable Apollo that it’s going to not contemplate any new investments at the moment,” PSERS advised the Monetary Instances.

PSERS is among the many greatest backers of personal fairness funds on the planet and contributed $225m to the New York agency’s newest buyout automobile, in keeping with knowledge supplier PitchBook. An individual near Apollo mentioned PSERS has lower than $1bn invested with the non-public fairness group.

The PSERS transfer underscores how the reputational disaster surrounding Mr Black’s relationship with Epstein is changing into a monetary danger for Apollo, which manages $414bn for buyers that embody most of the world’s largest pensions and sovereign wealth funds.

Apollo mentioned in a press release it was “firmly dedicated to transparency”, including: “Leon has communicated immediately with our buyers on this problem and we stay in open dialogue.”

On Tuesday Apollo employed an out of doors regulation agency to conduct a probe into his hyperlinks to Epstein — a transfer that the agency mentioned was urged by Mr Black “in gentle of continued consideration” to the ties between the 2 males.

Mr Black has mentioned the funds had been for property planning recommendation and household workplace philanthropy and funding providers. He has not been accused of any inappropriate behaviour or wrongdoing.

Apollo has by no means itself finished enterprise with Epstein, a spokeswoman mentioned.

PSERS mentioned it was “carefully following the continuing authorized points and the newly launched inner Apollo investigation”.

The abrupt halt to funding from PSERS comes as three different backers of Apollo’s non-public fairness funds have raised considerations concerning the relationship between Mr Black and Epstein, after Mr Black confirmed that he had paid Epstein hundreds of thousands of {dollars} per 12 months. 

The buyers, all public pension funds, say they’re both already in touch with Apollo or are planning to be, as they search additional details about the hyperlinks between the 2 males. 

“As a accountable investor we take ESG [environmental, social and governance] . . . significantly,” mentioned Markus Pauli, head of other investments on the Finnish pension fund Keva, which manages about €56bn and has dedicated $225m to Apollo’s most up-to-date non-public fairness fund. 

“We proceed to comply with the subject and are in dialogue with Apollo,” he mentioned, including that whereas Keva typically tried to affect buyout teams “in a optimistic manner” when it had considerations, it may promote its stake in funds “if the supervisor regardless of buyers’ suggestions doesn’t take crucial actions to repair the state of affairs”. He welcomed the skin probe.

Two UK native authority pension funds, the £7bn Essex Pension Fund and the £8.2bn South Yorkshire Pensions Authority, have additionally voiced considerations about Mr Black’s funds to Epstein, which had been first reported by The New York Instances final week. 

“Clearly it raises some questions when it comes to the timings and nature of the connection and we’ll comply with these up with the fund supervisor as a part of our ongoing liaison,” mentioned George Graham, director of the SYPA. He additionally welcomed the regulation agency’s evaluation.

“We’ll proceed to have interaction with our non-public fairness supervisor [Hamilton Lane] to know what steps the overall companions [Apollo] intend to take,” mentioned Essex Pension Fund. A Hamilton Lane spokeswoman declined to touch upon its conversations with pension funds and Apollo on the topic.

Most massive buyers with Apollo have maintained a public silence on Mr Black’s funds to Epstein. Calpers, Calstrs and the NY Frequent Retirement Fund all declined to remark

Epstein died in jail in August 2019 whereas awaiting trial on prices of intercourse trafficking, in what was dominated a suicide. 

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