An investor who’ve previously backed FinTech companies is facing a revolt due to his ties with convicted sex offender Jeffrey Epstein.
Leon Black is the chairman, CEO and founder of Apollo Global Management, the investment company that has previously backed companies like DATASHIELD and backed the $2.8bn merger between Novitex and SourceHOV in 2017.
However, he is now facing a revolt among the private equity firm’s limited partners after his affiliation with Epstein was revealed, the LA Times reported.
Following the news that his own board, prompted by Black himself, has launched an external review, a Pennsylvania-based and a Connecticut-based pension fund have both paused new investments.
Moreover, a consultant gatekeeping $160bn of investor commitment is reportedly urging clients to not inject any more capital into the Apollo Global Management.
The withholding of money suggests that LPs may be distancing themselves from the firm and that they are far from convinced that external review conducted by law firm Dechert LLP will be sufficient to clear Black’s name.
The freeze comes as Apollo Global Management is trying to raise $20bn across several new funds.
“While performance is always going to be an important factor, increasingly it’s not the only factor,” said Gerald O’Hara, an analyst at Jefferies Financial Group Inc, when speaking with the LA Times. “In some respects, there’s some willingness to sacrifice performance for a company that’s run with good governance, good ethics.”
Having already endured some scrutiny due to the links with the infamous sex offender, Black faced more pressure about his connections to Epstein after the New York Times reported that he had wired at least $50m to Epstein after he’d been convicted in 2008 for procuring a minor for prostitution. The article didn’t accuse Black of breaking the law.
“We are firmly committed to transparency,” Apollo said in a statement seen by the LA Times, noting that Black has been communicating regularly with investors. “Although Apollo never did business with Jeffrey Epstein, Leon has requested an independent, outside review regarding his previous professional relationship with Mr. Epstein.”
Black is not the only person of note in the financial services industry to have faced a backlash due his ties to Epstein.
Deutsche Bank was slammed with $150m fine in July for failing to make its relationship with convicted sex offender Jeffrey Epstein clear.
In February, we also reported that the Financial Conduct Authority and the Prudential Regulation Authority were investigating investigating Jes Staley, CEO of Barclays, regarding his relationship with the late US financier.
Epstein, who also had ties to US president Donald Trump and Prince Andrew, killed himself in prison while awaiting trial on sex trafficking charges.
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