The smart money is getting ready to buy
The smart money is getting warmed up.
Private-equity firms and distressed debt specialists spy an opportunity amid the market carnage of the past few weeks, and large funds are ramping up investment.
It's a change for the industry, which spent the last few years struggling to find deals as valuations soared. Instead the funds seized the opportunity to sell-off older investments and raised new capital.
Now it's time to spend that money.
"We're buying when things get tough ? we're buying low and selling high," Apollo co-founder Josh Harris said on a conference call this month. "We sold when the markets were high, now that the markets are low, we're slowing down our selling and doing a lot of buying."
Apollo has $26 billion in undeployed capital to invest, according to Credit Suisse, and its not alone.
"Alternative asset managers are rapidly increasing their capital deployment," Credit Suisse analysts led by Craig Siegenthaler wrote in a note Tuesday.
Siegenthaler and his team expect Apollo and others to focus on investing in debt, and in the energy sector - both places where investors have been panic selling lately.
Apollo's average capital deployment jumped from the $2 billion to $3 billion range in the first half of last year to $4.1 billion in the final three months of the year. According to cofounder Leon Black, that could be just the beginning.