By Miriam Gottfried
Josh Harris, the co-founder of Apollo Global Management Inc.,
obsessively weighs the risks and implications of decisions he
makes: whom to hire for a role at the private-equity giant, whether
to move forward with an investment or which trades to make to fill
out the roster of the Philadelphia 76ers, the NBA team he co-owns.
Former employees describe him as a micromanager who is known to
call people numerous times in a day to discuss a small investment
and spend an entire meeting rehashing unresolved questions from his
previous one. Even Mr. Harris's friends joke about sometimes
getting multiple calls from him in a single day to discuss the same
matter.
This approach has helped to make Apollo an investing giant with
$433 billion in assets, second only in the private-equity world to
Blackstone Group Inc. In 2017, it raised a record-setting $24.7
billion buyout fund that has only been surpassed by a Blackstone
vehicle. Its $300 billion credit business has nearly tripled over
the past five years.
Now, Mr. Harris, a 55-year-old billionaire, faces a new
challenge: Trying to revamp the firm's cutthroat culture and
rough-edged image, which has long been seen as synonymous with the
men who founded it 30 years ago. He is trying to modernize its
corporate structure, creating a broader shared power arrangement
that could one day form the basis of a succession plan. And he's
trying to move past the firm's reputation for using sharp elbows to
pursue profits at all costs.
Recently, the task of scrubbing up Apollo's image has been made
more difficult as its co-founder and most recognizable personality,
Chief Executive Leon Black, has found himself under scrutiny for
his relationship with late financier Jeffrey Epstein, who was
indicted last year on federal sex-trafficking charges involving
underage girls and later took his life in a Manhattan jail.
A group of Apollo's independent board members hired law firm
Dechert LLP to conduct a review of the business connections between
Mr. Black and Mr. Epstein. And in a conference call Thursday Mr.
Black offered his most detailed public account yet of his ties to
Mr. Epstein to whom he has said he paid millions of dollars
annually to provide estate planning, tax and professional services
to his family partnership and other family entities from 2012 to
2017.
"Any suggestion of blackmail, or any other connection to
Epstein's reprehensible conduct, is categorically untrue," said Mr.
Black, who hasn't been accused of any inappropriate conduct. On
that same call Mr. Harris called the independent review "an
important step."
Another obstacle that could get in the way of a corporate revamp
at Apollo: Mr. Harris himself. Even those who say he has made
progress on a revamp of the firm's culture acknowledge his
personality is perhaps most reflected in Apollo's public image --
aggressive, intense and fiercely competitive.
For years he has overseen every detail of the New York firm's
day-to-day operations -- a task that didn't interest either Mr.
Black or Marc Rowan, Apollo's third co-founder. Mr. Black is the
architect of the firm's investment style and big-picture visionary
while Mr. Rowan has been its creative genius, conceiving and
executing the highly successful strategy of acquiring and building
insurance companies and then managing their assets.
Three years ago, as part of an effort to craft more of a typical
corporate hierarchy, Apollo named James Zelter and Scott Kleinman
-- at the urging of Mr. Harris -- to the newly created roles of
co-presidents. However, it has been a challenge for Mr. Harris to
learn how to let them do their jobs without intervening, people
close to Apollo say.
Some of those people remain unconvinced of Mr. Harris's ability
and willingness to take steps required to modernize the firm. He
regularly dominated investment committee meetings, hammering young
analysts about their financial models, former employees say. Not
replying right away to a Saturday morning email from Mr. Harris
would yield a response 10 minutes later of "?". And he frustrated
people with his iterative decision-making process, sometimes taking
a year to decide not to do something.
Mr. Harris, whose net worth has been pegged at nearly $5 billion
by Forbes, stands out as a workaholic in an industry filled with
them. Over the years, he has regularly been the first one in the
office and the last to leave and has been tasked with leading most
of the firm's quarterly conference calls, tending to relationships
with important investors and hiring and reviewing the leaders of
its key businesses.
"Some people play golf. Some people play tennis. I work," Mr.
Harris said in a rare interview in September -- itself a sign of
his effort to project a new image. Even his hobbies -- attending
games of the teams he owns and training for marathons -- aren't
what everyone would call relaxing. In addition to the Sixers, Mr.
Harris is co-owner of the NHL's New Jersey Devils and the English
Premier League's Crystal Palace -- roles that forced him to embrace
the importance of a positive public-facing image.
"Josh likes to win," says Bippy Siegal, CEO of private-equity
firm Raycliff Capital, who has been friends with Mr. Harris for 23
years and says he talks with him about 15 times a week. While
taking a bike ride on Block Island, R.I., during a vacation with
their families over the summer, Mr. Siegal says Mr. Harris tried to
race ahead of him. "We're riding crappy, beat-up, bikes. I said:
'Do you have to take it to the next level?'"
