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‘We are apologizing for nothing’: Apollo CEO says private equity firm is leaning into the downturn

November 3, 2022, 10:57 AM UTC

After a third consecutive quarter with his company running at a net loss, Marc Rowan, the CEO of Apollo Global Management, has no apologies to offer.

“We excel in this kind of market. We are leaning in,” he said on the company’s earnings call yesterday. “We are out talking with investors, and we are apologizing for nothing. By and large, we did what we were supposed to have done in a period of market excess, which was avoid potholes.”

The Fed continues to lift interest rates (another three-quarters of a percentage point yesterday). And the markets—both public and private—are suffering. As Rowan pointed out on Apollo’s call: Venture capital valuations are down 60%, the Nasdaq is down 30%, and the S&P is down nearly 20%. Apollo is still running at a net loss, as it has every quarter of this year.  

“We have an entire generation of investors [and] investment analysts, who have really grown up just seeing the market go in one direction,” Rowan said. “And we now all know it goes both ways.”

Like many other private equity shops or venture capital firms, Apollo is positioning the downturn as a “particularly good time” for the company. After all, alternatives are supposed to help diversify a portfolio and offer some downside protection from indexation. 

“We are on offense,” Rowan said, pointing out how Apollo had deployed $37 billion in capital in the third quarter, and how it was still sitting on $50 billion in dry powder. Even so, Apollo reported a net loss of $1.2 billion this quarter, now mounting to a nearly $5.7 billion net loss year-to-date, even as management fees and transaction fees are on the rise.

Apollo continues to pivot further into the high-net-worth market. The asset manager says it has been approved by three bank platforms to launch its AAA product, a core equity replacement meant to essentially be the S&P 500 of alternatives. The product has also apparently received interest from registered investment advisors, family offices, and independent broker-dealers. Rowan also said Apollo is continuing to expand in the Asia Pacific region.

“Uncertainty is not a time not to invest,” Rowan said. “Uncertainty is a time to make sure you are getting paid and going in with your eyes wide open as to a range of outcomes.”

As Anne reports from Lisbon…Apparently, Elon Musk isn’t the only one with eyes on social media. The U.K.-based payments and financial services unicorn Revolut is eyeing a further push into social media down the road. The fintech launched a new instant chat feature on its app yesterday for customers in the U.K. and EU—putting it in proximity to China-based titans like WeChat. But for the long term, Revolut might have bigger plans. Read the story here.

See you tomorrow,

Jessica Mathews
Twitter: @jessicakmathews
Email: jessica.mathews@fortune.com
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Jackson Fordyce curated the deals section of today’s newsletter.

VENTURE DEALS

- Volocopter, a Bruchsal, Germany-based battery-powered aviation startup, raised an additional $182 million in Series E funding. NEOM and GLy Capital Management invested in the round. 

- Alation, a Redwood City, Calif.-based enterprise data intelligence company, raised $123 million in Series E funding. Thoma Bravo, Sanabil Investments, and Costanoa Ventures led the round and were joined by investors including Databricks Ventures, Dell Technologies Capital, Hewlett Packard Enterprise, Icon Ventures, Queensland Investment Corporation, Riverwood Capital, Salesforce Ventures, Sapphire Ventures, and Union Grove

- AMP Robotics, a Louisville, Colo.-based A.I., robotics, and infrastructure company for the waste and recycling industry, raised $91 million in Series C funding. Congruent Ventures and Wellington Management co-led the round and were joined by investors including Blue Earth Capital, Sidewalk Infrastructure Partners, Tao Capital Partners, XN, Sequoia Capital, GV, Range Ventures, and Valor Equity Partners

- project44, a Chicago-based supply chain visibility platform, raised $80 million in funding. Generation Investment Management and A.P. Moller Holding co-led the round and were joined by investors including CMA CGM, Goldman Sachs Asset Management, TPG, Emergence Capital, Chicago Ventures, Sapphire, 8VC, Sozo Ventures, and Omidyar Technology Ventures

- Lodgify, a Barcelona, Spain-based vacation rental software startup, raised $30 million in Series B funding. Octopus Ventures led the round and was joined by investors including Bonsai Partners, Aldea Ventures, ICF, Intermedia Vermögensverwaltung, and Nauta Capital.

- Concerto Biosciences, a Cambridge, Mass.-based microbial communities biotech designer, raised $23 million in Series A funding. Safar Partners led the round and was joined by  investors including Horizons Ventures, M Ventures, and others. 

