Apollo’s Leon Black explains why he still did business with Jeffrey Epstein

On Thursday, Apollo Global Management cofounder Leon Black offered his most comprehensive public statement yet regarding his ties with convicted sex offender Jeffrey Epstein, saying his decision to give the financier a second chance had been a “terrible mistake.”

The statement comes just after the cofounder’s ties with Epstein were brought under the microscope once again earlier this month, when the New York Times reported that Black paid Epstein at least $50 million for advice and services in the years after Epstein was convicted of soliciting prostitution from a teenage girl in 2008.

In the aftermath of the report, Apollo clients have threatened to take action: The Pennsylvania Public School Employees’ Retirement System has said it will not consider new investments with Apollo, as investigations over Epstein’s ties to Black continue. Cambridge Associates, a consultant to investors and endowments, is also weighing whether to stop recommending Apollo as an option altogether, per Bloomberg. The California Public Employees’ Retirement System meanwhile is said to be pressing the private equity firm over the issue. 

While Apollo and Black have repeatedly denied any connection between Black and the firm itself, so important is Black to the company’s operations that shares of Apollo still remain down some 14% since the information first went public.

“Like many other people I respected, I decided to give Epstein a second chance. This was a terrible mistake,” Black said during the earnings call, acknowledging that he had done business with the convicted sex offender—and paid him millions of dollars annually between 2012 to 2017—after he was first released from jail in 2009. “Had I known any of the facts about Epstein’s sickening and repulsive conduct, which I learned in late 2018, more than a year after I stopped working with them, I never would have had anything to do with him. I understand and appreciate that concerns remain.”

Still, it is confusing: Media covered Epstein’s 2008 arrest and case thoroughly. Here’s a New York Times piece from back in 2008 about Epstein turning himself in to authorities after he was accused of paying women—at least one who was 14—to give him massages that at times turned into sexual favors. Here’s one from the Guardian. And the New York Post with no shortage of details. Was that alone not disturbing enough—or were the reports dismissed?

Here’s more from Black, explaining his thinking at the time and acknowledging he knew Epstein was under investigation in 2006: “I was not aware of Epstein’s criminal conduct until it was publicly reported that Epstein was being investigated by Florida state and Federal prosecutors and law enforcement officials beginning in late 2006. In 2009, after being released from jail, Epstein returned to his previous financial advisory activities and once again began working and associating with many prominent individuals, spanning the worlds of finance, academia, science, technology, philanthropy, business, and government. The distinguished reputations of these individuals gave me misplaced comfort in retaining Epstein’s services in 2012 for my personal estate planning, tax structuring, and philanthropic advice. … I wish I could go back in time and change that decision, but I cannot.”

This statement stands in stark contrast to how Black addressed the issue back when Epstein, who died in his jail cell in the summer last year, was arrested in July 2019 on sex trafficking charges. During Apollo’s earnings call that month, Black made no mention of his dealings with Epstein after 2008, saying only that his family entities had retained the financier’s services from time to time.

The firm’s conflict committee meanwhile has retained law firm Dechert LLC to conduct an independent review of Black’s ties to Epstein, with which Black says he is cooperating fully. The process could be completed by the end of the year.

Editor’s note: A previous version of this newsletter quoted Black stating he not know of Epstein’s criminal conduct until 2018. It has been updated with another quote in which Black acknowledges he was aware of investigations into Epstein’s criminal activity as early as 2006.

VENTURE DEALS

- DoubleVerify, a New York-based software platform for digital media measurement and analytics, raised $350 million in funding. Tiger Global Management led the round and was joined by investors including Fidelity Management & Research Company, BlackRock, and Neuberger Berman Investment Advisers.

- Gracell Biotechnologies, a Shanghai-based biopharmaceutical company developing cancer treatments, raised $100 million in Series C funding. Investors included Wellington Management Company, OrbiMed, Morningside Ventures, Vivo Capital, Temasek Holdings, Lilly Asia Ventures, OrbiMed, and King Star Med.

- Finova, an India-based lender to small and mid-size businesses, raised $35 million in funding. Investors included Sequoia Capital India and Faering Capital. 

- Clarity AI, a New York-based platform for determining the social and environmental impacts of portfolios, raised $15 million in funding. Deutsche Börse AG and Mundi Ventures invested.

- R2c, a San Francisco-based security tool set for developers, raised $13 million in Series A funding. Redpoint and Sequoia led the round. 

- LightDeck Diagnostics, a Boulder, Co.o.-based maker of testing for COVID-19, raised $11 million in Series B funding. Investors include Incubic, Entrada, and Boulder Ventures. 

- CodeSandbox, an Amsterdam-based  startup that enables teams to prototype, build and host web applications with its rapid web development platform, raised $12.7 million in Series A funding. EQT Ventures led the round and was joined by investors including Kleiner Perkins, Arches Capital, and Guillermo Rauch. 

- Goodcover, a San Francisco-based renters insurance startup, raised $7.5 million in Series A funding. Goodwater Capital led the round and was joined by investors including Fuel Capital, Broadhaven Ventures, Global Founders Capital, Liquid 2 Ventures and TransRe. Read more.

