Following the real estate investment firm’s agreement to be acquired by Apollo Global Management (APO) for $1.5 billion, Bridge Investment Group Holdings’ (BRDG) stock shot up 35% on Monday.
Apollo to Provide Real Estate Firm Bridge Investment Group for $1.5 Billion:
Apollo Global Management has revealed intentions to purchase Bridge Investment Group Holdings Inc. for $1.5 billion in an all-stock transaction as a calculated step to strengthen its real estate holdings. Apollo, which has traditionally concentrated on debt and equity investments and asset management for the insurance industry, is making a significant change with this acquisition.
The transaction, which is anticipated to be finalized in the third quarter of 2023, would increase Apollo’s portfolio by around $50 billion in assets under management, almost doubling its real estate AUM to $110 billion. Apollo’s growth aligns them with its competitors, KKR and Blackstone, who own sizable real estate assets.
The deal states that for every share of Bridge Class A common stock, investors will get 0.07081 shares of Apollo stock, which would value Bridge at $11.50 per share. Compared to Bridge’s closing price of $7.92 on the Friday before the announcement, this is a premium of around 45%. The announcement was well received by the market, as seen by the 0.8% increase in Apollo’s shares and the 35% increase in Bridge Investment’s stock.
Apollo’s aggressive growth goals align with the purchase, which includes managing $1 trillion in assets by 2026 and $1.5 trillion by 2029. John Barnidge, an analyst at Piper Sandler, reiterated an overweight recommendation on Apollo’s shares and pointed out that the transaction will help the company reach its five-year growth target of 20%.
According to Apollo Partner David Sambur, the firm’s real estate business was “growing but not yet at scale,” this purchase attempts to close that gap. With prospects in housing, logistics, commercial real estate debt, and “core plus” assets needing minor capital enhancements, the transaction is anticipated to strengthen Apollo’s origination capabilities in real estate equity and credit. After the acquisition, the bridge will be an independent platform inside Apollo’s asset management division. To maintain continuity, Bob Morse, the executive chairman of Bridge, will join Apollo as a partner and head the company’s real estate equity division. This change in leadership is viewed as a move in the right direction toward combining the operations and knowledge of the two companies.
