Earlier this week, Bloomberg reported that private equity firm Apollo Global Management is leading a group of investors trying to buy a roughly $10 billion stake in Saudi Aramco’s oil pipelines. The deal would reportedly be one of Apollo’s largest ever.[i]
Apollo’s recent investments in fossil fuels have performed poorly, based on the performance of its Apollo Natural Resources Partners funds.
|Fund||Vintage||Multiple||Net IRR||As of|
|Apollo Natural Resources Partners III||2020||0.95||NM||4Q20|
|Apollo Natural Resources Partners II||2016||1.20||4%||4Q20|
|Apollo Natural Resources Partners I||2012||0.99||-4%||4Q20|
(Source, Apollo 2020 10-K)
As of the end of 2020, two of Apollo’s three Natural Resources Partners funds had lost money, with its 2012 Apollo Natural Resources Partners I generating a -4% annualized return (IRR).[ii]
Last year Apollo and Ares Management-owned oil exploration and production company Chisolm Oil & Gas filed for bankruptcy.
Apollo’s investment in the Saudi Aramco oil pipelines would support the government of Saudi Crown Prince Mohammed bin Salman. The Saudi oil company is mulling asset disposals as a way of maintaining its $75 billion of annual dividend payments, almost all of which go to the Saudi government.[iii]
In February, the US Government released an intelligence report stating that Crown Prince Mohammed bin Salman approved the assassination of the Washington Post journalist Jamal Khashoggi in 2018. The Saudi Arabian government has also faced growing outrage over its role in the humanitarian catastrophe in Yemen.
Despite the poor returns of Apollo’s past oil and gas investments, the firm and its portfolio companies have continued to make additional investments in fossil fuels.
In September 2020, Apollo invested in Momentum Minerals, an oil and gas mineral and royalty acquisition fund.
In December 2019, Apollo and Riverstone-owned offshore drilling company Talos Energy went on a $640 million buying spree in the Gulf of Mexico, picking up assets with 19,000 barrels of oil equivalent per day production, as well as multiple exploration prospects.
In February, the Private Equity Stakeholder Project, the Sierra Club, Greenpeace, and dozens of other climate justice organizations sent a letter to Apollo calling on the firm to develop a plan with clear benchmarks to shift to a pollution-free energy portfolio; plan for a just transition for workers and communities impacted by current fossil fuel holdings; and disclose all political spending and whether it aligns with a 1.5 degree scenario as in the Paris Agreement.
Despite multiple attempts at follow up, Apollo has not responded to the letter.