UBS and Apollo announced today that they have entered into an agreement whereby ATLAS SP (Atlas) has entered into the Transition Services Agreement with UBS and UBS will close the Investment Management Agreement with Atlas.
As part of this deal, Apollo will buy $8 billion of senior financial facilities from UBS.
This mutually beneficial agreement aligns with UBS’s strategy to streamline and simplify the Non-Core and Legacy (NCL) portfolio and with Apollo’s continued momentum in developing Atlas as a standalone origination platform.
For UBS, these actions will allow the bank to further accelerate its plans to more effectively unwind and simplify the NCL portfolio, while minimizing any disruption to clients and reducing the asset-weighted and leverage ratio denominator at NCL .
UBS Group expects to recognize a net gain in the first quarter of 2024 of approximately USD 0.3 billion from entering into these agreements and the assignment of the senior secured financing facilities, while Credit Suisse AG is expected to recognize a net loss of approximately USD 0.9 billion .
The differences reflect the IFRS adjustments made by UBS Group as part of the purchase price allocation at the closing of the Credit Suisse Group acquisition, as well as provisions made by UBS Group in the second and third quarters of 2023 that are not recognized by Credit Suisse AG’s US GAAP accounting policies.
For Atlas and Apollo, the deal marks the evolution of Atlas into a fully independent platform focused on investment-backed origination.
Commenting on the transaction, Sergio P. Ermotti, CEO of UBS Group said:
“We are pleased with this mutual agreement with Apollo. As we execute our completion plans, this is another example of our relentless focus on working with customers and counterparties to free up capital from non-core activities and reduce costs and complexity.”
Marc Rowan, CEO of Apollo, also commented:
“We are pleased to complete the transition of Atlas in partnership with UBS in a financially neutral manner for our company. This caps a record-setting quarter of capital generation and raising for Atlas, where we have raised US$24 billion since the ground up and secured capital to support more than US$40 billion of client assets.”