It was an offer Ming Dang was not supposed to refuse. One afternoon last October, the 30-year-old former investment banker was escorted to a private room for a meeting that would alter the course of his career. First to speak was Christian Weideman, recently arrived on Wall Street after working as a senior official in Barack Obama’s Treasury department. He delivered a blunt warning. 

“We are lawyers for Apollo,” he began, referring to one of the world’s leading — and most aggressive — private equity firms, where Mr Dang also worked. “We don’t represent you. Anything you tell us, we can use.” 

The ambush exposed Mr Dang’s divided loyalties in a messy power struggle between two generations of Wall Street fortune-makers. On one side of the battle was Marc Rowan, co-founder of Apollo Global Management, who at 57 is old enough to have become a multibillionaire from the leveraged buyout revolution a generation ago. Pitted against him: his erstwhile protégé Imran Siddiqui, a man he regarded as “brilliant and capable”, who earned $20m a year in his early forties at Apollo yet insisted he was worth far more. 

The pair had fallen out over one of the most lucrative investments of the past decade. During the financial crisis they set up a life insurer, Athene Holding, buying insurance policies at bargain prices and moving billions of dollars of customers’ retirement savings into unconventional credit investments just as markets bottomed.

Athene Holding Ltd. Chairman and CEO Jim Belardi, center, is applauded as he rings a ceremonial bell to mark the beginning of trades in his company's IPO, on the floor of the New York Stock Exchange, Friday, Dec. 9, 2016. (AP Photo/Richard Drew)
Athene chief executive Jim Belardi rings a ceremonial bell on the New York Stock Exchange to launch the insurance company's initial public offering in 2016

Athene now pays enormous fees to Apollo to manage its assets; analysts say the insurance group has added $4bn to the value of Apollo, nearly one-third of its market capitalisation. It was a complete reimagination of what a Wall Street firm could become. The likes of Blackstone founder Stephen Schwarzman and former Barclays boss Bob Diamond have been trying to replicate it ever since. 

Yet this triumph has degenerated into an ugly grudge match that one rival private equity executive likens to “a circular firing squad”. In particular, some Athene shareholders have complained about the insurer’s close ties to Apollo.

Mr Siddiqui quit Apollo when it became clear that his rift with Mr Rowan could not be repaired, only to suffer damaging revelations that set back his own attempt to establish a rival insurance venture. He faces a barrage of litigation, which allies view as an attempt by one of the world’s best-resourced firms to sabotage a potential competitor.

This account, based on a dozen interviews with key insiders together with a review of securities filings, court records and other documents, reflects a generational divide that has riven the firms that invented the alternative assets industry four decades ago. It shows that Apollo’s veteran founders, like their counterparts at Blackstone, KKR and Carlyle, are wrestling with how to groom new leaders without giving up control — bringing them into conflict with younger executives behind Wall Street’s latest moneymaking machines.

Apollo has prospered while Athene trades below its IPO price

Mr Dang could only guess at any of that as he sat in an Apollo conference room and tried to explain away the private emails that unmasked him as a collaborator in Mr Siddiqui’s new insurance venture, which his employer, Apollo, was trying to suppress. 

“Do you know how long this will take?” he asked. 

Months later, an arbitrator would conclude that Mr Dang’s account of his two-timing “reflected a lack of a moral compass”. But for now he had a job, and a prospect that he could keep it, if he spilled everything he knew and agreed to testify for Apollo against Mr Siddiqui.

“Is this something we can reschedule?” Mr Dang suggested. 

“Unfortunately not,” Mr Weideman replied.

Mr Siddiqui left Apollo convinced that insurance was an industry where lightning could strike twice. Long before Athene, his mentor Mr Rowan scored an early success with Executive Life, a California insurance company that collapsed in 1991 after buying billions of dollars’ worth of junk bonds from investment bank Drexel Burnham Lambert.

Now regarded as one of the sharpest minds on Wall Street, Mr Rowan started at Drexel at the height of the junk bond boom, after graduating from the Wharton School. Several of the bank’s top executives were at that time perpetrating one of the most notorious financial crimes in American history. “I worked directly for Dennis Levine, who went to jail,” Mr Rowan once said, summarising his early career. “I then went to work for Marty Siegel, who also went to jail. I then moved out to California to work for Mike Milken, who also went to jail.”

