In this episode we sit down with Michael Shapiro, Apollo’s co-head of Capital Markets and Syndicate, to unpack what it really takes to engineer a successful IPO in today’s market. Drawing on Apollo’s deep experience across public and private markets—including recent IPOs like Lottomatica in Italy, Sun Country in the US, and Ventia in Australia —Michael explains how the firm builds IPO readiness from the moment of investment, why purchase price matters more than ever, and how to turn complex businesses into compelling public stories.
We dive into the practical playbook Apollo uses: early investor engagement, dry-run earnings reports, capital structure optimization, and building credibility long before the listing. Michael also challenges old assumptions about investor categories, advocating for a focus on fundamentals over labels like “long-only” or “hedge fund.” Throughout the conversation, he emphasizes the importance of predictability, simplicity, and investor alignment to maximize post-IPO performance.
Whether you’re a company preparing to go public, an investor evaluating IPOs, or simply fascinated by how public markets work, this episode offers a masterclass in IPO execution from one of the industry’s top capital markets practitioners.
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If you have feedback, or there are any topics you would like us to cover on the show, please reach out at contact@ipostories.com
Disclaimer: The discussion in this episode is not financial advice, nor an investment recommendation, nor a solicitation to buy or sell any financial instruments or an offer for financial services or any other transaction. The information contained in the recording has no contractual value and is intended for informational purposes only. Amundsen Investment Management and the participants in this podcast may have holdings in the companies being discussed. Any views expressed are those of the guests only, and not of Amundsen Investment Management or Apollo Global Management.
[01:38] Gautier: Michael, thank you very much for joining us today. It’s a pleasure to have you. Can you please start introducing yourself?
[01:43] Michael: Thanks, Gautier, for having me as well. So I joined Apollo just about three and a half years ago now to lead the global equity capital markets business. Apollo today is a approximately $800,000,000,000 global asset manager. Approximately a hundred billion dollars of that is equity, and the other 700 is credit. We are a value oriented investor focused on downside protection, operational improvement, and obviously, cash flow. You know, I think historically, if you thought about Apollo, we are a investor who focuses on purchase price.
[02:16] Michael: So the average multiple that we buy our companies is roughly around six to seven times. We typically put less leverage on our businesses. On average, that’s roughly around three and a half to four times. And I think the performance has spoken for itself.
[02:29] Michael: I sit within a business called Apollo Capital Solutions, which really sits at the center of the broader Apollo ecosystem and encompasses all of
[02:35] Gautier: our origination, capital markets, and syndication businesses. Today, it’s
[02:36] Michael: a 50 origination capital markets and syndication businesses. Today, it’s a 50 person team that operates across the globe, and I get to oversee both our equity capital markets and syndication business. And the integration of our ACS and private equity business allows our deal teams and portfolio companies to leverage our expertise in the debt capital markets, equity capital markets, and can optimize capital structures, support the growth of our businesses, and facilitate smooth exits, which obviously I’m excited to talk to you about today.
[03:04] Gautier: Why the need to set up that function, internal ECM and syndication function, which is again, is not that unusual. We see it as well in some of the very big large asset managers. But again, it’s not something everyone does within private equity. Why did you feel the need you had to set up that function as well?
[03:19] Michael: I think what’s interesting, if you look back at our track record, roughly 50 to 60 of the deals that we do are public to private. And similarly, 50 to 60% of our exits are through the public market.
[03:31] Michael: And we pride ourselves on buying complexity, but I don’t necessarily know if we’ve appreciated or taken a pause to really understand what was misunderstood about these companies in the public markets that allowed us this really interesting opportunity to take them private and what ultimately needed to change in private ownership to then bring them back out to the public market successfully.
[03:50] Michael: And so our team works with our deal teams and portfolio companies to think about public exit really at the time of the buy, crystallizing that investment through the hold, and then really generating alpha through the exit.
[04:02] Gautier: Can you mention a few examples of transactions you’ve been, involved yourself?
[04:06] Michael: Yes. So the great thing about our team is we work with our deal teams across the globe. So we took, a business public back in 2021 called Ventia, which was, an IPO we did in Australia, A deal that you and I got to work very closely on back in 2023 in Italy was for a company called Lotomatica. And then in The US, we’ve taken companies public like Sun Country in recent years and then have also helped our deal teams monetize tech data, Cinex, ADT, and others.
[04:34] Gautier: So you have a global mandate, and and that’s great because we’re gonna talk a lot about the different, you know, trends and market structure for IPOs globally. So it’s really good to have you and share that that global perspective. One general, statement or procession of the IPO market is obviously that IPO volumes remain below historical average. We see 2020 was a boom, but since then, volume have not recovered really. And structurally, it seems the IPO volume activity has come down. There’s different reason for that.
[05:01] Gautier: But I’m really keen to get what you think we still haven’t seen yet a recovery in IPOs recently in The US and Europe. Either the volumes haven’t really picked up or even the performance haven’t been too good. Why do you think that’s the case?
[05:14] Michael: I think it’s interesting. I think there’s been some structural changes in the public equity markets that have made, you know, IPOs much more challenged. But I also think a big issue for the IPO market is just a bid ask spread that exists between buyers and sellers. You know, they talked about one of the areas where we think we differentiate ourselves is on purchase price, which obviously provides us with a lot more flexibility for exit.
[05:35] Michael: I don’t necessarily think that’s the case for every sponsor out there or for all the different companies that are trying to go public who, you know, have high valuation entry points that are trying to solve for a certain valuation on the exit. And so I think the bid ask Per it, as I mentioned, is is still very wide. And I think what’s great, Gauthier, is, like, the types of conversations that we get to have, which is we’re ultimately trying to solve for each other’s best interest, and we ultimately own the outcome together.
[06:01] Michael: And I think there just needs to be a lot more dialogue between the buyers of public companies and the sellers because, ultimately, efficient capital markets are important for folks like yourself and, obviously, for sellers of assets like us. You know, I think also the other thing too is making sure that companies are set up for public success. Too often, you’re seeing businesses miss their earnings the first year out, and that just drags credibility down for for sellers of IPOs.
[06:26] Michael: So I think the engagement with investors, I think making sure that you have a model that is ready to take to public markets and and operate against is is critically important. And we’re just seeing too many footfalls both from evaluation setup and then from an operational setup, which is making IPOs that much more challenged. And then you overlay that with the changing market structure where, you know, just candidly, there’s a lot less dollars chasing small and mid cap companies around the globe. The market has become much more passive and algo driven.
[06:55] Michael: And so the need to build a shareholder base or an IPO registry that you feel really, really strong about is critical, and it goes back again to the engagement that sellers of assets are having with buyers of assets and making sure that we’re solving for each other’s outcomes.
