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Apollo Global Management is a publicly traded alternative asset manager. Founded in 1990 as a private equity firm, Apollo invests in several different strategies such as credit, which includes direct lending and asset-backed finance; equity, which includes private equity and secondaries; and real assets such as real estate and infrastructure. Apollo also owns Athene, a retirement services business that offers annuities. Investors in Apollo funds include public pension funds, endowments, family offices, sovereign wealth funds, and insurance companies.

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Apollo Global Management (APO): Company Profile, Stock Price, News, Rankings

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Apollo Global Management

apollo global management

Good morning, and welcome to Apollo Global Management's First Quarter twenty twenty five Earnings Conference Call. During today's discussion, all callers will be placed in listen only mode. And following management's prepared remarks, the conference call will be opened for questions. Please limit yourself to one question and then rejoin the queue. This conference call is being recorded.

This call may contain forward looking statements and projections, which do not guarantee future events or performance. Please refer to Apollo's most recent SEC filings for risk factors related to these statements. Apollo will be discussing certain non GAAP measures on this call, which management believes are relevant in assessing the financial performance of the business. These non GAAP measures are reconciled to GAAP figures in Apollo's earnings presentation, which is available on the company's website. Also note that nothing on this call constitutes an offer to sell or solicitation of an offer to purchase an interest in any Apollo fund.

I will now turn the call over to Noah Gunn, Global Head of Investor Relations.

Great. Thanks, operator, and welcome again to our call. Joining me to discuss our results and the momentum we're seeing across the business are Mark Rowan, CEO Jim Zelter, President and Martin Kelly, CFO. Earlier this morning, we published our earnings release and financial supplement on the Investor Relations portion website. As you can see, first quarter results marked a strong start to the year.

We generated record fee related earnings of $559,000,000 or $0.91 per share, spread related earnings excluding notable items of $826,000,000 or $1.35 per share and adjusted net income of $1,100,000,000 or $1.82 per share. In addition, we declared a cash dividend of $0.51 per share of common stock for the quarter ended March 31, representing a 10% increase from our prior quarterly run rate and consistent with the growth trajectory we provided at Investor Day. And with that, I'll now hand it over to Mark.

Thank you, Noah, and thanks to all of you joining this morning. As Noah started off, strong results, particularly amid a very volatile market. FRE of $559,000,000 up 21% quarter over quarter, or I should say year over year, SRE of 826x notables, AUM up seven eighty five, up 17% year over year, record inflows $43,000,000,000 in the quarter inclusive of $26,000,000,000 at Athene, solid origination quarter at $56,000,000,000 led primarily by platforms and most importantly, fund level returned strong. I'd call out two particular areas in the credit business, percent now depending on the fund on an LTM basis and in our hybrid area 19% on an LTM basis. In communicating what's going on in this market, most of the questions I've received over the past month have been about the macro.

So let me start there. It's never been more important to understand the manager philosophy and thus the direction of the business. You as investors, you should expect divergent paths managers. For us, purchase price matters in all markets. In debt and equity in up markets and down markets purchase price always matters.

We are not a current period profit maximizer. That means we are willing to sit things out. We are willing to reduce leverage. We are willing to wait for the fat pitch. Three, we are relentlessly focused on origination as our source of excess return.

We are not writing market trends. Hope and prayer, we have found to be very poor business strategies, but good strategies for life. Just a quick example of this. ADS was one time leverage in January of twenty twenty three. Prudent management of the vehicle took leverage down to 0.5 times in January of twenty twenty five.

We have earned the right to deploy in this market and we expect an acceleration returns rather than a reduction in risk. This is a totally different positioning than almost everyone else in the marketplace and reflective of the philosophy by which we run the business. Let me really pivot to macro. The last few years through Q1, I would describe as hyper U. S.

Exceptionalism. Money from around the globe found its way into The U. S, primarily into our listed markets and indices. In the equity market, 10 stocks of the S and P 500 stood for 40% of the index. Nvidia alone was larger than the market cap of every stock exchange in the world other than Japan and those 10 stocks reached a height of earnings basis.

In credit, BBB corporate spreads tightened below 100 basis points. The last time that happened twenty seven years ago in 1998. CLOs tightest spreads in decade. Every asset manager was offered a choice. They could continue buying into this trend, adding risk, adding leverage, reducing credit quality to chase returns, or they could reduce risk, reduce leverage, prepare for the fat or I should say fatter pitch and rely on proprietary origination to try to get them through while public markets and the corollary in private markets did not offer acceptable risk adjusted returns.

