Brian Sheth’s Haveli Investments Lands $500 Million Apollo Deal
by Abdul Aziz Mondal Finance 31 March 2023
In a recent fundraising round, Apollo Global Management injected $500 million into Brian Sheth’s private equity firm, Haveli Investments, which Apollo says will strengthen Haveli in the software and gaming sector and bolster its capital-market capabilities.
About Haveli Investments
“Haveli is building a talented, diverse team that combines industry and operational. First know-how the growth investment expertise can be the partner with compelling companies with the help of talented entrepreneurs in the technology industry,” said Brian Sheth in a statement about the new Haveli Investments partnership.
“We chose to partner with Apollo, an industry leader and a highly complementary platform, to help accelerate our growth.”
Apollo CEO Marc Rowan said it was an organic collaboration. “Haveli’s experience naturally complements Apollo’s capabilities,” Rowan said in a statement.
“The technological foundation is built to support gaming may one day support the broader financial ecosystem, and their insights in software are relevant to investments across our platform.
Brian and the team at Haveli are the right teams, and this is an attractive time to enter the sector. We are excited to support Haveli’s growth, leveraging our fund formation, capital markets, and yield and hybrid capital solutions.
Our strategic partnership with Haveli is designed to create a flywheel effect and align our respective firms for continued success.”
Haveli, which was founded by Sheth in 2021, is off to a hot start. It recently infused capital into Motive Partners, a private equity firm that specializes in buying up fintech companies.
Haveli Investments also plunked down $971 million on Sofinnova Partners, a life sciences-focused investment firm. Sheth is also in the process of garnering $3 billion for a software-focused fund at Haveli. Although plans for the fund are private, its name serves as a hint: Haveli VC Gaming Fund I. In March 2022, it was reported that Haveli had already raised $358 million.
The Rush To Invest In Gaming
Private equity firms like Sheth’s Haveli are zeroing in on the gaming sector for a good reason: Gaming has been up ever since the COVID-19 pandemic forced millions worldwide into lockdown. According to an independent study by fintech firm Drake Star, 2022 was a banner year for gaming, with the sector pulling in $127 billion in deals.
2022 saw 324 acquisitions, 58 public market deals worth $13.5 billion, and 938 private investments worth $11.1 billion. That’s up from 2021’s 295 acquisitions and 723 private investments in 2021, according to Drake Star.
Leading the charge, of course, is the behemoth of Microsoft’s acquisition of Activision at $68.7 billion.
And the Haveli Investments strategy behind private equity’s rush for all things gaming is pretty straightforward. When a game like Fortnite, Candy Crush, or Call of Duty goes viral, the value of the business soars, which means hefty returns for PE firms.
Highly valued gaming companies are a draw for PE money, and so too are brand-new gaming subscription models that breathe new life into companies in the form of gamer interest and money.
There is Xbox’s Game Pass, where gamers can pay $1 a month for titles like Minecraft and Tomb Raider. Netflix is also in on the act, expanding its new portfolio of video games from 24 to 50 in hopes of buoying its sagging stock price.
“It has triggered a new revenue stream for products that might have launched five or six years ago. For the PE guys, that’s another revenue stream, and it is straight profit because you’ve got no cost. The game is ready, and you just send it to Netflix, and they give you a million dollars,” says Hemal Shah, a partner at advisory and accounting firm Grant Thornton.
Brian Sheth Staffs Up Haveli Investments
In addition to strategic brand partnerships, Brian Sheth, who was named one of America’s richest entrepreneurs under the age of 40 in 2015 by Forbes magazine, also recently brought on a few finance heavyweights to his staff of 40.
The Austin, Texas-based business magnate recruited Ian Loring to be senior managing director and executive chair. Before joining Haveli, Loring spent 24 years managing more than $100 billion of assets at private equity firm Bain Capital.
Sheth also added Lucas Joppa to the Haveli Investments team in the fall of 2022 in the role of chief sustainability officer and senior managing director. Joppa says he was brought on as a member of the firm’s investment committee to “retain talent and take creative risks.”
The firm says it will continue to focus its efforts in the areas of digital technology while partnering with “innovative companies, entrepreneurs, and management teams,” according to a statement on the Apollo deal.
“Haveli is building a talented, diverse team that combines industry and operational know-how with growth investment expertise to partner with exciting companies and talented entrepreneurs in the technology industry,”
adds Brian Sheth.