Bloomberg刊发William Cohan新书《Money to Burn》书评，回顾Leon Black与Apollo历史，无新增可交易信息

Like eating a tub of candy for dinner, reading the nearly 700 pages of William Cohan’s Money to Burn: The Unvarnished Truth About Leon Black, Apollo, and the New Wall Street (Portfolio, Sept. 8) leaves you fatigued, stuffed and still hungry. Yet some of the book’s most satisfying insights come in its final eight pages, when an “Apollo competitor” describes the firm, usually thought of as a pugnacious private capital giant, as “a lightly regulated and leveraged bank.”

The numbers supporting the competitor’s case are telling. Only a sixth of Apollo Global Management Inc.’s almost 6,000 people are now investment professionals. Many of the rest sell annuities through its Athene business. Their customers, self-selected for financial caution, provide Athene with low-cost funding; Apollo then uses their money to make direct loans through 16 separate platforms. While the firm isn’t as snoozy as the old 3-6-3 model — take in money at 3%, lend it out at 6%, leave the office at 3 o’clock — it does bear the risks of that model. Apollo, the competitor points out, is contracted to pay its annuity holders, unlike private equity or credit firms that — caveat emptor — merely try their best to meet targeted returns.

The money tells the same story. In the first half of this year, Apollo earned $1.5 billion from the “spread” at Athene, the difference between what it makes from its loans and what it needs to pay out in annuities. That’s the same amount it made from asset management, where three-quarters of revenue came from private capital funds rather than private equity. Indeed, banklike Apollo now makes about the same from syndicating loans as from managing private equity funds. Only 0.8% of its corporate revenue came from carried interest and other performance-related incentive fees.

This is a big-bet transformation. But Money to Burn doesn’t seem particularly interested in exploring the questions it raises. Why is Apollo steadily diversifying away from the competitive, investor-sated business of delivering 15% returns in PE for the lower-margin business of delivering 5% returns to annuity buyers? Is it because Apollo’s PE performance, from its 2006 flagship fund on, has been all over the place? Does Apollo’s evolved approach seem savvy only because its credit underwriting (and annuity-holder behavior) hasn’t yet been tested in a crisis? And how did hard-edged personality-driven Apollo up here?

At least Money to Burn, amid its many filibusters, digressions and asides, gives us two answers to this question. First, credit rather than equity has been the soul of Apollo since its inception in 1990. Founder Leon Black and his early partners almost all came out of Michael Milken’s Drexel Burnham Lambert, the inventor of the modern junk-bond market. Apollo’s first two funds were all in bonds bought from Executive Life Insurance, which was done in by buying everything Drexel had sold. Apollo, a master of “creditor-on-creditor violence,” has always been ready to pivot between equity and debt inside its PE funds and indeed generated its biggest win ever, $10 billion, in the LyondellBasell distressed-bond deal in 2008.

The second reason is more idiosyncratic and less predetermined. Black planned to retire at age 70, at the top of the game, in 2021. But by then, Apollo was being upended by twin scandals of Black’s own making: his friendship with Jeffrey Epstein (and $158 million in payments to him) and his affair with the former Russian model Guzel Ganieva. A triumvirate of Black, Josh Harris and Marc Rowan had long ruled Apollo, held together more by inertia than by intention or even respect. Black told Cohan that the three of them never once met alone as an executive committee. (There’s also no known photograph of them together, maybe because, according to The Caesars Palace Coup by Max Frames and Sujeet Indap, Black is 6-foot-5 and both Harris and Rowan are 5-foot-8.)

By 2021, brainy and sweatered Rowan had for years internally exiled himself to focus almost exclusively on Athene, his baby, and was on semisabbatical amid his restaurants in the Hamptons. Harris was running Apollo day to day. Black, a man famous for being unsmiling and ungrateful himself, told Cohan that Harris was a “psychopath” for his unrelentingly harsh, worrywart leadership style, the kind of boss with a “preference for calling meetings for eleven o’clock on Sunday nights and then not showing up or canceling them an hour before.” When it came time to choose his successor, Black picked Rowan. Not because nice guys finish first at Apollo, but because Black, who held the power, didn’t want Harris to lead. Harris, for his part, hired three law firms and three PR agencies, while still at Apollo, to advise him in his personal fight to run the firm.