For us, we found our return to origination structure rather than reaching down the credit curve. We have built massive funding and reduced risk. We are well prepared. We believe we were one of the largest active buyers of assets post Liberation Day, twenty five billion in April alone. Interestingly, mostly in public markets, public markets were the fastest to adjust from a price point of view and exhibited what we expect to see going forward limited liquidity.

The equity market pretty much at all times has liquidity, but investors are discovering what we have been saying for years. There just is no liquidity in publicly traded fixed income markets. And therefore, we expect extreme price volatility to the point where sometimes public markets offer better returns on a risk adjusted basis than private markets. Impacts the two businesses. In asset management, we're sitting with $64,000,000,000 of dry powder, really strong investment performance.

I'd highlight particularly in private equity. Private equity their most recent fund, Fund ten, sitting with a net IRR at the end of the quarter of 19% versus 9% for industry peers over the same time period, strong DPI. Purchase price simply matters. The philosophy and performance and product breadth is resonating with our client base. Jim will talk to you about what's happening in capital formation, but think about the five or six products that are really scaling.

ADS is greater than $20,000,000,000 in three years. S3, our secondaries business $10,000,000,000 in less than three years AAA greater than $20,000,000,000 in three years ABF over $7,000,000,000 in less than two years Accord $8,500,000,000 in less than two years. We feel good about what we've done. We feel good about the communication we've had with our investors and partners and they understand our view of markets and how we have prepared for the more volatile environment that we are seeing today. In retirement services, the macro trend continued to play out, exceptionally strong demand for all forms of guaranteed income, reflecting both higher rates and an aging population.

We saw interesting competitive behavior in Q1. Think about this corporate spreads collapsed, prepays of higher yielding assets hit records. And yet we saw increased competition in the most competitive of the channels for retail sales of fixed annuities as competitors tried to make up shortfalls with volume and by taking on more risk in asset selection. We chose a different direction. Tighter spreads made it a great time to fund in less competitive channels.

We raised $26,000,000,000 in the first quarter and another 10,000,000,000 in April. We invested that money more in cash, in treasuries, in agencies and paying down leverage. That is not without its cost, but it sets us up well in a volatile market. That move toward more cash and less risky assets cost us approximately $15,000,000 in the first quarter and if not deployed will cost us some $30,000,000 for the year. However, 14,000,000,000 was invested in April alone at 50 basis points wider spreads than those available in Q1.

Lower rates now forecast in excess of those that we discussed at Investor Day plus sizable prepays from the record tight spreads in Q1 will create headwinds. The opportunity for us is a strong asset pipeline of proprietary origination, continuation of the wider spreads we're seeing in April and our ability to run the business in a volatile market because we have prepared for it. We run Athene with a principal mindset and a long term focus. Athene is in an excellent position. On an absolute basis relative to nearly all peers, having four different funding channels, which were especially important in Q1 against the backdrop of strong secular demand for retirement products.

And as you can see, we are spring loaded on both sides of the balance sheet. That does not mean it will be straight up, but we are well prepared for volatility and we will react accordingly with our principal hat on making sure we get the best long term outcome. Martin will detail for you all the puts and takes for the rest of the year making a more difficult forecast in an uncertain environment, but one also filled with opportunity. Let me return for a moment to the industry that we are in. This is not unique to Apollo.

This is the entirety of our industry. We have built this industry over forty years out of the smallest bucket of our institutional clients called alternatives. We are fortunate we now have another sizable bucket called individuals. We have a third bucket, which companies who have witnessed the success of Athene and are starting to emulate. We also now have institutions who for the first time are entertaining the use of privates, particularly private investment grade in their fixed income bucket.

And we expect eventually we'll replace some portion of their public equity buckets with equity that is private, but that's for another day. Most interestingly over the second half of last year and now the beginning of this year, we're seeing yet another source of demand play out and that is in the form of traditional asset managers. Traditional asset managers are in the process of redefining what active management is. We always management as the active buying and selling of stocks and bonds. I now believe we will see active management as the public market beta married with appropriate private market assets and structures that investors understand like mutual funds and ETFs and integral funds and otherwise.

