Apollo just set a goal to manage $1.2 trillion in private loans by 2029. These 7 slides show how it will get there.
October 1, 20240
Asset managers have grown their market cap five times in the last ten years.
Apoll
Alternative asset managers like Apollo and Blackstone have been the stars of the last ten years in financial services. The industry’s market cap has grown from $2.3 trillion to $3.4 trillion since 2014, but alternative asset manager’s market caps have grown from only 4% of all financial services to 12%, and they’ve grown five times over in ten-years.
Rowan looked back to 2008, when all of the largest alternative managers were roughly $40 billon in assets under management. By the end of 2023, when the firm was at $650 billion, it had grown between 16 or 17 times over, numbers that Rowan said are rare in financial services.
“We actually outgrew Apple, we outgrew Microsoft, ” Rowan said. “We outgrew almost every growth company you could think of.”
The capital needs of the future are long-term and complex.
This slide compares Apollo Credit’s lending capabilities with traditional lenders.
Apollo
Apollo’s merger with Athene brought life insurance and retirement capital to its balance sheet and is a key part of Apollo’s future strategy. Athene’s balance sheet has $235 billion in assets under management, plus an additional $69 billion from its Apollo-Athene dedicated investment program, and an additional $392 billion in third-party capital from clients.
That capital, especially Athene’s capital, which needs to pay out life-insurance annuities, is looking for long-term, safe yield. While many alternative firms are working with life-insurance capital, Apollo has brought it in-house. This allows the firm to lend in a wide-variety of ways over the long-term.
As banks scale back their own lending, Apollo expects to step in and finance the future.
“These long-term solutions across a variety of cost of capital are not really appropriate for bank balance sheets who fund themselves short,” Rowan said.
Allocations towards fixed-income are up, providing a runway for the firm.
This slide shows how the private-market has started to penetrate the sub-investment grade market, but not the investment-grade one.
Apollo
The private market has made a large impact on the sub-investment grade market over the past ten years, taking up $1 trillion of the roughly $3 trillion market. But it’s barely even tapped the surface of the $9 trillion investment-grade market, of which Apollo is a clear leader with its Intel and AB InBev deals.
… and in asset-backed finance.
Apollo still plans to make a lot of its fee-revenue from managing third-party capital.
Apollo
While Apollo’s Athene transaction brought huge amounts of capital to its balance sheet, the firm was quick to silence any naysayers who said that was the firm’s only large growth bucket.
“Many people look at our growth and they’ll always say, okay, it’s driven by Athene, not third party.” Zito said. “You’re seeing we grew third-party revenues in the last five years by 20%. The next five years, we anticipate third-party revenues to grow by 25%.”
While Apollo plans to explore new frontiers over the next five years, it definitely hasn’t forgotten its original DNA of making returns for its third-party investors.