[07:09] Gautier: Yeah. Very interesting. So there’s a lot of challenges that probably mean the bar is higher now to choose the IPO as an exit option for you. Is that the case? Do you have to validate the IPO feasibility already at the time of Investment? As you said, that’s important now, part of your investment process to validate IPO as an exit. How you think about that?
[07:28] Michael: It is. I think the bar is definitely higher. I think our LPs are also focused on exit path. Obviously, this has been a big focal point for investors over the last couple of years. So I’ll just take you through how we think about it at Apollo. One of the unique things about our team is we get to sit in our private equity investment committee, and we work very closely with our deal teams as they’re underwriting the various different exit alternatives.
[07:50] Michael: And so our team is actually re underwriting all the exit assumptions that they’re making for the time of exit. And so that can include the IPO exit multiple, what’s the implied IPO discount that the deal team is considering, and the pace at which we’re selling down and the price appreciation or valuation expansion that we may see in those deals. And so we’re putting a true capital markets approach to how those companies are going to ultimately exit.
[08:14] Michael: And, you know, that is a big part of the discussion that goes through the various investment committees and our level of confidence about whether or not these companies are gonna ultimately be good public companies once again.
[08:24] Gautier: You had one, company in Germany, a bank, OLB. You considered listing this year. Eventually, you have have actually received a strategic bid, so it’s not gonna be listed. That was one where initially you already had validated the IPO as an option, and then this bid came as a surprise because you’ve been quite far in the IPO process. Right?
[08:41] Michael: That’s one near and dear to both of our hearts. We are obviously very well engaged on it. It’s one that we’ve contemplated taking public for some time. It’s an asset that’s obviously had a lot of duration under private ownership at Apollo, and it’s one that is pretty unique in terms of just the overall equity check. If you think about the types of deals that we’re doing out of our private equity business today, those are roughly a billion to a billion $2.50 of equity deployment.
[09:06] Michael: And if we’ve done our job right, you know, typically, we’ve scaled those assets to, you know, call it 2 plus billion dollars. And so for a lot of our scaled assets, your IPO is going to be one of the only exit alternatives. Right? It’s there’s not many buyers out there who can speak to the types of size that we’re that we’re talking about from a company perspective.
[09:24] Michael: OLB was fairly unique where we obviously had a really attractive IPO option that came down to the real finish line in terms of having a path to a successful IPO exit, one that I think you and I felt very good about. But at the end of the day, one of the things we’re also focused on is leaving the company in the best position to continue its growth trajectory.
[09:44] Michael: And as we look at the, you know, opportunity that the French bank Credit Mutual provided us, it really allowed OLB to scale in a way that we thought was going to be differentiated then in the public markets. And, obviously, the ability to recognize what we thought was a really attractive value at once was just something that we ultimately couldn’t pass up.
[10:03] Gautier: When you sit with your, investment committee initially and you go through the validation of the company being, you know, potentially a good IPO candidate, What are the good criteria are you using to evaluate that, IPO optionality at the time of the initial investment?
[10:18] Michael: Yeah. So I think for us, it’s gonna be very different than the traditional IPO. Obviously, a lot of focus has been on growth trajectory of certain businesses. Again, we’re buying durable, downside protected, what we think of long term compounders. And so these are businesses that are generating meaningful free cash flow and have a really interesting, you know, total shareholder return story. So as we think about what’s attractive to investors today, there obviously needs to be some growth, and so we think about it as GDP plus. We think there needs to be a margin improvement story.
[10:48] Michael: But then we also think about what can we do to utilize the free cash flow that these businesses are generating. Does that mean paying a dividend? Does that mean being a, you know, thoughtful use of capital to buy back stock? Is there m and a opportunities that these businesses can go and get? And, you know, as leverage continues to come down, we’re also seeing EPS expansion.
[11:05] Michael: So as we think about what’s attractive today in a in an IPO market that’s very different than four or five years ago, durability and total shareholder return are ones that we’re really focused on.
[11:15] Gautier: Those are all very good metrics, and it’s very rational, especially in the investment world, everything you’re looking at. I think there’s still a challenge to be a public company. It’s actually, are you going to be a liked asset by public investors? Will the public markets understand the business? Is this business predictable or not to some degree? So I still think being a good IPO candidate is just not only being a good investment, which can be in a private setup, is also to be a good public company.
[11:40] Gautier: Again, do you put some different lenses analysis on that aspect of what is a good public company versus just a good private company?
[11:47] Michael: Yeah, for sure. So one of the things that we do is we talked about we start to plan for the exit at the time of the buy. And one of the unique things about Per seed is we’re also involved in the co Investment syndication of our equity check. So let me just give you two clear differentiators of how we think about planning for an exit. So one, you know, as I mentioned, 50 to 60% of the companies that we ultimately put into our private equity portfolio have been public companies.
[12:10] Michael: So when we close those deals, given the relationships we have with the buy side, we take our deal teams on a mini roadshow of sorts to go meet with the top shareholders of that once public company. We wanna understand from them what was the KPIs they were focused on. What about the equity thesis was misunderstood by the public markets? What are the things that we need to change from a strategic perspective to help make that complexity be more simplified? To your point, have a bit more predictability.
[12:38] Michael: What are the areas that we need to focus on? We have those conversations also with some of the research analysts. I think the second part too is how can we start to diversify our equity cap stack with investors that are gonna ultimately be helpful to us on the exit? So as I mentioned, leading our co invest, obviously, a good portion of our co invest dollars are going to our existing LP base.
[12:57] Michael: But one of the things that we’ve also started to do is bring in public style investors who are looking for private market alpha who can also be helpful to us as we think about preparing for an exit. For some of the same focus areas that you just meant, what are the things that we need to change? They obviously liked that business and its public life.
[13:15] Michael: They think there’s some key operational and strategic changes that need to be deployed in private life, but wanna be a big supporter of it again when it comes back out to the public markets. And utilizing, again, the connectivity that we have with the buy side has just been incredibly important to delivering on the equity thesis that we ultimately need these businesses to look like from a public markets perspective.
[13:35] Gautier: Very interesting. Do you see a different when it comes to US versus Europe in that interaction with investors who can be crossover funds, invest privately but publicly as well, and help you having this type of discussions Amundsen pre IPO rounds, basically?
[13:48] Michael: Yeah. I think it’s evolved a lot. I think a lot of folks, particularly at the large mutual fund houses, had been focused obviously in more of the growth driven crossover rounds. I now think you’re seeing some of the value oriented portfolio managers seeing there being, you know, obviously a major shift to private markets and wanting to get deployed there.
[14:05] Michael: Obviously, as, you know, Apollo, we’ve been front of the charge in terms of the deflation and value creation in value creation in private markets, but you’re starting to see a lot more appetite for private opportunities from not just the growth oriented Investment, but from value oriented investors. I’d say it’s a deeper pool of folks in The US. I think it’s something that The US has become much more comfortable with, but you’re starting to see an evolution.