These traditional asset managers I expect will be large consumers private assets and will reach clients that our industry probably would not have reached on its own, whether we see the interesting innovations in model portfolios or the interesting partnerships or we just look at what we're doing on our own, whether it is access to private credit in a daily liquid wrapper through the State Street PRIV ETF or the income solutions we've launched with Lord Abbott through an interval fund or it's introducing privates into retirement solutions through a target date fund partnered with State Street. Across the board, we are working managers to integrate private assets in an appropriate way into products that we in the industry never really expected. These strong sources of demand starting with the original institutional base and now moving all the way for traditional asset management, I think portend very well for our industry so long as we are focused as not growing too fast. And too fast to me, we are in the business of excess return per unit of risk. Therefore, we are able to grow only as fast as we are able to originate good assets that offer those risk reward characteristics.

Thus, our relentless focus on origination as much as we possibly can across the board in most of the asset classes. We're also seeing interesting innovations across our business that I would call out not just in traditional asset management, but the early signs of progress in defined contribution in 04/2001 and tax advantaged, tokenization and digital markets, structured notes and portfolio solutions. I expect the level of creativity at our firm and in our industry opportunities, again boosting demand for private assets. And as you know, I am very bullish on the demand for private assets. And most days I wake up concerned more about the supply and thus origination.

Uncertainty leads to volatility, but volatility historically has been our friend. We would rather have uncertainty from our current position of strength than any other way. With that, I'll turn the call over to Jim.

Thanks, Mark. I'd like to start by sharing some perspective and view on the recent market volatility. The current administration was clear on their objectives pre and post election. They want to revitalize American industry, bring manufacturing, focus on domestic energy production and stimulate the industrial global renaissance. Tariff taxes and regulation are on the three legged stool to support these objectives.

While the tariff should not have come as a surprise, the scope and approach clearly rattle markets. At Apollo, we've been preparing for this environment like this environment and positioning the firm as Mark mentioned defensively in anticipation of this market disruption with dry powder and liquidity to thrive. As a reminder, we run our business as an equal opportunity investor with the ability to pivot between public and private, primary and secondary allowing us to focus on the most compelling risk reward. As market structure has evolved and private credit has grown far beyond direct lending to include vast pools of investment grade assets, we believe our presence has been amplified given the differentiated model and strong relative position to address this broader opportunity set. Our long dated capital has clearly demonstrated this capacity in the investment grade arena, complementing our expertise in the non investment grade arena over time.

In recent months when public markets went no bid, we brought our own bid. This wasn't just liquidity, it was leadership. For some, capital light has become code for heads we win, tails we win and hopefully our clients do okay. In contrast, our aligned client centric model along with our principle driven balance sheet allows our platform a degree of maneuverability that is unmatched. Over many years, we built a platform to deliver stable strong performance for our clients and Q1 was no exception.

Touching on origination. As Mark mentioned, we originated $56,000,000,000 of assets during the quarter, representing nearly a 30% growth year over year. This result was driven by activity across our diversified channels, platforms, core credit, high grade corporate solutions, equity and hybrid. And significant momentum to start the year positions us to hit our full year targets of exceeding last year's level record level of volume. Even with credit spreads at or near generational types, the advantages of our origination engine shine through.

For example, our 16 affiliated platforms and core credit channels, we originated nearly $49,000,000,000 of assets at 200 basis points of excess spread versus comparable rated corporates or 300 basis to three seventy five basis over comparable treasuries. In the first quarter, we observed market tightening of approximately 30 basis points to levels representing generational tights before subsequent widening of 30 to 45 basis points in April. Our origination activity continues to be very broad based with diversified flow that is not dependent on any one platform or transaction. To deep dive, we originated over $11,000,000,000 via the broad sponsor channel in more than 80 different financing opportunities, showcasing our leading presence and depth and connectivity to the market. Just recently, our leadership in the financing for Caro Healthcare sponsored by KKR is another example where we stepped into a structure at attractive financing solutions in lieu of a broadly syndicated loan package.

The sponsor selected of the Apollo led consortium owing to our speed of execution and certainty of closing. We believe wins like this create a flywheel effect where demonstrated results leave us being the first call for solutions to broad clients. Elsewhere, within our infrastructure and energy investing franchise, we signed committed or deployed over $3,000,000,000 during the quarter across a half dozen opportunities across the globe, highlighting our growing presence to originate with and finance the ongoing global industrial renaissance. This current environment provides an opportunity to stay close to our clients and understand how we can be helpful and best serve their needs. For example, we continue to work closely with our multiple bank partners.

The recently announced financing for Jefferson carve out of Boeing via our Citi partnership is a great example of our ongoing collaboration. During this time, our scaled durable capital base and structuring expertise allowed us to offer flexible solutions with certainty for borrowers. As a result, our origination pipeline in a variety of areas with particular focus on high grade capital solutions and hybrid has never been broader and wider. Turning to capital formation. We generated record quarterly organic inflows of $43,000,000,000 across the business comprised of $18,000,000,000 from asset management and a remarkable 26,000,000,000 from Athene.

