Apollo Global Management is betting on timeshares with its latest acquisition, the $2.2 billion purchase of Diamond Resorts International announced Wednesday.
The firm has agreed to acquire the Las Vegas-based company that owns over 420 timeshare properties in 35 countries in an all-cash offer. The transaction is expected to close in the next few months, according to a Wednesday statement from the companies.
“We are tremendously excited about the opportunity for our funds to acquire Diamond Resorts,” said David Sambur, a partner at Apollo, in the statement. “We look forward to bringing Apollo’s resources to bear and working with the Diamond Resorts team to continue to grow and enhance their business.”
A spokesperson for Apollo declined further comment, but PERE understands that capital for the purchase came from the firm’s latest private equity fund, Apollo Investment Fund VIII. The firm held a final close on $18 billion in December 2013, which was the largest private equity fundraise at the time. According to the firm’s first-quarter earnings report, there were 16 investments from the fund as of the end of March, including the purchase of home-security monitoring company ADT Corporation for a total price tag of $6.9 billion, including debt.
Major investors in Apollo Investment Fund VIII include the Teacher Retirement System of Texas, which committed $850 million; Canada Pension Plan Investment Board, which invested C$991.8 million ($765.6 million; €688.6 million); and California Public Employees’ Retirement System and New York City Retirement Systems, which each allocated $500 million, according to PERE’s sister publication, Private Equity International.
Apollo has long operated in the hospitality space through purchases in both its real estate and private equity funds. Last March, the private equity firm sold Great Wolf Resorts, the US’ largest indoor waterpark operator, to Centerbridge Partners for $1.35 billion. Apollo took the company private in 2012 for $703 million.
Apollo’s latest publicly disclosed real estate transaction was the October purchase of a four-building office park in Irving, Texas for $327.7 million with investment manager Vanderbilt Partners, according to data provider Real Capital Analytics. Last year, the firm also bought a 22-property British hotel portfolio from a consortium of investors for $1.4 billion, according to RCA.
Apollo had a total of $173 billion assets under management as of March 31, including about $11 billion in real estate, according to the firm’s first-quarter earnings report.