Report: Apollo Investors Revolt Over Ties to Epstein

Over the last week, Leon Black’s giant investment firm, Apollo Global Management Inc., has confronted one question after another about his decades-long relationship with convicted sex offender Jeffrey Epstein, reports The L-A Times.

First, his own board ordered an external review prompted by Black himself. Then a Pennsylvania pension fund paused new investments — and the state of Connecticut has done the same. One major consultant — a gatekeeper to $160 billion of investor commitments — has urged clients to hold off, and another is considering taking similar action.

Clients who for years enjoyed some of the best returns on Wall Street are reconsidering their ties to Apollo amid renewed scrutiny over Epstein, spurred by a New York Times report last week and given fresh attention from an unsealed deposition of Epstein associate Ghislaine Maxwell.

Investors distancing themselves from the firm show how serious the issue has become for Black and his general partners. Some clients aren’t convinced that the review, which will be handled by law firm Dechert LLP, will be enough to clear Black’s name, according to people familiar with the matter.

A freeze in new money could hurt Apollo at a time when it’s trying to raise $20 billion for several new funds. The pandemic-spurred turmoil in the credit markets is a prime investing opportunity for the firm, which is known for buying struggling businesses. Apollo is seeking to take advantage of market dislocations as well as invest in private debt, people with knowledge of the matter said in April.

Black’s growing troubles reflect the changing politics of the investing world, where major funds have become more sensitive to environmental, social and governance matters. The new focus means that even the prospect of lucrative returns may not be enough of a lure in the midst of a scandal.

Though Black had already faced pressure in the immediate aftermath of Epstein’s arrest last year, investor angst was rekindled by a New York Times report that he had wired at least $50 million to Epstein after Epstein’s 2008 conviction for procuring a minor for prostitution. The article didn’t accuse Black of breaking the law. Apollo shares have fallen about 12% since the story was published Oct. 12.

Last November, the FCC approved equity firm Apollo Global Management LLC’s takeover of TV and radio stations owned by Cox Enterprises Inc. and Northwest Broadcasting. The “Cox Media Group” name lives on as the “doing business as” brand.

The FCC approved the transactions, totaling almost $3.5 billion, sought by Apollo-controlled Terrier Media Buyer Inc.