Mr. Harris has found greater personal and spiritual contentment
in recent years, his friends say, even meeting with a rabbi,
Yitzchok Itkin, who has consulted with other Wall Street
heavyweights. He enjoys spending time with his five children and
has been devoting more time to his philanthropic efforts with his
wife of 25 years, Marjorie, a former Citigroup Inc. banker.
Mr. Harris grew up in Chevy Chase, Md., the son of an
orthodontist. He was competitive in sports and became hooked on
wrestling at a young age. In high school he worked hard on that and
academics, eventually landing a spot at the University of
Pennsylvania's Wharton School.
After graduating in 1986, he joined the mergers-and-acquisitions
department of investment bank Drexel Burnham Lambert Inc., where
Messrs. Black and Rowan were already working. Under the influence
of Michael Milken, the bank had pioneered the use of junk bonds to
finance acquisitions, paving the way for the explosion of the
buyout business.
Mr. Harris left Drexel after two years to attend Harvard
Business School, where he was a Baker Scholar, a distinction
awarded to the top 5% of each graduating class.
By the time Mr. Harris graduated in 1990, the U.S. was in a
recession and Drexel -- brought down by Mr. Milken's
securities-fraud conviction and turmoil in the junk-bond market --
had filed for bankruptcy.
He got a job at Blackstone. He had been there for two months
when he got a call from Mr. Rowan asking him to join the fledgling
Apollo. The 25-year-old had already used his signing bonus to pay
down his student loans and was afraid Blackstone would make him pay
it back.
"My greatest trepidation was going into Steve's office and
letting him know," Mr. Harris said of Blackstone boss Stephen
Schwarzman. The Blackstone chief said he could keep the money. "He
was incredibly gracious."
At Apollo, Mr. Harris became one of the firm's top deal makers.
His crowning achievement was a restructuring of Dutch chemical
company LyondellBasell Industries NV, which went public in October
2010. Apollo reaped $10 billion in profits on a $2 billion
investment -- one of the most profitable private-equity deals of
all time.
Apollo's co-founders tried a decade ago to set up a broader
management structure at their firm, but that attempt was ultimately
unsuccessful. They hired Marc Spilker, a former Goldman Sachs Group
Inc. executive and college classmate of Mr. Harris, as president.
None of the co-founders -- including Mr. Harris, who was knee-deep
in deal making -- was particularly interested in building a public
image, accounting, hiring, investor relations, fundraising or
communications.
Mr. Spilker's power was limited, and it became clear the three
founders weren't ready to cede decision-making to him, people
familiar with the matter say. He left the firm at the end of 2014,
and it then fell to Mr. Harris to take over.
There are no signs Mr. Harris, at 55, is going anywhere soon.
But his latest effort to set the firm up for a future beyond the
founders has picked up steam lately. In 2019, he named Chief
Financial Officer Martin Kelly and longtime partner Anthony Civale
to the roles of co-chief operating officers and promoted two
younger partners to co-head private equity. Mr. Harris brought in a
former BlackRock Inc. executive to oversee human resources and
talent recruitment, replacing a longtime insider, and hired
Apollo's first dedicated head of communications.
He admits Apollo has been slow to evolve, but says the firm is
now 70% millennial or Gen-Z -- generations that care about working
at socially responsible companies. He argues that Apollo's
reputation for looking to make a quick buck on unloved assets is no
longer accurate. A decade-plus of low interest rates has meant most
of its business is dedicated to generating yield for institutions
like insurance companies, he says. Apollo set a goal last November
of reaching $600 billion in assets under management in five
years.
True to its roots, Apollo has poured tens of billions of dollars
into beaten-down areas such as the airline, aerospace and aircraft
industries since the coronavirus pandemic began. But in keeping
with Mr. Harris's new reputational focus, he is quick to assert
that the firm first ensured the health and safety of its employees
and provided over $50 million in donations together with its
portfolio companies to purchase technology for children and support
health care workers. It employs more than 1,500 in 15 offices
around the world.
Mr. Harris credits buying sports teams with throwing him "into
the deep end of the pool" as a public-facing leader. Owning a team
in the NBA -- which stood out for its swift public response to the
pandemic and to Black Lives Matter movement -- made a mark on
him.
"If you think about a sports team, you're a steward for a city,"
he said. "Social media and communications are very important.
That's really helped with Apollo in terms of communicating culture,
values and what we stand for."
Write to Miriam Gottfried at miriam.gottfried@wsj.com
(END) Dow Jones Newswires
October 31, 2020 00:15 ET (04:15 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
Apollo Global Management (NYSE:APO)
Historical Stock Chart
From Aug 2024 to Sep 2024
Apollo Global Management (NYSE:APO)
Historical Stock Chart
From Sep 2023 to Sep 2024