Apollo's Week: The Diagnosis and the Dropped Bid

There is a particular kind of candour that emerges at industry conferences, and Scott Kleinman, co-president of Apollo Asset Management, delivered a notable dose of it at SuperReturn in Berlin this week. The private equity industry, he told delegates, got "a little out of whack" between 2017 and 2022, and there is "a price to pay" for the exuberance of that period. The creative capital solutions firms have been using to avoid proper exits, borrowing against fund assets, selling companies to themselves through continuation vehicles, do not solve the problem, he said. They merely "ameliorate it and kick the can for a later date."¹

Two days later, Apollo withdrew its £1.5 billion bid for Bodycote, a FTSE 250 components business it had been pursuing through multiple proposals before going public with an offer of £8.85 a share last month. The firm said it would not proceed and is now restricted under UK takeover rules from making another approach for six months. Bodycote shares fell 9 per cent in early trading to around £7.40².

The juxtaposition is striking. Here is one of the industry's most prominent firms warning publicly that discipline and patience are the only way through the current cycle, while simultaneously failing to execute a deal it had been working toward for long enough to have made several prior proposals. Apollo is not being hypocritical exactly. But it is an illustration of just how difficult the current environment is even for the firms that claim to have stayed disciplined throughout the boom years.

The UK Paradox

Bodycote's return to the London market highlights a pattern that has become increasingly visible in recent months. UK-listed companies are cheap by historical standards, cheap enough to attract repeated private equity interest across multiple sectors, and yet deals keep falling apart or failing to materialise at the final stage.

The contrast with the deals that have completed is instructive. Blackstone and industrial investor Tinicum agreed to buy aerospace parts supplier Senior in a £1.4 billion cash deal in April. EQT secured Intertek, the testing and quality assurance business, for £10.6 billion after four separate bids. Both of those deals involved businesses with clear, defensible cash flows and limited exposure to the technological uncertainty that has frozen software investment. Bodycote, which offers heat treatment for manufacturing, metal joining, and protective metallic coatings, sits in the same industrial category and was presumably attractive for the same reasons².

What appears to have changed between Apollo's initial interest and its withdrawal is not the quality of the asset but the broader conditions around it. The UK market is not short of private equity attention. Castlelake is attempting to form a bid for easyJet, and a consortium including Energy Capital Partners and KKR faces a June 10 deadline on a £5 billion approach for energy group DCC that was rejected in late April. The pipeline of interest is real. The conversion rate is not.

My view is that the UK market paradox reflects something deeper than deal-by-deal execution risk. The firms circling UK-listed companies are doing so because depressed valuations represent genuine value, but they are operating in an environment where financing conditions, exit visibility, and LP patience are all constrained simultaneously. Completing a deal requires confidence that you can service the debt, improve the asset, and find a buyer at a higher price within a reasonable timeframe. In the current environment, that third condition is the one that keeps failing the test.

Kicking the Can

Kleinman's remarks about creative capital solutions are worth dwelling on in this context. The industry's response to the exit drought has been to manufacture liquidity through NAV loans and continuation vehicles rather than through actual realisations. The problem, as Kleinman acknowledged, is that these structures do not generate the clean distributions that LP investors need to justify committing to the next fund. They buy time, but the underlying maths of the 2017 to 2022 vintage, assets bought at peak multiples with cheap debt that is now expensive to service, does not improve with time. It gets worse.

The slow shake out Kleinman predicted will, in his own assessment, play out through investors reallocating capital away from firms with inferior performance records. "It takes a long time to kill a private equity firm," he said, "but eventually the industry finds its balance before the next cycle comes."¹ That is a remarkably candid admission from a co-president of one of the world's largest alternative asset managers. It is also consistent with what is visible in the fundraising data, the Astorg situation, the retreat of retail capital, and the pressure on mid-market European firms that do not have the scale to absorb a bad vintage and keep moving.

The SpaceX Question

The one genuinely optimistic note at SuperReturn came from Gabriel Caillaux of General Atlantic, who argued that liquidity markets are improving and that distributions to investors are returning to levels not seen since the boom years, running at around 20 per cent of net asset value annually. Liquidity is "coming back in different forms", he said, with less reliance on IPOs as the primary exit route.

But the event Caillaux identified as a potential turning point is firmly in the IPO camp. A successful SpaceX listing, he suggested, could serve as a catalyst for renewed public market appetite, a signal that investors are willing to back large, complex businesses going public even in an uncertain year. The logic is straightforward: a landmark IPO generates returns for early institutional investors, improves sentiment toward the public market exit route that private equity has been largely denied since 2022, and potentially unlocks the pipeline of assets that firms have been holding past their optimal exit window.

Whether SpaceX delivers that catalyst depends on conditions that have nothing to do with private equity directly. But the industry's need for it is real. The exit drought is not just a problem for individual funds. It is the mechanism by which the entire system, LP commitments, GP fundraising, bank financing, valuation credibility, remains under strain. A single landmark IPO will not resolve the vintage overhang that Kleinman described at SuperReturn. But it could shift the sentiment that has kept investment committees cautious and exit windows narrow for the better part of three years.

Apollo's week, a candid conference speech followed by a withdrawn takeover bid, captures the industry's current condition better than most data points could. The diagnosis is clear. The cure is still waiting on events outside anyone's control.

Footnotes

1. Ivan Levingston and Alexandra Heal, Apollo executive says private equity got 'a little out of whack'↗ (opens in a new tab), Financial Times, 10 June 2026. ↩ ↩²

2. Stefania Palma and Ivan Levingston, Apollo drops £1.5bn bid for London-listed Bodycote↗ (opens in a new tab), Financial Times, 5 June 2026. ↩ ↩²