- Protein Evolution, a New Haven, Conn.-based carbon reduction climate tech startup, raised $23 million in funding. Collaborative Fund’s Collab SOS led the round and was joined by investors including New Climate Ventures, Eldridge, Nextrans, and Good Friends

- AMP, a Los Angeles-based energy management company for e-mobility, raised $17.25 million in Series A funding. Ecosystem Integrity Fund and Helios Climate Ventures invested in the round.

- Momento, a Seattle-based serverless cache company, raised $15 million in seed funding. Bain Capital Ventures led the round and was joined by investors including The General Partnership and other angels. 

- InterPrice Technologies, a New York-based treasury capital markets funding platform, raised $7.3 million in Series A funding. Nasdaq Ventures and DRW Venture Capital co-led the round and were joined by Bowery Capital.

- Exer AI, a Denver-based digital remote patient monitoring platform, raised $6.5 million in funding. Backstage Capital, Life Extension Ventures, Morado Ventures, Oceans Ventures, Operator Partners, Signia Venture Partners, Anne Wojcicki, and David Ko invested in the round.

- Treet, a San Francisco-based branded resale platform, raised $3.5 million in seed funding. First Round Capital led the round and was joined by investors including Bling Capital, Techstars, Interlace, Alante Ventures, BAM Ventures, and BBG Ventures

- Flowers Software, a Munich, Germany-based organizational management system for SMBs, raised $3.2 million in seed funding. La Famiglia VC led the round and was joined by investors including LEA Partners, Collective Ventures, and other angels. 

- Mozart, a San Francisco-based Web3 gaming integration platform for game developers, raised $3 million in pre-seed funding. Arcanum Capital, AG Build, Future Perfect Venture, SaxeCap, and others invested in the round. 

- BuildWithin, a Washington, D.C.-based software management platform for apprenticeship and workplace training programs, raised $2.4 million in pre-seed funding. Dundee Venture Capital led the round and was joined by Black Capital.

- AiPrise, a Santa Clara, Calif.-based customer orchestration platform, raised $2 million in seed funding. Y Combinator and Okta Ventures co-led the round and were joined by investors including Restive Ventures, Liquid2 Ventures, TwentyTwo Ventures, and Wedbush Ventures

PRIVATE EQUITY

- GTCR acquired a majority stake in Biocoat Holdings, a Horsham, Pa.-based medical device contract manufacturing company. Financial terms were not disclosed. 

- Medical Manufacturing Technologies, a portfolio company of Arcline Investment Management, acquired the equipment manufacturing group of Confluent Medical Technologies, a Scottsdale, Ariz.-based material science technology and manufacturing company. Financial terms were not disclosed. 

- NEC, a Pfingsten portfolio company, acquired Eastern Communications, a Bloomfield, Conn.-based maintenance, repair, and upgrade services provider to telecommunications infrastructure across the New England region. Financial terms were not disclosed.

- Truist Ventures acquired a minority stake in Spectral, a New Rochelle, N.Y.-based Web3 credit risk assessment infrastructure company. Financial terms were not disclosed.

EXITS

- MTY Food Group agreed to acquire Wetzel’s Pretzels, a Pasadena, Calif.-based pretzel snack franchisor, from CenterOak Partners for $207 million.  

- Aurora Capital Partners acquired Universal Pure, a Lincoln, Neb.-based food safety solutions provider for cold chain human and pet food customers, from Tilia Holdings. Financial terms were not disclosed. 

OTHER

- Hint Health acquired AeroDPC, a Denver-based electronic medical record provider, and  Equal Health, a Brookline, Mass.-based direct primary care network provider. Financial terms were not disclosed. 

IPOS

- Ithaca Energy, an Aberdeen, Scotland-based oil and gas producer, plans to raise as much as £310 million ($357 million) in an initial public offering in London. 

FUNDS + FUNDS OF FUNDS

- Sixth Street, a San Francisco-based investment firm, raised $4.4 billion for a fund focused on late- and mid-stage growth companies. 

- Blackbird Ventures, an Auckland, Melbourne, and Sydney-based venture capital firm, raised A$1 billion ($637.25 million) for its fifth fund focused on pre-seed to Series B companies.

Correction: The deals section of this newsletter has been corrected to reflect that Medical Manufacturing Technologies acquired the equipment manufacturing group of Confluent Medical Technologies, not the whole company.

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