Apollo Does Commodities — What’s Next?

Apollo Management has hired Neal Shear, Morgan Stanley’s former head of trading, to launch a commodities trading business. The move is consistent with Apollo’s plan to pursue new investment avenues as mega-buyout opportunities dwindle. Further evidence of diversification includes the firm’s expansion of its global credit and distressed debt team, and its allocation of $1 billion toward the discounted debt of its own portfolio companies.

Apollo Management recently filed to go public on the New York Stock Exchange as a way to raise capital to enter areas like commodities trading and real estate, as well as to make acquisitions. With plans for the commodities business underway, an expansion of the firm’s real estate operations may be next. Such an expansion would remain separate from Apollo’s existing ownerships of REITs and real estate-focused retail and leisure companies.

Apollo spokesman Steven Anreder noted that even though the firm filed to list itself on the NYSE, the filing is “simply a registration,” and the firm is not currently raising new money. Part of the reason buyout firms go public is for capital to make acquisitions. An IPO would afford Apollo the capital to enter new areas via acquisition, and a possible delay, coupled with the hiring of Shear, may indicate those moves will be organic.

Anreder declined to comment on the commodities business beyond confirming Shear’s hire, which was first reported by Bloomberg. Shear left his post as chairman of trading at Morgan Stanley in February. He is building team based in New York.

A delay of Apollo’s public debut wouldn’t be surprising, considering IPO of its peer, the Blackstone Group, has lost more than half of its value since its ill-timed IPO last June. And Apollo hasn’t fared too well in trading itself—since it began trading on a private Goldman Sachs-run exchange in August, the firm’s stock lost more than 40 percent of its value. Apollo’s filing to trade on the NYSE occurred in early April, narrowly beating its May deadline to do so.