BREAKINGVIEWS-Apollo reaps rich rent on its Intel lifeline

By Jonathan Guilford

NEW YORK, April 1 (Reuters Breakingviews) - Amid growing worries about private markets, Marc Rowan manufactured a handy positive case study. The boss of Apollo Global Management APO.N commands vast financial firepower thanks to wholly owned insurer Athene and its capacious balance sheet. In 2024, that helped his firm lead an $11 billion investment in a key fabrication plant for Intel INTC.O. On Wednesday, the chipmaker bought Apollo’s stake back for $14 billion. Despite the hefty return, it should be a win-win.

Intel is an unusual company. Unlike rivals AMD AMD.O or Nvidia NVDA.O, it owns its own manufacturing facilities. That makes it uniquely important to U.S. national security as international supply chains fracture. But Intel had steadily fallen behind Taiwan Semiconductor Manufacturing as competition eroded its traditional strongholds.

Former boss Pat Gelsinger promised massive spending to regain the lead, but funding was tricky. Intel’s stock price collapsed 74% between January 2020 and April 2025, making equity financing cost-prohibitive. As profitability nosedived, raising too much debt might have imperiled the company’s credit rating.

During its long slide, Intel first struck a $15 billion deal to sell a 49% stake in its chip factories in Arizona to Brookfield Infrastructure. By 2024, a carbon-copy agreement for a different manufacturing plant would have been tough: ratings agencies still treated the Brookfield agreement as debt. Apollo worked out a structure that would instead be treated as an equity investment, again for a 49% stake, this time for a plant in Ireland.

The upside for Intel’s rating, though, was a downside for its results. Financial reporting conventions meant that Apollo’s cut of the Irish facility’s value would depress earnings more than the Brookfield deal. But Intel’s strategic importance came to the rescue. Following a near-$9 billion investment from the U.S. government, a $5 billion investment from Nvidia and a $2 billion stake purchased by Japan’s SoftBank, the company’s cash coffers were refilled. Its share price has since jumped, up nearly 170% from its nadir.

New boss Lip-Bu Tan’s efficiency drive and renewed hopes of catching the AI wave help further. Tan is using this moment of strength to repurchase Apollo’s stake with cash and some new debt, flattering earnings and reducing funding costs.

Intel has paid a pretty penny, but survived near-existential uncertainty. Apollo’s rate of return should be in the low-to-mid teens, earned by bringing to bear firepower that few others can match: much of its initial outlay came from Athene. As concerns mount that trend-chasing private lenders have gone awry, this is a genuinely different kind of deal. The trick, in this case, was that Intel was also a different kind of company. Repeating that magic is the challenge.

Follow Jonathan Guilford on X and LinkedIn.

CONTEXT NEWS

Intel said on April 1 it had agreed to repurchase a 49% equity stake in a chip manufacturing facility known as Fab 34 in Ireland for $14.2 billion. In 2024, funds managed by Apollo Global Management and affiliates agreed to pay $11.2 billion for the stake.

Intel expects to fund the purchase through cash on hand and the issuance of approximately $6.5 billion of new debt.

In August, the U.S. government said it would make an $8.9 billion investment in Intel common stock, equal to a 9.9% stake, funded by grants that had been previously awarded but not disbursed to the company under the U.S. CHIPS and Science Act and the Secure Enclave program.

That same month, Intel announced that Japanese investment firm SoftBank would invest $2 billion in the company’s common stock. Chip designer Nvidia subsequently announced in September that it would invest $5 billion in Intel’s stock.

Goldman Sachs provided financial advice to Intel, while Morgan Stanley advised the seller’s independent board.