[14:27] Michael: And there’s some notable investors in Europe as well, but there’s you’re starting to see an evolution of European investors seeing their US counterparts generating meaningful alpha and starting to play there as well. I do think the evolution or the market backdrop has changed a lot from chasing a lot of the growth capital that was raised back in the, you know, 2021 vintage and people being much more diligent about where they’re putting capital to work. But, you know, even Apollo has evolved in a big way.
[14:52] Michael: We’ve got a strategy called hybrid value now, which is putting capital to work in, you know, pre IPO context.
[14:59] Michael: And so we’re working with sponsors that look and feel very much like Apollo, family owned businesses, seeing really attractive risk return opportunities to put capital work in a pre IPO context to help provide a solution For those same reasons that we talked about earlier is, you know, in a challenge IPO market, obviously, sponsors are looking for liquidity, and I think there’s a a place to play for both in the traditional mutual fund complexes, but then also large global alternative asset managers like us.
[15:26] Gautier: No. We have certainly seen, an increase in those pre IPO rounds. I think it’s quite helpful. It also helped the company to be a bit more ready for being a public company, diversifying the ownership base as well. Right?
[15:36] Michael: Yeah. Gotcha. I mean, a great example of that is obviously, you know, another European asset that we’re a minority shareholder in, which is AutoDoc, another German a German based business. You know, there was a company who we were able to through our hybrid value strategy, you know, founder led business and never take an external capital. But to your point, we were able to come in with a creative solution to help validate the equity thesis.
[15:57] Michael: It also, through our integrated platform, brings the capital markets both on the equity side as well as the debt side to that business. And, you know, obviously working very closely with them as they ultimately think about a potential IPO.
[16:08] Gautier: That’s interesting because that’s a minority investment. So I guess the rationale to do that as well is to make sure you have high certainty that this company would be a good IPO candidate. It has to because otherwise it does limit your options in terms of exit, right?
[16:21] Michael: It does. I mean, one of the interesting things about the hybrid value strategy is lower cost of capital. So think of it as a kind of mid teens return cost of capital. The business is really centered around downside protection with equity upside convexity, and that could be through structure. It could be through it could be through coupon. And yes, you need to believe in the equity upside, as I just mentioned, to really deliver outsized returns. But the nice thing about that strategy is it’s not anchored to equity upside convexity.
[16:51] Michael: It’s anchored to obviously being very downside protection through the the type of instrument that we’re putting into these businesses.
[16:56] Gautier: When you sit down with your colleagues on the investment committee, again, at the initial investment decision, where do they challenge you? What are the main point of discussion about the IPO feasibility? Where do they need to hear from you or get comfort that that’s gonna be a valid option for us? When as well do they push you back on the IPO case?
[17:17] Michael: I think duration is a big area of pushback. Right? I think one of the things that we’ve tried to do is bake in a level of conservatism in terms of the pace at which we’re selling down. I think also it’s the exit multiple or the blended exit multiple in which we’re trying to get in the public markets. You know, one of the key questions is, what exactly have we changed about the business that’s going to allow us to generate a meaningful value expansion in the public markets?
[17:42] Michael: And I think one of the things, and Gochi, this is a perfect example, is the one, you know, is LOTA Madica. Right? LOTA Madica is a business where, you know, when we went out well ahead of an IPO and tested some key questions around the equity thesis, right, this is a business that was obviously a public company before. It had evolved in a meaningful way post COVID, major shift to online, obviously, an Italian champion, single country.
[18:06] Michael: And there Per some key questions that we wanted to ask investors about the equity thesis and the viability of that company to be a successful public company. But one of the great things about our strategy, and we use this ethos of purchase price matters, is when you’re buying cheap, it provides you with a lot more flexibility on the exit. And so you don’t necessarily need to get meaningful multiple expansion, though we’ve seen it in our public company exits versus where we buy.
[18:31] Michael: It’s usually, you know, at the time of ultimate exits, usually a three turns multiple pickup, but you’re not reliant on that. Our strategy is not reliant on multiple expansion. It’s reliant on value creation and cash flow generation, where I think the market as a whole has been much more reliant on multiple expansion. So the debate we have is really around technicals. What is it that we don’t understand about the public markets as private equity investors that’s gonna make a challenge? What are the things that we can’t see around the corner?
[18:59] Michael: And I don’t necessarily know if I’ve got a perfect answer that is going to increase the duration of our hold, and what does that mean to returns? And so those are really the questions of, like, what is our confidence level and our ability to go and monetize these assets in an efficient manner and transition the ownership from private to public?
[19:17] Gautier: That’s very interesting. You will think that should be the case for everyone because trying to time the market is it’s just impossible. You don’t know what the market will pay you as a multiple anyway at the time of the listing. So you should, you know, rather focus on making the IPO a success, I e, the company did ring on the equity story in the numbers, and eventually the valuation would be given by the market as a company bill a track record. Right?
[19:38] Gautier: So you shouldn’t build your IPO case on the assumption the market will give you x multiple in five years because it’s just very difficult to predict. But you should make sure indeed you have comfort that you’re buying cheap today Amundsen eventually there’s a lot of value creation and the market will just reflect that, but it will not necessarily come at the time of the IPO.
[19:56] Michael: That’s for sure. I mean, I think one of the things and hopefully you started to see this is we’ve really changed the way that we approach the public markets, and it’s doing exactly what you said. And I think it’s driven by the dialogue that we have, which is, you know, the IPO should be the cheapest price at which you sell stock. Right?
[20:12] Michael: And if you set your IPO up correctly and build the right investor base and the right following, and then your management team goes out and executes against the plan that they’ve communicated, then you should be able to monetize in an efficient manner at higher prices.
[20:27] Michael: And so, you know, ultimately, what I think we’ve tried to do is set up these businesses to be successful in the public markets by one, pricing them at the right level where they’re going to work from a public market perspective, being really thoughtful about how we ultimately monetize both from a size and price and pace perspective. And ultimately, our ability to monetize in an accelerated fashion, that’s the differentiation in terms of IRR creation versus trying to, you know, squeeze out the last nickel or last dollar in an IPO price.
[20:56] Gautier: I mean, those are all very good execution points, but maybe let’s go back because at the end of the day, it’s it’s about having a company which Per with the right management, the right plan, the right equity story that the market again is capable of appreciating and then valuing by definition. What is your role to get those companies ready from day of investment to exits and be prepared to be a public company? What’s the milestones on the way?
[21:20] Michael: Yeah. For sure. It’s a great question because I think it’s something that we’ve really started to spend a lot of time with our management teams on. And so one, I think the financial operations within any of these businesses obviously is a critical part of that. The ability to model your business and predict the performance of your business. I think we talked about it earlier just in terms of trying to deliver more predictability to the market. So we have our companies doing dry runs of public style earnings releases well ahead of an ultimate IPO.
