Apollo Chief Questions Effort to Limit Banks’ Exposure to Buyout Deals

Leon D. Black, the head of Apollo Global Management, questioned the wisdom of a regulatory effort to limit the ability of banks to finance risky buyout deals.

Mr. Black, speaking at a conference in Manhattan on Friday, said that regulators instructing banks to avoid providing financing above a certain level of debt were “micromanaging.” While Mr. Black said that the crackdown would not affect Apollo, due to the lower leverage it uses, he said it was “a bit concerning to have a blanket number” for debt in such deals.

“To have a blanket number like that is micromanaging too much,” he said, interviewed on stage at an event in Manhattan organized by the private equity and venture capital club of Columbia Business School.

According to news reports, the Federal Reserve and the Office of the Comptroller of the Currency have been pushing banks to comply with guidelines limiting their ability to back debt-heavy takeovers, and some banks are reported to have turned down some of these financing opportunities.

A spokeswoman for the comptroller of the currency did not immediately provide a response to Mr. Black’s remarks. The Fed declined to comment.

Mr. Black’s comments were part of a conversation that ranged widely, touching on recent deals and the outlook for private equity. Mr. Black offered some insight into his firm’s strategy in buying the parent company of Chuck E. Cheese last month, and also recounted Apollo’s deal for parts of Hostess Brands last year. While the Hostess deal was an unusual opportunity to rehabilitate brands like Twinkies and Ding Dongs after bankruptcy, Chuck E. Cheese is merely in need of some fresh thinking, he said.

With its combination of casual food and arcade-style entertainment, Chuck E. Cheese fits with the particular expertise of Apollo, which until recently owned the Hardee’s restaurant chain and currently owns Great Wolf Resorts, a water park company, Mr. Black said, characterizing Chuck E. Cheese as “kind of a combination” of those two. Apollo paid $1.3 billion to buy the chain’s parent.

While Mr. Black is known for his abilities in distressed investments, Chuck E. Cheese does not fit in that category, he said. Instead, Apollo will try to make the company more efficient.

“They open early in the morning, and there’s practically no business until lunch,” Mr. Black said. “The pricing was the same in towns in Kansas as they were in New York City.”

Mr. Black, whose firm took advantage of soaring stock markets to sell billions of dollars worth of investments last year, returning piles of money to its investors, also discussed the big picture for his firm. In private equity, he said, Apollo is “about as big as we can be.”

“The challenge, I think, will be to stay best in class,” Mr. Black added.

Apollo’s credit businesses, meanwhile, are its fastest-growing segment, Mr. Black said. He said the credit funds were focusing especially on illiquid investments, including collateralized loan obligations, mortgage-backed securities, ship financing, aircraft leasing, life settlements and non-performing loans in Europe.

On the topic of regulators, Mr. Black said that “some” of the regulations introduced since the financial crisis make sense.

“There shouldn’t have been leverage at 30 times among the investment banks,” he said. “But I worry when regulators and politicians put numbers on banks on a blanket basis across all industries.”

When it came to Chuck E. Cheese, Mr. Black did not approach that deal from a position of personal familiarity with the chain’s offerings.

Asked whether he had sampled the Chuck E. Cheese fare â€" which includes pizza, wings and sandwiches â€" Mr. Black said he had not.

“But many in my group at Apollo have, especially those with younger children,” he said. “Mine are all grown.”

But he added: “I’ve eaten many Twinkies, unfortunately. Too many.”