When junk bond prices collapsed, Mr Rowan was out of a job and Executive Life was out of business, decimating the savings of some pensioners. But Apollo, founded in 1990 by several Drexel veterans including Mr Rowan, discovered a silver lining. When regulators organised a fire sale of the bonds the Drexel team had sold to Executive Life, Apollo was an enthusiastic buyer. The firm reportedly made large profits. 

Michael Milken, chairman of the Milken Institute, speaks during the Skybridge Alternatives (SALT) conference in Las Vegas, Nevada, U.S., on Thursday, May 9, 2019. SALT brings together investors, policy experts, politicians and business leaders to network and share ideas to unlock growth opportunities in finance, economics, entrepreneurship, public policy, technology and philanthropy. Photographer: Joe Buglewicz/Bloomberg
The one-time 'junk bond king' Michael Milken, who went to jail, is one of Marc Rowan's former employers

Debt markets were again convulsed by financial crisis when Apollo poached Mr Siddiqui in 2008 from a smaller private equity firm. He graduated from Harvard Law School after stints in internet start-ups and consultancy, before moving to Goldman Sachs. “The rarest quality in junior people on Wall Street is willingness to invent,” says a person who supervised him there. “Imran brought that to work every day.”

In his first five years at Apollo, Mr Siddiqui worked with Mr Rowan to buy scraps of mispriced business from major insurance companies. They used them to build Athene into an insurance company with enough heft to be listed on the stock market. 

In 2013 Apollo raised a new $18bn private equity fund — and Mr Siddiqui saw a chance to ask for more money. He also made two unusual requests. Instead of a bigger stake in Apollo or its funds, he asked for a stake in Athene. And he asked to borrow cash from Goldman and Apollo, so he could double down and buy even more Athene shares. While Apollo, too, has a large equity stake in Athene, which it says “creates a close alignment” between the companies, the move potentially put Mr Siddiqui at odds with his employer over the fees the firm extracted from the insurer. 

The unorthodox pay package may have widened a cultural gap between Mr Siddiqui and some of his Apollo colleagues. He was a decade older than the private equity firm’s typical recruits, and some viewed him as aloof and arrogant, with a tendency to give unsolicited advice to his fellow partners on how to run their portfolio companies. Unlike peers who usually had a dozen or so deals at various stages of development, he was spending most of his time at Athene. Now, even as he ascended to the rank of senior partner with a prized slot on the Apollo Management committee, Mr Siddiqui’s $78.5m stake in Athene dwarfed his $20m holding of Apollo’s shares and also exceeded his participation in the firm’s private equity funds.

By mid-2015 Mr Siddiqui and Mr Rowan were set on a collision course.

A major bone of contention was the position of Jim Belardi, who served as Athene’s chief executive while owning a 5 per cent stake of the Apollo subsidiary that charged fees for managing the insurance company’s assets. In 2015, Mr Siddiqui came close to replacing him with respected MetLife executive Bill Wheeler. Mr Rowan called Mr Wheeler “great window dressing for an Athene IPO and perhaps . . . also a great executive” but took exception to what he saw as a secretive hiring process. (Mr Wheeler eventually took the role of “president”, which Athene says was “always intended”, calling his role “critical and influential”.) 

In late 2015, Mr Siddiqui and others who worked closely with Athene felt he was being sidelined from his role at the insurer. Mr Rowan disputed this and stated in sworn testimony that “Mr Siddiqui was fully operational with respect to Athene through the day he left”. Still, by the time Mr Siddiqui departed in 2017, his relationship with Mr Rowan was so broken that, unlike Apollo co-founders Leon Black and Josh Harris, the man who had been his closest mentor did not stop by to say farewell. 

Unbeknown to his former boss, Mr Siddiqui had already been working on his own insurance venture. Caldera Holdings would compete with Athene, but with a difference: instead of being captive to a private equity firm such as Apollo, he planned to put policyholders’ money into fixed-income portfolios operated by low-fee asset managers such as BlackRock, according to people familiar with his plans. 

The problem was that Mr Siddiqui had signed a non-compete clause. In January 2018, Apollo started legal action. The case was settled. Mr Siddiqui’s lawyer, Lisa Solbakken, stated that Caldera, which was incorporated in Bermuda last July, “was neither founded nor operating until well after Siddiqui’s departure.” Mr Siddiqui gave up $15m of Apollo-related assets as part of the settlement.