[21:48] Michael: We wanna make sure that they have the ability to close their books. We wanna make sure that they have the ability to present what we think is public style earnings releases well ahead of actually being put on, you know, real time in terms of being a public company and be able to being able to deliver it. So that’s a key milestone. We wanna be able to say that we’ve been able to hit numbers versus what we would have guided to if we were an ultimate public company.
[22:10] Michael: But I think the other thing too that we do well with an IPO, call it eighteen months to twenty four months ahead of listing, is we have our companies out at conferences. Historical basis. And then when you see those companies, you know, six, twelve months later, the ability to say, hey. We said we were gonna do x y z, and we did exactly that, and the business is continuing to perform and grow. And here are the areas of predictability that we Per focused on.
[22:43] Michael: And by the way, x percent of our revenue today is now contractual or certain other KPIs that those investors are focused on.
[22:51] Michael: Our ability to deliver that and build credibility
[22:54] Gautier: Interesting. This engagement with public investors, you say eighteen months to two years, is that systematic across the portfolio? That’s only gonna be for the asset where you think, again, the IPO is a credible, exit?
[23:05] Michael: Yeah. I I can’t say that there’s any specific assets where an IPO is is a 0% outcome. Right? You know, some are much lower than others. But, yeah, that is the playbook we look to deploy, which is making sure and and, you know, one of the nice things is is we built, you know, what I would say close relationship with dozen really close investor contacts that we wanna have our companies out well ahead of even, like, contemplating what an IPO could look like, well ahead of engaging with an investment bank or with research analysts.
[23:34] Michael: And just start to have that dialogue. Just, again, going back to what we talked about earlier, start to understand what about the equity thesis needs to evolve. Build that credibility and get real feedback, right, so that we can start to implement some of the things that we hear from the buy side. Because, ultimately, those are going to be the folks that we’re going to need to convince that this is a good public company investment twelve, eighteen, twenty four months later.
[23:57] Michael: And so that is part of the playbook that we’re deploying on the vast majority of our portfolio companies.
[24:03] Gautier: So the strengths of your setup, you’re not necessarily relying on appointing book runners or IPO banks to already have a sense of where the market might be and to collect investor feedback. That the edge you have with your team is to to get that visibility or feedback early as well before any process really starts.
[24:19] Michael: That’s exactly right. It’s hard for anyone to give you real concrete valuation feedback, obviously, without having a ton of information that far in advance. But what you’re starting to get is evaluation framework. Who are the right comps? You know, for a lot of our businesses, there’s going to be a clear one or two folks. How do you think about this business vis a vis those one or two comps? What do we need to do in the next eighteen to twenty four months to evolve this story to better position ourselves as a premium to those comps?
[24:45] Michael: And that allows us also to start to build a shadow book. Right? I mean, it’s obviously, as we get closer to the IPO, and this is where I think one of the cool things about the European processes, the number of different points of engagement that you have. But, like, to start to build a shadow book at various different points so that you ultimately know what you’re solving for. Listen, the banks are incredibly important to us, and they play a vital role.
[25:05] Michael: But we wanna have that direct feedback because, ultimately, as I said earlier, Apollo owns the outcome. You as the investor own the outcome. And the banks are an agent for that process, but, ultimately, they don’t own any of those shares day one, day two, day a 80. We all own that outcome with our pockets. And so we wanna make sure that we’re getting that feedback directly from you to implement the best outcome for the both of us.
[25:28] Gautier: And do you feel you have enough investors doing the work and engaging? I mean, I don’t know how many investors you’re talking for a specific case, but do you feel there’s enough depth in terms of investors and the universe is large enough? How should we think about the number of interactions you can have and entertain?
[25:43] Michael: Yeah. It’s a four person team. So, obviously, we’re limited just in reach. And as I mentioned, we’re doing it for the globe. And so we’re gonna rely on some specific geographical benefits of, obviously, having people boots on the ground. But as you and I have gotten to know each other incredibly well, obviously, with a big ocean between us, we think the depth is there, and we think we’ve, you know, come to find those key partners who are going to be supportive of us and we wanna be supportive of as well.
[26:07] Michael: And one of the cool stats about the deals that we’re bringing to market, roughly 80% of our books has investors who are participating in two or more of our deals. Right? And these are big mutual fund houses. These are candidly fundamental hedge funds, and we should talk a little bit about that because I think the definition of investors has has very much changed in the new environment. But we do think the depth is there, and we think the feedback that we’re getting is representative of a broader market.
[26:33] Michael: I mean, one of the things that I think is pretty interesting is once you’ve talked to, call it, six to 10 investors, you start to see the key trends. And there’s different debates in in any particular company around framework, but you’re starting to see some consistency amongst that group. And so we think that’s incredibly informative.
[26:48] Gautier: Okay. So let me pick up on that comment. You said you would like to discuss the investor universe. How do you break down investors? What are the category of investors you’re engaging with and the difference between those and the Amundsen they have?
[27:00] Michael: Yeah, I think it’s interesting. I think the old school definition of long only and the old school definition of hedge fund has changed a lot, right? I don’t necessarily think that every long only investor is owning shares for the long Per, and I don’t think every hedge fund investor is owning shares for the short term. I think there’s a redefinition of those investments, and I think it’s critical for us as owners of assets and and sellers of assets to really appreciate that. I think there’s different ways to approach it.
[27:27] Michael: I think there’s long only mutual fund complexes that have fast money portfolio managers, and I think there’s fundamental hedge funds that will own shares for a lot longer than any other investor. And so I think it goes back to really understanding where you’re putting capital and how you’re allocating those shares and making sure you have a really good appreciation for what someone’s fundamental view of a business is. And so we don’t necessarily characterize anyone as long only or hedge fund. We characterize them as fundamental or as trading.
[27:56] Michael: And, listen, I think capital markets Investment play a vital role in, you know, the new world order. But, ultimately, we also wanna make sure that the people that we’re allocating shares to have a fundamental view on the stock. We understand what their price targets are. We understand what they’re looking for for the business to perform, and we understand on any given day where they think about the business as it relates to their overall portfolio.
[28:21] Gautier: I’m glad you bring that topic. I think it’s good that you’re there to have direct interaction with investors Amundsen understand yourself as the owner of the asset. Who really cares? Who are the smart investors? Who can own this company, help you valuing it and have a proper fundamental view? Because I think too often, obviously, I don’t think it’s because people are lazy, but in IPO processes, everyone is busy and try to take shortcuts. And I think too many times people will say, okay, this is a good investor because it’s a strong brand.
