Warren Buffett’s Berkshire Hathaway may have inspired Apollo’s $11 billion Athene deal

Warren buffett
Warren Buffett. AP Images

  • Apollo Global Management has agreed to merge with Athene Holding.
  • Cofounder Marc Rowan was inspired by Warren Buffett to fund investments with insurance.
  • “There are elements of Berkshire Hathaway,” Rowan said about the deal this week.
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Marc Rowan wants to give Warren Buffett a run for his money.

The Apollo Global Management cofounder, who is will replace Leon Black as CEO later this year, spearheaded the private-equity group’s latest deal. Apollo has agreed to merge with Athene Holding in an $US11 ($14) billion all-stock deal, it said on Monday.

Apollo already owns more than 25% of the insurance group – the result of Rowan deciding to emulate Buffett’s Berkshire Hathaway conglomerate in the late 2000s and use insurance to finance investments.

Rowan’s deal to bring Athene fully into the fold will make Apollo even more like Berkshire. Buffett’s company uses the money thrown off by Geico, National Indemnity, and its other insurers to fund cash-hungry subsidiaries and invest in public markets.

“There are elements of Berkshire Hathaway,” Rowan said about the Athene deal in a conference call on Monday. However, while he would be “more than happy to be grouped” with Buffett’s conglomerate, he emphasized there are differences between the two companies.

“We are doing something in our own way with our own strategy and with our own rationale,” he said.

Berkshire famously uses insurance “float,” or the premiums collected by its insurers before they’re paid out to satisfy claims, to make internal and external investments. The strategy has consistently generated a higher return than letting the funds sit in the bank.

Similarly, Apollo’s merger with Athene will provide it with even more life-insurance and annuity payments to finance investments.

Apollo’s strategy isn’t too surprising, given its bosses have drawn parallels to Buffett’s company in the past.

“Next to Berkshire Hathaway, we have the largest amount of permanent capital out there in this business,” cofounder Joshua Harris said on an earnings call in 2019.

“We’re an asset-light Berkshire Hathaway,” he said at a financial-services forum last year.

Rowan and Harris may hold Berkshire in high regard, but they’re not afraid to steal its lunch. Apollo outbid Berkshire for Tech Data in 2019, ending Buffett’s hopes of deploying $US5 ($6) billion of his firm’s huge cash hoard.