Apollo Global Management (NYSE:APO), the private equity firm, seemed poised for two huge takeovers last month when both THG PLC (LSE:THG) and energy industry engineer Wood Group (John) PLC (LSE:WG.) revealed merger talks had taken place.
However, over the last week the firm, which manages more than US$90bln in assets, has closed the book on buyouts at both companies.
Apollo has purchased stakes in more than 175 companies since it was founded back in 1990 including companies like Airbnb Inc (NASDAQ:ABNB), Expedia (NASDAQ:EXPE), and ADT Security.
Wood Group, which is down more than 33% on the back of Monday’s news, revealed that Apollo had offered 240p per share at one point – amounting to around a £1.6bln bid.
While THG didn’t specify how much Apollo had offered, the group's market value sits at over £800mln
This hypothetically means Apollo has close to £2.5bln set aside for acquisitions.
The group launched a US$4bln fund last month aimed at investing in clean energy firms, part of its goal to invest US$50bln in sustainable targets over 2023.
So, who could Apollo invest in should it continue with plans to pick up a London stock?
For £2.5bln, one of the largest companies Apollo could buy is FTSE 250 energy generation firm Drax Group (LSE:DRX).
As sustainability is at the forefront of Apollo’s ethos, this could be a tough purchase for its investors to get behind.
Last week the energy company started being investigated by Ofgem into whether the group’s burning of biomass fuels is sustainable and can be considered ‘carbon neutral’.
Drax has an ESG risk rating of 25.9 out of 100, with oil companies like Shell PLC (LSE:SHEL, NYSE:SHEL) and Chevron Corporation (NYSE:CVX) sitting around the 36 mark.
If acquiring an online retailer like THG was Apollo’s plan possibly something else in the e-commerce/fashion industry might now fit.
ASOS PLC (LSE:ASC) is currently the second most shorted stock in London, with a net short position of 5.83%, but Apollo might see something different.
The stock has fallen more than 90% since its 5,600p peak in 2021 as high streets reopened and online experienced a large drop in sales.
Yet, Asos has been in this position before, in 2018 the stock reached upwards of 7,000p before falling to as low as 1,200p at the start of Covid.
The group experienced a similar rise and fall four years prior in 2014.
With a market capitalisation of £500mln, there could be potential for Apollo to snap Asos up for a discount and maybe even amend how the retailer approaches sustainability and fast fashion.
Apollo could even add fellow online fashion retailer Boohoo Group PLC (AIM:BOO), which is valued at a similar price to Asos, to the purchase deal and still have funds left over.
Another company ripe for an offer is Virgin Money UK PLC (LSE:VMUK), which has seen its share price struggle in recent months.
Analysts at Shore Capital said: “We do not think the very low valuation can be overlooked and think it could be a bid target if the share price doesn’t recover soon.”
With a low 17.4 ESG risk rating, this could be yet another option for the private equity firm.