[28:46] Gautier: But a lot of people are free riding on the brand and then it’s silly doing the work and have a proper view. This definition of long only, I think I said it already in the past is, yes, you have the word long, but it doesn’t mean you’re long term. Long only means you’re happy to to take market risk beta. You measure yourself against the the market. This is why you long only. The hedge fund will be able to hedge, and they can be long term or short term.
[29:07] Gautier: It has nothing to do with how they structure their products. And as I mentioned, we will always keep saying, listen, the duration of the capital is not a function of how you structure that. It’s it’s actually a function of how how fundamental and how much conviction you have in the case. Sometimes allocation and and everything is just not really decided on their level of engagement by investors, but much more by just size of the funds and reputation of the funds. It’s always a debate.
[29:30] Gautier: But I guess having you in those process really help also, probably, having yourself a better understanding who can own the stock.
[29:38] Michael: Yeah. For sure. I mean, you should know we go line by line through every deal that we IPO follow on, even some of our unregistered trades. Right? We go line by line in everything we do to make sure the allocations are reflective of the time that we’ve spent with folks and the time that those folks have spent with our companies to really understand, again, to your point, their fundamental thesis around the business. And it’s critically important for us that these deals trade well.
[30:05] Michael: And we want investors to have a really good experience across the portfolio with Apollo deals because to your point, you know, alpha and beta are are pretty interesting right now in the markets. And capital markets transactions historically were meant to drive alpha. Well, if the capital markets, as we talked about earlier, aren’t doing that, you need to set these businesses up to really create differentiation for investors to actually drive Per. And we want the people that we’re spending a lot of time with and doing a lot of work to reap those benefits.
[30:36] Michael: And so, yeah, I mean, you can talk to some of our favorite syndicate people in terms of how late we’ve kept them in the office as we go line by line, literally share by share, allocating these deals because, like I said, we want these deals to work. We want these deals to trade well. We want investors to make money in the things that we bring to market, and it’s critically important to reward the partners that, you know, we’re spending a lot of time with and we’re spending a lot of time with us.
[31:01] Gautier: One other comment you made is the engagement with Investment. There’s difference between The US and Europe in terms of when you can have those touch points. It seems that Europe, you have several touch points during the IPO process. We always thought that The US IPO process is very healthy in the sense they released the s one and the filing quite well ahead of the actual IPO book built, which really help us to have a lot of disclosure and information, which is not necessarily the case in Europe.
[31:25] Gautier: We tend to wait way too long to release a prospectus. But it seems you’re happy with the European setup in terms of, you know, timeline engagement with investors. Can you share a bit of the differences you see?
[31:36] Michael: Yeah. I mean, maybe I’d even ask you too, Gauthier, in terms of the processes that you’ve been involved with both Europe and The US. I mean, you get so many opportunities in the European process to interact with the management team, whether it be through the early engagement, deep dives, etcetera. Whereas in The US, we call it testing the waters, and, essentially, you’ve got a 25 page deck and, you know, maybe you do that a couple times, three times before an IPO. Maybe you’ve done an NDR some sometime before that.
[32:02] Michael: I think the level of depth in terms of into the business you get in Europe through the deep dives is pretty differentiated. I think it also provides, you know, you all with with a lot more information. Maybe the lack of disclosure that obviously the prospectus provides is not the same. But, you know, even The US has has evolved. Right? Now those filings are only coming out two weeks before an IPO.
[32:23] Michael: And so I actually think there’s a lot to like about the level of engagement in Europe, and and I’d ask you if you think it’s too much. But, like, one of the other interesting things about the European process, which is very different than The US process, is your ability to engage with the research analyst community ahead of ahead of the IPO. Right? I mean, one of the wild things about The US process is, obviously, research doesn’t come out till after the IPO, whereas in Europe, it comes out before the IPO.
[32:47] Michael: So I think there’s definitely clear differences to say we like one better than the other. I don’t have a great answer on that question, but I just think the level of engagement we get from Europe is is pretty unique. And you get a level of depth in through that deep dive that I think is very distinguished and very differentiated versus The US process.
[33:05] Gautier: It’s true. I think we should have probably a blend of the two worlds because in Europe, you have a lot of touch points for the few investors who actually get access because not everyone get access testing the water or the deep dive. And I think Europe has to do that because there’s less liquidity and less engagement from the broader investor community and IPOs in general. So you really have to create those touchpoints to make sure you have visibility when you go ahead with the IPO.
[33:29] Gautier: The US wait a bit longer, but I think it’s because they can rely on a broader investor base as well. So I think having this prospectus earlier in Europe will help as well to engage with more investors eventually. But I agree as well, a lot of frustration in The US not to have access to sell sites and research on that is Amundsen not really having a lot of information before the prospectus is released. So I guess it’s both processes try to, address different, challenges, on on each side.
[33:54] Gautier: One question important question is the sizing of the IPO. How much to sell at IPO or how much to raise in terms of primary? Here again, actually, there’s differences between The US and Europe. The average free float in The US is around 10%, and it goes from 5% to 15% of the company. So that IPO in Europe, it’s minimum 25% across most listing location, and it can go as high as 40%, which we think is a challenge because suddenly it creates a lot of shares to be digested.
[34:24] Gautier: What’s your view in the team how to size? What’s the magic formula for the sizing?
[34:28] Michael: Yeah. When we say there’s a magic formula, obviously, it’s very case specific. I mean, a lot of it is based on what we think the supply demand imbalance tension gets created and where we think these things need to size to ultimately price and trade well. It’s interesting your point on just the difference of the European and US.
[34:44] Michael: I mean, you know, this metric of percentage of market cap is is such a funny one to me because you can have a, you know, billion 5 market cap or you can have a $3,000,000,000 market cap, and yet we apply the same metric. And at the end of the day, you need to solve for dollars or euros in the door. I think we’ve taken an approach that, you know, we wanna price these things appropriately.
[35:04] Michael: And if we are pricing them appropriately and if we are selling them at the cheapest price that we’re gonna sell these businesses, then ultimately, we probably wanna sell less. Right? And so, ultimately, it’s trying to solve for what we think is a requisite aftermarket liquidity, a size where large fundamental investors can care and can have a meaningful position.
[35:25] Michael: Obviously, if there’s a need for primary capital, making sure that these companies’ balance sheets are shored up to a level where the public markets need them to be from a leverage perspective or if there’s a growth angle, obviously, having the requisite capital on balance sheet to go deploy that capital into into the market. And so it’s case by case specific. And so I I reckon I’m not necessarily giving you a perfect answer, but I do think we’re a little less focused on the percentage of market cap as an answer.
[35:52] Michael: I think what we’re trying to ultimately do is solve for the absolute dollars where we think there is an attractive deal where the aftermarket liquidity is one where it’s an interesting point. I I actually had this debate at a dinner I was at at London. You know, you talk to a few Investment, and they’ll say liquidity in both European and The US markets are are tough for IPOs right now. But yet they want you to allocate 70 to 80% to the top 10 investors.