Cohan interviewed Rowan, Black and Harris — he chummily calls them Marc, Leon and Josh — seemingly with press handlers in the room. He clearly admires Rowan, whom he calls a “generational talent.” (Winners write history.) Black and Harris, meanwhile, get ample room to state their case. And so they do, often about each other, until we don’t care anymore. For Cohan seems far less interested in Apollo’s strategic transformation, except as proof from on high of how smart Rowan is, than in men behaving badly. Indeed, a better subtitle for Money to Burn would be some country song: “All My Pardners Went to Prison, But I Did Just Fine.”

Cohan gives us long chapters on the self-dealing and insider trading of Milken and his crew, the chicanery of Crédit Lyonnais in the Executive Life scandal, and the kickbacks to a California Public Employees’ Retirement System executive and agent. We get, limply, Donald Trump and Vladimir Putin. We even get a long origin story of Black’s father, a prominent financier who threw himself from the Pan Am building amid mounting pressure over his company’s purchase of a bribe-paying banana business. (Rowan’s father also killed himself. Cohan mentions this only in passing.) And that’s before the 140 or so sordid pages dedicated to the still-married Black’s friendship with Epstein and sexual and financial relationship with Ganieva.

None of this adds up to make Money to Burn what its blurbs say: a “master class in reporting” and an “astounding exposé.” The book instead seems a master class in the Blaise Pascal line “I didn’t have time to write a short letter, so I wrote a long letter instead.” Unlike the 300-page-shorter and incalculably more captivating The Caesars Palace Coup, which chronicles Apollo’s failed buyout of Caesars Entertainment Inc. and its aftermath, Money to Burn rarely knits a narrative showing Apollo people in action. We mainly hear them in overlong interview excerpts that are often confirmatory and confoundingly repetitive, particularly Rowan’s.

The transcribing of interviews alternates with the transcribing of the internet. Instead of, for instance, reporting on Apollo’s tough workplace culture by talking to any of the thousands of junior people who’ve worked there, Cohan quotes, for two pages, comments from the Wall Street Oasis message board. On Epstein’s now publicly available emails to Black, Cohan writes that “a little taste of the emails goes a long way,” then leaves us to judge the flavor of a supersize bucket by quoting them for 11 pages. All this illuminates little: You’ll still find it outrageously improbable that the $158 million Black paid Epstein was for tax and estate advice, and still have no smoking gun that it was anything else.

Comparing Rowan’s “simpler” business, in his words, to Apollo’s rogue-proximate history could have been a condemnation of the company, or even a semiauthorized defense of it. But this baggy, woefully edited book has no point of view, no depth, no seeming rules of selection — just wing shots of commentary as Cohan types up his notes with the nearest words at hand. There’s so much “skating to the puck” (usually in Rowan’s words) and “long putts” (in Cohan’s) that you wonder if you’re watching SportsCenter. After noting a mildly surprising number, Cohan writes twice within 30 pages, “that’s not a typo,” as if he were selling knives on TV. Maybe this is a public service, given cringeworthy errors such as stating that Drexel Burnham Lambert had made an “infamous” $5.3 million payment to Ivan Boesky for inside information instead of the other way around.

Which is all unfortunate. Even though Money to Burn feels less like unvarnished truth than unsorted lumber, the Apollo story is still good wood. The leading giant hedge funds and private capital firms of our age have amassed enormous assets, market power and billions for their founders. After decades of managing institutional money, often with little mercy, they’re now crossing a divide, with unmediated access to — and an insatiable appetite for — the savings of the upper middle class. No firm has had a stranger crossing than “Apollo 2.0,” or one with more at stake for both the firm and the financial system, given its contracted payments to annuity holders and the amount of capital Athene needs if things go wrong.

Maybe this works out well for all. Then again, maybe it’s just Wall Street finding a new way for the wolves to get closer to the lambs. We know how that old story ends.