Apollo repackages $9bn Oneok stake to fund acquisition and debt repayment - Bloomberg
Apollo Global Management (APO) is converting its $9bn stake in Oneok (OKE) into investment-grade debt securities. The deal, involving Athene and other insurers, allows Oneok to raise capital without adding conventional debt. Proceeds will fund a $4.4bn acquisition and repay debt, avoiding leverage risks. Apollo's strategy positions it as a financier for flexible capital structures.
How this was made
The 30-second read
Why it matters
The transaction could set a precedent for midstream companies seeking non‑traditional capital, affecting valuation metrics.
Market read
A $9 bn stake conversion and $4.4 bn acquisition represent a significant capital event for the U.S. energy sector.
What to watch
Potential rating pressure if the subordinated debt is later re‑rated lower than expected.
Background
Apollo's innovative financing approach allows Oneok to fund a $4.4 bn acquisition while preserving its credit rating.
Ticker impact
Apollo Global Management is converting its $9 bn Oneok stake into investment‑grade debt securities.
Potential upside for APO if the structure is well‑received; modest pressure on OKE as debt‑like capital replaces equity.
The deal is a fresh, material transaction disclosed for the first time.
Oneok will use the proceeds to buy Brazos Midstream's natural‑gas assets for $4.4 bn and repay debt.
Likely support for OKE shares as the transaction adds growth and reduces leverage risk.
First disclosure of a large‑scale acquisition funded by a novel capital structure.
Market effects
Midstream energy sector may see increased M&A activity using similar financing structures.
U.S. energy infrastructure investors could reassess capital‑raising options.
Highlights alternative financing trends that could influence global commodity logistics firms.
Counterpoint
The debt‑like instrument may be viewed as disguised equity, raising concerns about hidden leverage.
Key entities
- Asset ManagerApollo Global Management
Alternative investment firm structuring the stake conversion.
- Midstream Energy CompanyOneok Inc.
Recipient of the financing and acquirer of Brazos Midstream assets.