[36:19] Michael: And if we go back to the debate around fundamental long only long term in nature, well, then if if they really do wanna take a long term view, then there theoretically shouldn’t be that much liquidity.
[36:29] Michael: And so it’s a balancing act of trying to provide the right amount of of liquidity to the market, size the deal so that you’re appropriately allocating it, and create the right supply demand tension so that the price that you’re you’re ultimately pricing at is one that is super attractive to both the buy side and us that allows it to trade up so that as we’re continuing to sell down stock in in the future, those are at much higher prices.
[36:51] Gautier: Yeah. So you have to solve for a lot of things. Obviously, price is an important consideration, but liquidity after the listing as well is important. And, obviously, size is also subject to demand. What we see is sometimes when there’s a good asset, demand really builds up. There’s a lot of momentum. And, actually, the biggest risk is that the deal is upsized to meet that demand, which, you know, most likely would be inflated. How do you see this upsizing option that issuers or sellers have at the time of the IPO? What’s your lessons learned on that?
[37:20] Michael: Yeah. I mean, I hate to keep coming back to the same theme. But again, I think the direct dialogue we have with investors helps inform those decisions. We know ultimately where people care. So, you know, a x hundred million dollar order where that is only 5% of which can be allocable, like, we know what is real demand and what’s allocable demand, and we ultimately solve and size our deals for what we think is thoughtful and smart allocations, not based on the demand and the oversubscription because, obviously, oversubscription could be heavily inflated.
[37:53] Michael: And so we’ve taken a much more diligent approach. And so I think when we ultimately have pricing decisions and sizing decisions, like, we’re bringing all those factors. And this isn’t just an IPO, but it’s also for the follow ons. We wanna create, again, that right supply demand tension that creates the right aftermarket buying.
[38:09] Michael: We don’t wanna size a deal too small that people who’ve come in with big orders feel like they’re getting cut back so significantly that the resulting position is one that’s just so insignificant to them that they ultimately sell it because, know, they just don’t wanna own a stub. And so, again, difficult balancing act, but, you know, we we look at those on a deal by deal basis.
[38:29] Gautier: Yep. I mean, our experience is one of the very important factor to drive liquidity. It’s not necessarily the dollar amount initially, it’s also how the how the company obviously perform because performance brings interest, bring liquidity and velocity. And that’s a much more important factor than try to, to size too large initially because then they they actually risk that this is too much supply in one go.
[38:50] Michael: So, Chi, I make that point very frequently. A lot of times we hear this commentary around overhang. And I’m not trying to dismiss that overhang isn’t a real thing and there’s some indirect discount that sponsors like us have to pay for the fact that there’s overhang and there’s gonna be more supply. But you’ll tell me if you disagree with this. At the end of the day, I think public market investors wanna own good fundamental businesses.
[39:12] Michael: And if those good fundamental businesses are continuing to perform and deliver on what they say they’re going to deliver, then ultimately, their earnings should continue to move higher and their multiple, even at a constant, should move the stock price higher. And ultimately, that should drive liquidity. And I agree with you.
[39:27] Michael: I think I think liquidity comes from people wanting to own fundamentally good businesses, and they won’t necessarily wait on the sidelines for the next supply because the risk again is that supply demand imbalance just doesn’t exist to allow them to build a position, and they wanna own good stocks.
[39:43] Gautier: Yeah. You’re right. Having people under pressure as well how the market structure has changed. There’s more and more passive money, relying on index inclusion, more and more quants and momentum strategies, factor driven. And all those strategies will just pine into a stock which is going up. If the stock is going down, it actually they won’t touch it. Liquidity will dry it up.
[40:02] Gautier: So you really need to focus about how how do I make sure my company treads really well initially because that actually will bring this type of Investment inflows, which again is probably the highest share of the trading activity right now in the market. Fundamental investors are here to help you price discovery initially. But again, they will not necessarily be the one driving liquidity in the first place. And I think you need to understand market structure to then size your IPO and price your size IPO accordingly. That lead us actually to the pricing discussion, right?
[40:31] Gautier: Is that searching as an IPO discount Per, fifteen %, twenty %? Does the pricing matter or not? What’s your approach on that at IPO?
[40:38] Michael: I mean, I think what you’re seeing in today’s environment is for deals to be successful, the IPO discount to to your point, which has historically been a 10 to 15% kinda norm has has widened out pretty significantly, and you’re seeing all sorts of different outcomes because of that. And so I think the cost of entry today is a lot more expensive versus where it was, you know, forget in the peaks of ’20 and ’21, but obviously even before that. So, yes, I think there is an IPO discount.
[41:07] Michael: I think, again, it goes back to the ethos that we deploy of of purchase price matters, which allows you to be much more flexible in terms of where you’re pricing your IPO and setting it up for ultimate public life success. You know, I I don’t know if there’s a hard and fast rule in terms of, hey. This one’s gotta be 25 or a portfolio approach of every deal needing to have a 25% IPO discount.
[41:27] Michael: I think you need to look at who the clear comps are, how you benchmark against those businesses, and then have the debate with your investing community as to where the right price is for entry. I do think we have buyers’ markets and sellers’ markets that can help that debate be a lot easier. I think candidly today, I don’t think anybody would argue we’re in much more of a buyers’ market.
[41:49] Michael: And so the ability for the buy side to take a little bit more, quote, unquote, IPO discount than historically is one that is just gonna be something that people are gonna have to get used to. But I also think that’s the reason why you’re seeing less IPOs right now is I think there’s a lot of people that are sitting on assets that they don’t feel like they’re getting the right fair value for in the public markets.
[42:09] Michael: And with the depth and liquidity that exists in the private markets today, they’d rather wait it out and come back to the public markets when the equilibrium shifts a little bit more to the middle or more to a seller’s market. But our approach again is is not universal in terms of what the quote unquote IPO discount is, but we all are also very conscious that that there is a cost of entry.
[42:29] Michael: And and we take each deal obviously on a deal by deal basis as to what we think the right price is to get a company into the public market.
[42:37] Gautier: But you rely on your own internal work and valuation work from the deal team or do you really rely on the market feedback because it might just be very different data points, how you value an asset privately versus what the market is willing to pay for that asset or the sector at any point in time. How you decide on that?
[42:53] Michael: I think it’s a mixture of both. I mean, obviously, we have a view as to what we think the fair price for something is, and that’s obviously what we go out to the public markets or at least open up the debate with people on. I think we have the right arguments for why certain company may position itself really well against its public peers and why we think it ultimately may trade at or above that that comp. And then I think what we need to ultimately do is back into, okay.