Our capital formation engine is highly differentiated and less prone to cyclical fundraising dynamics. And our historical strong presence within institutional channel, our building momentum in wealth channel and our market leadership in retirement services is a formidable combination. Within the $18,000,000,000 of inflows from asset management in the quarter, approximately 70% went to credit oriented strategies and 30% to equity oriented strategies with contribution coming from a broad array of investors around the globe. Two strategies in particular, Accord Plus, our opportunistic credit strategy and S3, our sponsor and secondary solutions both recently held successful final closings that demonstrate that our approach is resonating. S3 equity and hybrid solutions fund one closed with $5,400,000,000 in commitments bringing total capital raised across the S3 ecosystem to nearly $10,000,000,000 since launching three years ago.

And Accord plus Fund II closed with $4,800,000,000 of commitments, which when combined with the associated managed accounts bring the capital brings the capital raise for this strategy to $8,500,000,000 in less than two years. Global Wealth continues to be an important strategic contributor to our growth and we are extremely excited on the momentum we are seeing in that business. The emergence of a market volatility did not have an observable impact as we generated our best fundraising quarter to date approaching $5,000,000,000 in the quarter, an 85% year over year increase from one quarter twenty twenty four. And I would add that that's across 18 separate strategies encompassing our semi liquid suite as well as a variety of drawdown and QP offerings. We saw notable strength in Asia during the quarter as our offering continues to gain traction in that region.

We continue to effectively scale the business with six strategies now above $1,000,000,000 in AUM. And while still early, the growth trends in the wealth channel are showing signs of durability post liberation date. Athene had an outstanding quarter as mentioned with $26,000,000,000 of organic flows, the highest results on record. By channel, inflows were driven by $10,000,000,000 from retail, dollars 11,000,000,000 from funding agreements and $5,000,000,000 in flow reinsurance. Retail flows were led in strength by MYGAs and FIAs and the FABN issuance was the strongest on record as we leaned in and took advantage of very favorable issuance spreads as Mark mentioned.

In flow reinsurance, we capitalized on the strategic opportunity in The U. S. Client with a U. S. Client that drove outsized volume.

As we progress throughout the year, we continue to expect Athene's mix of new business will look like last year with strong activity in the funding agreement and retail channel. Athene remains extremely well positioned to serve the enormous needs of the growing retiree population and executing on this opportunity will enable Athene to durably grow earnings in the future. Our team remains focused on serving our clients and deserving our promise of excess return. We are leaning into areas of imbalance between capital and opportunity and we've been extremely active in the market over the past month leaning into volatility with size, speed and structure. We are viewed as a partner of choice to provide capital solutions to companies unable to go public, provide liquidity solutions to GPs that need realizations and provide alternative pools of capital to public companies seeking fund diversification or simply CapEx growth.

If the client of Dialogue in recent weeks is any barometer of the demand of our services then the outlook for Apollo is very, very bright. The open architecture and integrated model of our firm allows us to pivot and navigate swiftly in periods of short or extreme volatility. The recent stretch has clearly been one of our busiest in the last few years and we're approaching the opportunity from a position of strength. Since the April, in addition mentioned is the IG activity of gross $27,000,000,000 we have participated in over 40 direct lending or financing transactions and have also seen strong activity in the NAV loan finance sector. Our pipelines remain incredibly robust across our firm.

With that, let me turn the call over to Mark.

Thanks, Jim, and good morning, everyone. Our Q1 results demonstrate the strength of our platform and our ability to execute in a dynamic environment. I'll quickly walk through our financial results, highlight some key drivers that will position the balance of the year and then touch on capital allocation. FRE. In asset management, we generated $559,000,000 of fee related earnings for the quarter, a new record.

The FRE grew by 21% year over year and was driven by three components 18% management fee growth with notable strength from credit, which grew by 23% capital solutions fees of more than $150,000,000 for the quarter, a very strong outcome in view of the emerging volatility and expense discipline with combined comp and non comp expenses growing by 11% year over year. The uptick in compensation expense reflects continued investments across our business to execute on our broad set of growth opportunities. 17% overall revenue growth combined with 11% overall cost growth resulted in approximately 200 basis points of FRE margin expansion year over year. Consistent with prior comments, we remain confident in the long term margin potential of the business and expect to see expansion over a multiyear period as our business continues to scale. Key drivers within our FRE growth plan for 2025 include sustained momentum in global wealth, continued strength in third party credit more broadly in particular our asset backed finance business and our origination platforms and growth in PE adjacent businesses within equity specifically hybrid value and secondaries.

