(Bloomberg) — Apollo Global Management Inc. is trying to salvage an ill-timed bet it made two years ago on Amazon.com Inc. aggregators, companies that scooped up popular online brands and are now teetering after the pandemic-fueled sales boom evaporated.
Apollo in 2021 pledged as much as $500 million in debt to Victory Park Capital, a leading investor in multiple aggregators. Victory Park, a smaller firm, for months has been seeking a buyer for one of those investments, an aggregator named Perch, in a deal that would involve offloading about $400 million in debt, according to the people familiar with the matter, who requested anonymity to discuss private negotiations.
Perch, founded by former Wayfair Inc. operations executive Chris Bell, is the second-largest US aggregator and raised almost $1 billion from Victory Park, SoftBank Group Corp. and other investors. Apollo, keen to avoid its exposure to a writedown on Perch that potentially may be in the hundreds of millions of dollars, is getting more involved in trying to sell the company since Victory Park has been unsuccessful, the people said.
In recent days, Victory Park appointed new board members to other Amazon aggregators they’ve backed, which the aggregators say amounts to pressure to make them buy a struggling company they don’t want.
Representatives of Apollo and Victory Park declined to comment.
Read More: Amazon ‘Aggregators’ Who Raised $16 Billion Are Teetering
Bloomberg News reported in May that a reckoning had arrived for the nascent aggregator industry, thanks to rising interest rates, higher costs and cooling online demand. The shakeout has forced many of these firms to seek debt relief or merge with one another and now pits some of the biggest investors in the world against one another in high-stakes negotiations between those who made debt investments and those who hold equity positions. All told, dozens of aggregators raised $16 billion from Wall Street banks, private equity firms and venture capitalists.
Apollo and Victory Park tried to sell Perch to Berlin-based Razor Group, according to the people. Victory Park has a debt investment in Razor, which it tried to use as leverage to get it to buy Perch, but L Catterton, which has an equity stake in Razor, scuttled the deal, according to the people.
L Catterton is a private equity firm backed by Bernard Arnault, the world’s second -wealthiest man. A deal between Perch to Razor is still possible and negotiations continue, one of the people said, adding that the deal would likely be structured as a merger between the companies.
The disagreement between Apollo and L Catterton highlights the tension between debt holders and equity stakeholders in the Amazon aggregator industry as it melts down. Debt holders are generally first in line to get paid and want to recover as much principal as possible. Equity holders want the debt holders to accept a loss on principal to make the companies stronger financially and increase their value.
Victory Park and Apollo are trying to pressure other aggregators they’ve backed, including Moonshot Brands, DragonFly, Juvo Plus and Cap Hill Brands, to buy Perch and assume its debt, the people said. The companies are in default of their loans, which allows Victory Park to take more control over how they’re managed with Apollo involved as well.
The other aggregators don’t want to be forced to absorb Perch and are mulling their legal options. One strategy would be to file a lender liability lawsuit against Victory Park and Apollo, alleging they are forcing the companies into a bad deal by making them take on Perch’s debt, the people said.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
