Tiger Global builds big Apollo stake in shift from tech bets

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Chase Coleman’s Tiger Global has built a big stake in private equity group Apollo Global as the hedge fund looks outside of the technology investments that have been its mainstay in recent years in a hunt for better returns.

The investment in Apollo, which Tiger described as a “leading global alternative investment manager” was revealed to investors in a mid-year letter seen by the Financial Times. It did not disclose the size of the stake but its decision to draw attention to it is a sign that it is large.

Tiger, founded by Coleman in 2001, amassed the stake this year and has also “selectively added” other new holdings in the aerospace and healthcare sectors, according to the letter. Tiger declined to comment.

The push into non-tech companies comes amid a recovery in Tiger’s main hedge fund, which at the half-year point of 2022 had lost about 50 per cent of its value compared to 2021.

Tiger’s flagship fund and a “crossover” fund sold to wealthy individual investors have gained more than 20 per cent this year compared with the same period of 2022, according to documents seen by the FT. The flagship fund has gained every month, buoyed by a recovery in large-cap technology stocks, including Meta, Google and Amazon.

Performance was also bolstered by investments in digital gaming companies Flutter and Take-Two, as well as software companies Microsoft and Workday, Tiger told investors.

“Our exposures remain at levels we believe allow us to play offence when compelling opportunities emerge,” Tiger said. “Enhancements to our investment process have been yielding precise execution from our team, and we are working hard to build on this momentum.”

Tiger was once one of Apollo’s biggest backers. It built a large shareholding in 2017 by buying blocks of shares from Abu Dhabi Investment Authority and the California Public Employees’ Retirement System, sources have previously told the Financial Times.

The hedge fund ultimately ended up owning 8 per cent of Apollo and more than doubled its money by the time it exited most of the position in early 2022. In its letter to investors, Tiger said it had purchased its latest stake at roughly the same earnings multiple as its initial investment.

Tiger’s funds have borrowed hundreds of millions of dollars from Apollo in recent years to fund investments in private companies, according to securities filings.

Tiger told its investors that the value of its vast portfolio of non-public companies was roughly unchanged at the mid-year point of 2023 compared with the same period of last year. The value of that portfolio was marked down by nearly 20 per cent last year.

Its private holdings account for a smaller share of it flagship fund after its public investments recovered their value, Tiger said.

The group also said it had sold its last remaining stake in Flipkart to Walmart for $1.4bn at a valuation of $35bn, taking overall gains from its investment in the Indian ecommerce company to $3.5bn.

The hedge fund said its large bets on companies including Microsoft, Google and Meta stood to benefit from new artificial intelligence technologies. Microsoft’s AI product Copilot has the potential to generate “tens of billions” of dollars in new sales for the company, Tiger claimed. It has also invested in private AI start-ups such as OpenAI, the creator of ChatGPT, Scale and Pinecone.

Meanwhile, Tiger said Connie Lee, a partner at the firm who joined five years ago, had left the fund.