[43:16] Michael: Well, what is the right entry point? Right? Do we need to concede something based on the feedback that we’re hearing? Like and what is the reason for the feedback we’re hearing? Why is the public market investor arguing that a company is worth different than what our fundamental analysis is? And either make the argument for why we think there’s a different way to look at it or concede to the point that, you know, most of it is not fundamental driven. It’s technical driven or it’s capital markets driven.
[43:41] Michael: And that, again, when the buying activity has quieted down, you’re gonna have to offer things at a bigger discount in order for people to put their money on the table. And, you know, then that’s the debate that we have is, okay, if that’s the ultimate price that this needs to come at and the ultimate price that needs to come at to ultimately trade higher, are we willing to to go forward, or do we wanna explore a different option or explore a different window?
[44:04] Gautier: I like to remind sometime that as a public investor, we can invest in in thousand stock. So the the opportunity cost is pretty, you know, low in that sense that there’s a lot of alternatives for us, to invest.
[44:15] Michael: And by the way, most of those alternatives are probably going to be a lot more liquid, or in your existing portfolio today. And so we have this debate with people too. Like, right, someone says, like, I need to sell something. I’m fully invested. I need to sell something to ultimately buy this. Right? And so the relative value and the relative return that I need to get in a short period of time versus what I own in my portfolio today has to be attractive enough for it to work. And listen.
[44:39] Michael: You and I have had good healthy debates around what the right value for a certain business is. And, yeah, usually, we’re not too far off, but, like, that’s where I think, again, it’s the we have these conversations Amundsen you’re solving for something, I’m solving for something. And I think, ultimately, we try and land the plan in the right place where we both feel like there’s a a good outcome for both of our purposes.
[44:58] Gautier: I mean, you know, valuation or ad is a multiple discussion is always one thing. The the biggest risk for us is, is this company going to deliver on the plan? They are actually IPOing, so they’re selling a story. We don’t have that much history in track record, obviously, as opposed to the listed peers. So we have basically to rely on management quality, management execution of that plan. That’s the biggest risk we have.
[45:20] Gautier: To what extent this is a credible plan, we can research on it obviously, but there’s there’s certain limitation to what extent we can have full comfort on this guidance. We’ve seen too many IPOs, I think you referred to that, missing on the guidance. I’m not going to mention one of them, which is after its first year anniversary. Germany just managed to really miss big time what they told investors, obviously blaming the market.
[45:42] Gautier: But at the biggest risk for IPO investors, we tend to think we like to think management is building a buffer in the guidance and understand the game of the public markets, build a track record, be liked, beat and raise, and eventually, you earn a premium evaluation. When you sit down with your, portfolio companies, how much focus you put on this guidance and the buffer to make sure the the company is meeting expectations Amundsen and actually not meeting, but ideally beating them?
[46:07] Michael: It’s a hard balance, but it is one that we spend a lot of time with our our portfolio companies on. I think the other thing which is critically important because, listen, we don’t have a crystal ball. And as we’ve seen even in the last three months, right, market dynamics have shifted materially, and everything that you could have predicted and modeled out may have changed fairly meaningfully in a short period of time.
[46:28] Michael: But one of the other critical parts of this is the right communication with TheStreet and with the research analyst community on a regular basis because there are going to come you know, we owned an airline that we just, you know, sold out of. There’s a lot of things that happen in the airline industry that are outside of our control. I mean, you could take as conservative of an approach on on oil prices or on pandemics.
[46:49] Michael: And I think what’s incredible is or incredibly important is to have a really, really thoughtful investor relations team and a management team that is constantly interacting with the investor community and the research analysts so that if things are shifting away from plan, there’s not meaningful negative surprise and helping explain why things have changed because it’s going to be impossible to predict everything. But making sure that there’s not a surprise that obviously catches investors off guard, I think that to me is the critical part of this.
[47:21] Michael: We talk about predictability, and a lot of our businesses have a big element of predictable revenue streams. But what I think you wanna also communicate to people is, okay. What would change that would change that predictability?
[47:32] Michael: Or in the course of your public company life, making sure that you’re helping guide people to what are the inputs that are driving a change in output and, you know, spending time with research analysts to make sure that their models are built in the right way so that there’s not a big element of surprise at the time of ultimate reporting.
[47:50] Gautier: Yeah. I mean, in a private setup, as management, you can manage your board and your shareholders expectation. You can have direct calls and it’s relatively easy. Straightforward, when you’re public, first you’re going to be constrained by when and what you can communicate, and then it’s just not a few people you have to really manage. It’s Amundsen and thousands. So it’s a very different exercise, and you need to build the internal resources and communication to make sure you manage those expectation when you have windows to do it.
[48:15] Michael: Yeah. We talked about it a little bit earlier on, but, like, that’s why I think some of the credibility build in private life for people to start to get a good sense for what does the financial team look like? How do I feel about the CFO’s ability to predict their business? We also go through those dry runs to be able to do that so that, you know, if there is a surprise, we wanna know, well, what happened in any given quarter? What do we need to fix?
[48:39] Michael: What do we need to change about our budgeting and modeling so that those surprises don’t happen? And what’s the level of incremental conservatism that we may need to put into a singular input that may have, you know, a very, very large output move?
[48:51] Gautier: Yeah. I think a lot of that confirmed that. It’s, it’s a quite a high bar to get the company ready for IPO. It’s a lot of investment. You have to be thoughtful about that and prep the company for it. And again, we’ll probably back to the initial comments that this is why having a function like, like you guys probably makes a difference a lot and help those companies being actually good public companies. What do you think is a good recipe for, success factors for IPOs?
[49:13] Gautier: When you’re looking at your portfolio today at private companies, what are the key, key ingredients for you that, give you confidence those will be good IPO candidates?
[49:21] Michael: I think predictability is, is so important, right? I mean, we spend a lot of time talking about it today, but obviously having visibility into the businesses is obviously critical and clear. I think the ability to go and model your business in a efficient and conservative manner, which we just talked about, which is obviously a derivative of predictability. I think having a management team that has the energy to go and spend a lot of time with investors and get the story out there and be patient is is critically important.
[49:53] Michael: And at the end of the day, I think we need simplicity. Right? You know, a lot of these businesses that we talked about at the outset had a complex nature to them when they were existing public companies, and we need to make sure whether that’s changing the the framework of some of the parts and, you know, carving out a business, but getting simplicity, I think, is key to public markets today. To your point, portfolio managers are spending so much time on so many different things.
[50:20] Michael: Research analysts are covering more companies today than they ever have before. And so making the thesis digestible, easy to understand, simplified, I think is a critical differentiator. We have a portfolio company that had a whole bunch of different business segments. We cleaned it up about eighteen months ago, told a really efficient capital allocation story, increased the dividend or buying back stock, and now it’s a singular focused business. And the rerate of the multiple has been clear. The level of engagement from investors has been massive.
