Is Apollo friend or foe of banks?

A first for starters: Bennett Goodman’s Hunter Point Capital has taken the new step of turning to debt markets to return cash to its investors as it and rival investment firms look for ways to ease pressure on clients who have been left out of profit sharing.

And a music business: Pink Floyd, the British rock band, has agreed to sell the rights to their vast catalog of songs, including hits such as I wish you were here and Money to the Sony record label for about $400 million.

In today’s newsletter:

• Marc Rowan’s Big Ambitions

• How to Secretly Build a Big Bank Stake

• Jay-Z quits accounting firm BDO

Marc Rowan’s new vision of Wall Street

Tuesday, Mark Rowan gave a new presentation to the public about how Apollo Global will continue the conquest of Wall Street.

As Rowan was selling hard, he surprisingly offered veiled praise for a rival. The architect of Apollo’s powerful insurance business said a competitor “took the time to build something substantial”.

It was a reference to KKRhis insurance unit. The rumor in private equity circles has long been that the two firms are bitter rivals and rarely team up on deals. But times are changing.

Since Rowan took over the reins of Apollo in 2021, he has moved away from his reputation as a ruthless asset chaser. Instead, he fueled Apollo’s growth by forging complex financial partnerships.

Rowan highlighted its drive to $1.5 billion in assets and $275 billion in debt creation annually over five years, making it one of the top lenders globally.

He presented a vision where Apollo would be in different markets and alliances, with the group blurring what a bank and an investment company can finance. And in the process, what makes a public or private investment.

Apollo has recently partnered with large banks such as City Group and BNP Paribas — critical relationships to balance as they form their own origination teams, which call on companies and specialist finance providers that offer their own loans.

As a testament to Apollo’s new mindset, Rowan said he bought a soft-serve ice cream machine for dealmakers, which is only turned on to celebrate a big win.

“Apparently people prefer frozen yogurt to money,” Rowan joked. DD, now you’ve heard it all.

However, Rowan was also quick to point out that people who come to Apollo are “often escaping a larger institution. We should be very careful not to become like that.”

It’s not an optimistic view of investment banks training many of Apollo’s fresh faces, and the observation also points to the brain drain in banking. (Uncomfortable territory, given that the banks are also fueling Apollo’s debt machine.)

Meanwhile, Apollo’s private equity team took to memes to criticize its rivals.

That’s not to say Apollo doesn’t appreciate lending to these groups, or could be calling with a “capital solution” soon.

Andrea Orcel’s amazing Commerzbank transaction

When Porsche revealed a large share in Volkswagen which he built over several months through derivatives in 2008, triggered a panic among hedge funds that were caught short.

The disaster prompted regulators to uphold disclosure rules that put an end to corporations hiding their sizeable stakes in competition.

But Andrea Orcelthe executive director of the Italian lender UniCredithas obviously found a way to use these changes to his advantage.

He has amassed a 21% stake in the German rival Commerzbank in recent weeks taking advantage of regulatory loopholes.

So how did Orcel do it? Trading was based on an arbitrage between two rule books.

While companies are prohibited from buying more than 10% of a lender without first obtaining approval from European Central Bankthere are some caveats.

The ECB’s blessing is only required to take control of the voting rights attached to the shares. The rules do not prevent UniCredit from gaining economic exposure to the target’s shares, nor from signing the contracts now to receive shares after ECB approval.

“Think what you can, but this is nicely done,” said a Frankfurt banker.

New securities laws after the Porsche deal require investors to disclose their positions – directly or indirectly through derivatives – when their economic interest reaches 5% or higher thresholds such as 20%.

But the gaps between those marks leave wiggle room for someone like Orcel to reveal a huge leap in his position. In the case of UniCredit, it managed to go from being a minority investor to surpassing the German government as the largest single shareholder.

Barclays and Bank of America are at the other end of the contracts, which are so-called total return swaps — instruments that replicate the performance of Commerzbank shares.

While the bank awaits final approval from the ECB to hold more than the 10% threshold, its position is basically as a Schrödinger’s cat thought experiment.

The famous theoretical cat is both dead and alive at the same time – just like Orcel owns and does not own 11.5% of the shares.

As the European banking landscape remains fragmented, DD will be watching to see if other lenders try to emulate Orcel’s tactics.

The theft allegations affect BDO’s Florida business

Is there a Jay-Z-size hole in the accounting firm avehis Florida businesses, the FT’s Stephen Foley has revealed, following allegations that a former employee stole money from customer accounts.

The star is one of a number of rappers who used BDO to handle their personal and business affairs but cut ties after becoming upset over the firm’s handling of the allegations, according to people familiar with the matter.

Stallion Megan Thee also left along with fat joewho was the first to make public claims against the company in 2022.

Fat Joe alleged that a BDO employee used his credit cards and bank accounts to withdraw thousands of dollars in cash and pay school fees.

The situation was so chaotic, his lawsuit claimed, that mortgage payments were often late and it appeared his credit card bills were sometimes paid from accounts belonging to other customers, including Major League Baseball players.

The lawsuit was quietly settled under undisclosed terms earlier this year, and BDO has denied the claims. But he still poked fun at one of the company’s recent major acquisitions.

In January 2021, BDO bought Morrison, Brown, Argiz and Farrawhich was the largest accounting firm in Florida and had signed Fat Joe, Jay-Z and others as clients about a decade ago.

former employee, Vanessa Rodriguezwas indicted in Miami on four counts of fraud, accused of spending on credit cards that did not belong to him.

She appeared in court yesterday and pleaded not guilty. She told the FT that she also denied the claims in Fat Joe’s lawsuit. Full details of the charges, which have been kept under seal, could be aired in a trial scheduled for November.

BDO said the firm “does not comment on ongoing litigation or matters relating to current or former clients”.

The job is moving

• Charles Schwabits longtime executive director Walt Bettinger will retire at the end of the year and be replaced by the company’s president, Rick Wurster. The bank has been trying to turn its fortunes around after a difficult period of exits due to the US regional banking crisis last year.

• Paul Weiss hired Joseph Glatt as a partner in its corporate department in New York. He was previously partner and general counsel for Apollo’s credit arm.

• Sidley Austin hired a group of lawyers from Latham and Watkins for its global finance team in London. Among the partners are Jay Sadanandan, Sam Hamilton, Fergus O’Domhnaill, Joe Kimberling and Ben Wright.

• Barclays promoted Brad Rogoff to global head of research, where he will also join the US investment bank leadership team and executive committee.

• Kirkland and Ellis promoted 200 lawyers to partner, including in debt financing, M&A and private equity.

Smart readings

Economic carnage China’s Hainan beaches were once a symbol of its economic riches, writes the FT’s Eleanor Olcott. Today, the region is littered with signs of trouble.

“Break It Up” Rolling Stone has the inside story on how the US Justice Department carried out its campaign to break up live music and ticketing giant Live Nation.

Pharmacy troubles CVS has spent more than $88 billion over the past six years buying major companies, The Wall Street Journal reports. His latest plan to share everything could prove difficult.

Presenting the news

Barclays details plans to modernize investment banking (FT) returns

US economy faces ‘paralysis’ ahead of election as dock workers go on strike (FT)

Mulberry rejects £83m takeover bid from Mike Ashley’s Frasers (FT)

Abu Dhabi targets biggest ever foreign takeover with €14.7bn bid for Covestro (FT)

SAP chief warns EU against over-regulation of artificial intelligence (AI)

Boeing weighs raising at least $10 billion in stock sale (Bloomberg)

LVMH bets on non-drinking bubbles at $100-plus a bottle (WSJ)