Now free to compete, Mr Siddiqui wanted to kick-start his new venture by acquiring a listed life insurer named American Equity Investment Life (AEL), which was also an Athene target. Together with his Caldera co-founder, a former Athene executive named Stephen Cernich, he began drumming up money for a bid. 

In May last year, Apollo sued again, this time accusing Mr Siddiqui of misusing the firm’s confidential information. Mr Rowan told colleagues that he could not see how else Caldera could have mastered the complexity of bidding for a listed insurer so soon after Mr Siddiqui left Apollo. A New York arbitrator rejected that argument, suggesting Apollo should not have settled with Mr Siddiqui if it did not want him to compete. While castigating him for falsely stating he had destroyed confidential documents as required, the arbitrator found no evidence that Mr Siddiqui used confidential information obtained from Apollo or Athene.

Apollo lost its principal claim against Mr Siddiqui, and was awarded $150,000 against him in punitive damages on other claims, but the firm obtained something arguably more valuable than the $300m it had sought. In riveting detail, the arbitrator laid bare how Mr Siddiqui had worked on his competing venture with the surreptitious help of a mid-level Apollo colleague. 

Mr Dang was a rising star at Apollo. He regularly pulled 100-hour weeks, and left his phone on overnight so his billionaire bosses could rouse him. Yet he also found time to build Excel models for Mr Siddiqui. The arbitrator found that Mr Dang, who had never worked on insurance deals at Apollo, accessed confidential files belonging to the Apollo team that was helping Athene bid for AEL. Mr Cernich conceded it was a “stupid and sophomoric” thing to do, although the arbitrator found there was no evidence that Mr Siddiqui was involved or used the information. Apollo failed to flip Mr Dang, who resigned the day after his confrontation with Mr Weideman and was ordered by the arbitrator to pay Apollo $1m over his wrongdoing.

Athene eventually walked away from AEL, deciding a deal would be too expensive. But Mr Siddiqui could not buy the company either. The Apollo legal action spooked his potential backers, according to people familiar with the discussions. Some believe that was the point. For Mr Cernich, the Caldera co-founder who is also being sued by Athene, the case was never really about confidential information. “It was about the fact that we had the audacity to go after Apollo’s income and would not back down from its threats,” he says. 

Stephen Schwarzman, chairman and chief executive officer of Blackstone Group LP, speaks during a Bloomberg Television interview in New York, U.S., on Tuesday, June 4, 2013. Blackstone Group LP, the second-biggest U.S. office landlord, has said it expects strong interest from sovereign-wealth funds for properties it plans to sell starting this year. Photographer: Scott Eells/Bloomberg
Athene's boost to Apollo's market capitalisation impressed the likes of Blackstone founder Stephen Schwarzman

Apollo rejects this view entirely and the arguments are still rattling around courtrooms. Athene is suing Mr Siddiqui in Bermuda, claiming he violated his legal duties to the company. Caldera is suing Apollo, Athene and Mr Black in New York, claiming that the Bermuda lawsuit — and the arbitration action before it — are “shams”, part of a campaign of litigation and slander aimed at suppressing competition. (The defendants deny this; Apollo says it has “overwhelmingly prevailed” in litigation against Mr Siddiqui, and that calling its claim a sham is “absurd”.) 

Earlier this year two US-based Athene shareholders took aim at the private equity firm’s “extravagantly expensive” fees, filing lawsuits against Apollo in New York, only to drop the claims after Athene persuaded a Bermuda court to slap them with injunctions against pursuing their complaints in the US.

At Apollo, Mr Siddiqui’s former colleagues insist it could have ended differently if he had abandoned his secret collaboration with Mr Dang and respected the peace treaty he struck when he settled the first legal action at the beginning of 2018. Some of Mr Siddiqui’s allies call that fanciful, pointing out that Apollo began litigating against his AEL deal months before it knew one of its employees was involved.

There have been no winners from the dispute. Athene’s shares trade just below their 2016 IPO price. The bloody fight with Mr Siddiqui has cast unwelcome attention on its controversial relationship with Apollo. Mr Siddiqui’s Caldera is again looking for takeover targets, and financial backers.

In short, it has been a calamity for everyone involved. In a conversation recorded in court papers, Sorin Siddiqui surveyed the mayhem unleashed by her husband’s attempt to earn a second fortune in insurance, and said: “He should have just sat on the beach for a while.”

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