NEW YORK - Apollo Global Management Inc. (NYSE: NYSE:APO), a prominent financial services player with a market capitalization of nearly $98 billion and impressive year-to-date returns of 88%, has reached an agreement to purchase a 50% interest in a portfolio of solar and battery energy storage systems in Texas from TotalEnergies (EPA:TTEF), marking a significant investment in the renewable energy sector. According to InvestingPro data, Apollo maintains strong liquidity with current assets nearly double its short-term obligations. The deal encompasses approximately 2 gigawatts (GW) of assets within the Electric Reliability Council of Texas (ERCOT) market, which includes three solar projects with a combined capacity of 1.7 GW and two battery storage projects totaling 300 megawatts (MW). With annual revenue exceeding $31 billion and a healthy gross profit margin of nearly 40%, Apollo demonstrates the financial strength to execute such significant investments.
TotalEnergies will maintain a 50% stake in the portfolio and continue to operate the projects, named Danish Fields, Cottonwood, and Hill Solar I. Brad Fierstein, a partner at Apollo, commented on the collaboration with TotalEnergies, emphasizing the investment in a "highly contracted, scaled renewable asset portfolio" that aligns with Apollo's Clean Transition strategy.
Apollo-managed funds have invested about $40 billion in energy transition and sustainability over the past five years, with a focus on a variety of clean energy and infrastructure projects. The firm has set a target to deploy $50 billion in clean energy and climate investments by 2027 and anticipates the potential to allocate over $100 billion by 2030.
The transaction is pending customary closing conditions and is expected to finalize in the fourth quarter of 2024. Apollo, a global alternative asset manager, has a diverse asset management portfolio and offers retirement services through its business Athene. With approximately $733 billion in assets under management as of September 30, 2024, Apollo continues to expand its reach in the investment domain, including significant stakes in the renewable energy market. Trading near its 52-week high of $176.75, Apollo shows strong momentum, with InvestingPro analysis suggesting the stock may still have room for growth based on its Fair Value assessment. Investors seeking detailed insights can access comprehensive analysis and 16 additional ProTips through InvestingPro's detailed research report.
This acquisition is based on a press release statement and reflects Apollo's ongoing commitment to investing in the energy transition, supporting companies and projects that contribute to decarbonization efforts.
In other recent news, Apollo Global Management has been subject to numerous analyst actions following a strong third quarter, which included record Fee Related Earnings (FRE) of $531 million, robust spread-related earnings (SRE) of $856 million, and an adjusted net income of $1.1 billion. TD Cowen, for instance, maintained its Buy rating on Apollo shares, while BMO Capital Markets raised its price target from $138 to $157. Similarly, Keefe, Bruyette & Woods increased Apollo's price target to $168, primarily due to higher management fees.
Piper Sandler initiated coverage on Apollo, assigning an Overweight rating and a price target of $188, citing the company's strategic positioning. The firm also highlighted Apollo's ambitious growth targets, aiming for both FRE and SRE to reach $10 billion by 2029, with adjusted net income doubling to $15 per share.
The leadership at Apollo is expected to remain stable, which alleviated concerns regarding a potential transition. This stability, coupled with the company's strategic direction and operations, is anticipated to continue without interruption.
These updates come amidst recent developments, such as the nomination of Scott Bessent as the next US Treasury Secretary, which has implications for the financial sector and firms like Apollo. Investors are keeping a close eye on these developments as they may influence Apollo's future performance.
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