- RealBlocks, a New York-based real estate investments platform, raised $7 million in Series A funding. Crosslink Capital led the round.

- Curve Health, a New York-based senior care company, raised $6 million in seed funding. Lightspeed Venture Partners led the round and was joined by investors including Vituity, Westway Capital, Correlation Ventures, Kapor Capital, Rosecliff Venture Partners, and The Fund.

- Skael, a San Francisco-based technology maker of an automation platform, raised $4.1 million in seed funding. Investors include Bonfire Ventures, Daher Capital, Backend Capital, RIDE Ventures, StratMinds VC, and Buffalo Ventures.

- Atmos, a San Francisco-based homebuilding startup, raised $4 million in funding. Investors included Scott Stowell (a board member of Lennar).

- Sinai Technologies, a San Francisco-based decarbonization software platform, raised $3.8 million in seed funding. Afore Capital led the round and was joined by investors including Abstract Ventures and Coelius Capital.

- PORTL, a California-based hologram startup, raised $3 million in funding. Investors include Tim Draper, Doug Barry (former Electronic Arts executive) and Joe Lewis. Read more.

- Shotcall, an Atlanta-based interactive gaming platform and marketplace, raised $2.2 million in seed funding. Initial Capital and New Stack led the round and were joined by Lerer Hippeau.

- Raycast, a London-based maker of an app that provides developers access to tools, raised $2.7 million in seed funding. Accel led the round and was joined by investors including Y Combinator and Chapter One.

PRIVATE EQUITY

- Carlyle Group will acquire the Flender mechanical drive unit from Siemens for about €2.1 billion ($2.4 billion).

- Ares Management made an offer to acquire AMP (AUS: AMP), an Australian wealth manager. AMP was valued at A$4.4 billion ($3.1 billion) Thursday.

- Brookwood Financial Partners invested $235 million in Yesway, a Fort Worth, Texas-based convenience store operator. 

- NAVEX Global, backed by BC Partners, acquired CSRware, a Mill Valley, Calif.-based maker of ESG reporting software. Financial terms weren't disclosed.

- Funds managed by Morgan Stanley Capital Partners invested in US HealthConnect, a Fort Washington, Pa.-based operator of medical marketing businesses. Financial terms weren't disclosed.

- Riverside Partners invested in Syner-G Pharma Consulting, a Southborough, Mass.-based technical, regulatory and compliance consulting services to pharmaceutical and biotechnology clients. Financial terms weren't disclosed.

- Frazier Healthcare Partners acquired Accuity Delivery Systems, a Las Vegas-based provider of revenue and clinical documentation services. Financial terms weren't disclosed.

- Arlington Capital formed BlueHalo, a new defense business, by combining AEgis Technologies, Applied Technology Associates and Brilligent Solutions. Financial terms weren't disclosed.

- Anexinet Corporation, a portfolio company of Mill Point Capital, agreed to acquire SereneIT, an Alpharetta, Ga.-based engineering and IT solutions firm. Financial terms weren't disclosed.

- Carmelina Capital Partners invested in BDI, a Louisville, Colo.-based provider of evaluation and monitoring services to the infrastructure market. Financial terms weren't disclosed.

- RidgeLake Partners invested in Newbury Partners, a  Stamford, Conn.-based secondaries fund manager. Financial terms weren't disclosed.

- TorQuest Partners is nearing a deal to acquire VersaCold Holdings, a Vancouver-based provider of cold storage, per Bloomberg. Read more.

EXITS

- Alliance Data agreed to acquire Bread, a New York-based digital payments platform, for $450 million. Bread investors included Bessemer Venture Partners and Menlo Ventures.

- Novartis acquired Vedere Bio, a Cambridge, Mass.-based developer of gene therapies, for up to $280 million. Vedere backers include Atlas Venture and Mission BioCapital.

- Teleflex plans to acquire Z-Medica, a Wallingford, Conn.-based creator of hemostatic products backed by Linden Capital Partners and DW Healthcare Partners. Financial terms weren't disclosed.

- Syneos Health agreed to acquire Synteract, a Carlsbad, Calif.-based contract research organization for biotech and pharmaceutical companies, from Amulet Capital Partners. Financial terms weren't disclosed.

OTHERS

- Brookfield Asset Management, the Simon Property Group, and other lenders entered an asset purchase agreement for assets of J.C. Penney. Read more.

IPO

- Lufax Holding, a Chinese wealth management platform, raised $2.4 billion after pricing at the high-end of its range. Ping An Group backs the firm. Read more.

-SQZ Biotechnologies Company, a Watertown, Mass.-based biotech, raised $70.4 million in its offering of 4,4 million shares priced at $16.00 apiece.

- WeWork, the New York-based office sharing startup, is on track to turn profitable in 2021 and will reconsider an IPO then, its CEO said. Read more.

SPAC

- Periphas Capital Partnering, a blank check firm from Periphas Capital, filed for a $300 million IPO. Read more.

F+FS

- One Rock Capital Partners raised $1.72 billion for its third fund. Read more.

- Builders VC plans to raise raising $250 million for its second fund. Read more.