[50:53] Michael: And, again, I think that is what the market, especially in today’s environment, is looking for because there are just so many other distractions.
[51:00] Gautier: Yeah. It’s interesting you mentioned the sell side, analysts covering more stocks. I mean, there’s been fewer and fewer sell side analysts. Obviously, each single analyst has to cover more, which you can argue maybe dilute as well, the quality or the level of engagement an analyst it can have on a single stock. And that’s another argument why it’s very important as well to really get the buy side as early as we can in the process. We haven’t touched, like, upon the capital structure.
[51:22] Gautier: That’s something as well for private equity industry used to be I mean, the model very often involve leverage. And the issue with the challenge of IPOs and getting enough liquidity in the market is if you come with a capital structure which is too high and you need suddenly to raise a lot of primary at the IPO, that really is gonna kill the IPO route and option. We see that in a few situations. Some of them have been solved by pre IPO rounds, raising primary before the IPO.
[51:48] Gautier: Do you think that’s, that’s a challenge for the private equity industry? That means today you can’t come with the same type of levered structure that you had in the past, you need to solve for that before the IPO?
[51:57] Michael: Yeah. I do. I think and I think we’ve been pretty proactive on this. I mean, if you look at our average leverage levels, it’s just it’s just much lower than the industry. The average leverage on our private equity portfolio companies today is roughly around four times. And so we’re putting less leverage on the businesses that we’re buying. I think there’s a few reasons for that.
[52:14] Michael: Obviously, it gives you a lot more flexibility throughout the entirety of the life cycle, both from a economic macro perspective, the ability to, you know, increase leverage if you need to for return of capital for m and a opportunities, but also ultimately for the exit. It just provides you with a lot more flexibility for what the market is looking for today. There is this clear line of demarcation of four times in The US and three ish times in Europe.
[52:39] Michael: I think that’s come down even further, and we can argue whether or not, again, that’s the right approach for a portfolio of companies or if it’s the right approach for any singular company. But I think the market, again, in a buyer’s market is speaking. And so I do think companies are going to have to look to all sorts of different alternatives to bring leverage to a more appropriate level for public market exits.
[53:00] Michael: And not to plug the the hybrid business that we run, but, like, that’s again, that is a solutions oriented business that we’re out trying to find really interesting businesses that may have higher amounts of leverage and come in in a pre IPO round to help bring their leverage down to make it more palatable for the public markets. But for our businesses, I think you hit it the nail on the head if we wanted to bring leverage. I think there’s two things.
[53:22] Michael: One is I think it’s helpful to diversify the capital structure for ultimate public market exit. As we talked about, it’s great to get a public style investor into the cap stack. I just think it helps with the execution.
[53:32] Michael: And two, if there is things on the balance sheet that you wanna shore up, it’d be great to do that ahead of the IPO because I think, yeah, maybe it’s at a multiple that’s not at a level that you feel great about at the time of sale, but it helps you blend into a much higher multiple at the time of IPO and subsequent monetizations that when you look back on the ultimate completion of that sell down, you should feel really good about where you’re exiting.
[53:55] Gautier: And I think I would like to think that when you actually IPO a company, maybe it used to be after four, five, six years, but maybe surely, probably start IPOing a bit earlier. Just because as we discussed, maybe you would have to sell a bit less at the IPO or maybe because there’s a need of a primary trench to deliver that, that was gonna push back the secondary trench. So if again, you don’t wanna be put in a corner here and squeeze by timing, maybe you should actually start earlier the listing.
[54:19] Gautier: But that means actually then how do you manage your public exposure as a product owner? Are you LPs paying you to really to get too much public exposure when you start selling down? What’s the right timing for accelerating the the exits? Do you have a plan in house when to do those blocks? What’s the right timing? Is that driven by IRR returns, timing of DPI that you need to returns? How to think about that?
[54:40] Michael: Yeah. So I’d say a couple of things. One is, you know, to your question just around IPOE businesses earlier, I think it’s a good question. I think the debate though is what has changed or has has change been so significant the business looks that different than the the company we bought. Right? So you need to you need to be really clear about that. There are businesses that we’ve taken out public that have looked very different, you know, shortly after our private ownership, and and we’ve tried to accelerate those IPOs.
[55:06] Michael: And there’s ones where you may need a little bit more time to recognize the value creation plan. As it comes to sell downs, I mean, I think your question is the right one. Do we have a a specific plan? The answer is no. I mean, we have a guide that we go into every year as we think about ultimate monetization based on a whole number of factors.
[55:23] Michael: But, ultimately, we wanna make sure that, one, we think we’re getting fair value because, ultimately, these businesses are not trading and should be trading at their fair value, that we think that we’re getting fair value for the company when we monetize. We also wanna size and price those deals again to accelerate the monetization.
[55:37] Michael: So, you know, if you look at the the case study of our sell down of Tech Data Synnex last year, I mean, we were able to monetize roughly $4,000,000,000 of stock in three months because we were really thoughtful about how we approached the markets. We were really thoughtful about how we educated the markets on the name. And so it allowed us to move and move quickly, each again at subsequently higher prices. And that drove IRR appreciation versus trying to maximize size or maximize price in any singular trade.
[56:05] Michael: It was a total approach to the ultimate, like, full sell down as opposed to looking at it on a singular basis, and that’s how we think about all of our our monetizations is on the completion rather than on a singular sale.
[56:17] Gautier: Okay. Listen, Michael. Thank you very much. Do you have a a war memory that you can share with us in one of those IPO you have executed?
[56:24] Michael: You know, I think for me listen. LOTA Madica, not just because it’s one you and I spent a lot of time on, but it was my first IPO that I had ever done in Italy. And, you know, obviously, a phenomenal management team getting to ring the bell in Milan was really, really cool and really unique. It was one that we had spent a lot of time on. And the success that we’re seeing today is like a I guess just a nice way to, like, think about how far we’ve come.
[56:50] Michael: And I think it speaks to just what we’re trying to do and how we’re trying to differentiate ourselves with the Apollo Equity Capital Markets team.
[56:57] Gautier: Yeah. And that’s a good example. Higher liquidity and float post IPO really help, you know, stock to be visible and rerating. Okay. Thank you very much, Michael. Have a good one. Thanks for being with us today.
[57:06] Michael: Thanks, Gautier.
[57:09] Per Einar Ellefsen: Thank you for listening to IPO Stories. In future episodes, we’ll host CEOs, CFOs, advisors, Amundsen other participants in the IPO process to learn from their experience, like from Michael today. If you like the show, please follow us on Spotify for Per Apple Podcasts and share the show with people around you. If you have questions about the IPO process that you’d like us to address with future guests, please get in touch at contact@ip0stories.com and follow our LinkedIn account, Amundsen Investment Management.
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