Adam Applegarth, the former chief executive of Northern Rock, has joined Apollo Global Management as a senior adviser to its European distressed debt fund, becoming the latest fallen corporate boss to seek refuge in private equity.

Two years after he left Northern Rock with an £840,000 pay-off and having come under fire from politicians for the bank’s nationalisation, Mr Applegarth has joined Apollo’s European Principal Fund, a €1bn (£912m) distressed debt vehicle.

Apollo, one of the world’s most secretive private equity groups, hopes to benefit from Mr Applegarth’s knowledge of UK mortgage lenders’ books. The former Northern Rock boss has been working at Apollo for a month.

His arrival at the private equity group – where he will work as a part-time consultant – highlights how private equity has become a sanctuary for well-known corporate bosses who have left their companies under a cloud in recent years.

Andy Hornby, former chief executive of HBOS, joined Alliance Boots as chief executive in July, teaming up with the pharmacy chain’s private equity owners KKR and Stefano Pessina, its executive chairman.

Other ousted corporate bosses to join private equity include Lord Browne, former BP chief executive, who quit the oil group in 2007 to work at Apax Partners and later joined Riverstone Holdings, the US energy buy-out group.

For besmirched corporate chiefs, private equity offers the double benefit of being out of the public limelight, while offering them an opportunity to make serious money from profit sharing schemes.

Luc Vandevelde and Roger Holmes both joined Change Capital Partners, a retail buy-out group, after quitting as chairman and chief executive of Marks and Spencer in 2004.

In the US, Cerberus Capital Management hired Bob Nardelli in 2007 to take charge of its buy-out of carmaker Chrysler after he left Home Depot amid a storm of criticism for his $210m severance package. At about the same time, Kevin Rollins joined TPG as an adviser after being ousted as Dell’s chief executive.

Mr Applegarth joined Northern Rock as a graduate trainee in 1983, rising to general manager 10 years later and chief executive in 2000.

The lender, which made losses of £1.4bn last year, made a £108,675 payment to the pension pot of Mr Applegarth, who is widely blamed for the bank’s plight. This was on top of his £731,629 compensation payment for loss of office.

Vince Cable, Liberal Democrat Treasury spokesman, said at the time that Mr Applegarth’s package was “outrageous”. He added: “This is a straightforward reward for failure.”

Apollo launched its European Principal Fund in May 2007 to take advantage of the opportunities thrown up by the credit crunch to buy portfolios of non-performing loans. The fund has raised €1bn towards a target of €1.5bn and focuses on buying distressed portfolios of corporate loans, residential and commercial mortgages from banks in the UK, Germany, Spain and Portugal. The fund has about 20 staff.

Apollo first encountered Mr Applegarth through its ill-judged buy-out of
Countrywide, the UK’s biggest real estate chain, which it acquired for £1.05bn at the peak of the property bubble in 2007.

The New York-based group has since lost control of Countrywide after a debt-for-equity swap handed majority ownership to its rival Oaktree Capital.

Apollo has also suffered a string of problem deals in the US, including the bankruptcy of Linens ’n Things, the US home goods retailer.

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