Given the momentum we see in the business, we are very confident in our 2025 earnings guidance. SRE. At the same time, Athene's business is facing a number of market driven uncertainties, which I will touch on in a minute. Athene's net invested assets grew by 15% year over year, driven by record organic inflows with strength across the three channels that Jim just highlighted. We generated $826,000,000 of SOE for the quarter excluding notable items.

Adjusting to our long term 11% return expectation on the alternatives portfolio will contribute an additional $29,000,000 of investment income. The ALTS return for the quarter came in higher than our pre release estimates due to positive valuation adjustments amid late quarter volatility. The notable item in the quarter stemmed from a change to how we recognize income on certain derivatives and resulted in a $22,000,000 unfavorable impact within cost of funds within the quarter. In spread terms, net spread ex notables of 129 basis points declined by eight basis points sequentially and you can see the components clearly laid out on the bridge we provide within our earnings presentation. Recall that spread related earnings and net spread results are

return. We are seeing 1.5 additional rate cuts, which is about a $40,000,000 headwind if realized. Competitive pressure in the retail channel of approximately 10 basis points on an assumed $35 to $40,000,000,000 of volume along with $40,000,000 of headwinds from higher asset prepayments. Those are the headwinds along with the liquidity build that Mark referenced earlier. And collectively they impact both our net investment income and our cost of funds trends.

In view of these dynamics and assuming normalized investment spreads for the balance of the year instead of the widespread conditions in April, we expect a mid single digit growth rate for 2025 off the rebased $3,200,000,000 starting point. We have an opportunity to earn some of this back based on the deployment pipeline and market volatility providing wider spreads in which case our growth rate will be higher. While different macro or business variables come into play in any given year, you should trust that we'll do sensible things to navigate the environment and we remain focused on delivering the 10% average growth we laid out within our five year plan. Turning finally to capital allocation. We deployed over $700,000,000 for share repurchases in the first quarter including $130,000,000 opportunistic buybacks.

As we have done in the past, we will seek to be relatively more active when there are particularly compelling opportunities or dislocation in our share price. Over the last twelve months, we've returned $1,700,000,000 of capital to shareholders through a combination of dividends and opportunistic share purchase repurchases, while also allocating more than $200,000,000 of capital to strategically invest in future growth initiatives. During the quarter, we announced the acquisition of Bridge Investment Group in an all stock transaction with an equity value of approximately $1,500,000,000 Bridge is an established leader in residential and industrial real estate as well as other specialized real estate asset classes. We believe Bridge will enhance our existing real estate business providing immediate scale and origination capabilities that fit synergistically within Apollo's ecosystem in particular asset demand from Athene and Aris our semi liquid real estate oriented products. We look forward to welcoming the Bridge team on board later this year and we expect the transaction to close in Q3 subject to outstanding closing conditions.

And with that, I'll turn the call back to the operator for Q and A.

Thank you. The floor is now open for questions. Session. first question is coming from Glenn Schorr of Evercore ISI. Please go ahead.

Hello there. I'll apologize in advance. I want to try to simplify the conversation even though you gave us a lot on SRE. And I'm thinking we a couple of years ago we thought we were growing I would say call it mid double digits. We brought that guy down to 11% and now we're coming down to mid single digits just this year.

I like you being conservative to the environment and waiting for a fat pitch. I like the growth that you've seen. So can we break down the lower SRE on which piece is the conservative part of the investment? And what conditions could make you less conservative and put that money to work sooner? And then the flip side of it is we didn't talk that much of there is a higher cost of funds.

Cost of funds is up 28%. I'm assuming that's tied to funding agreements. But maybe we could try to simplify between the asset side and the liability side and then we could understand which is the conservative piece versus the market environment? Thanks.

Okay. It's Mark. I'll do the macro and then Martin will do some of the micro. We underwrite the business on a spread basis and an ROE basis. Some products offer higher spread, but are more capital intensive.

Some products lower spread, but are more capital efficient. So we also have adjustments in the spread that we earn. Our goal is to run a mid teens historically 15 plus percent ROE business. If we run a 15% ROE business, we are more than covering our cost of equity and we are able to get outside funders to help us fund our business and that's the basis on which we want to do business. Recall that to do business, there's actually three things that get you to real spread.

The first is your asset spread. The second is your cost of liabilities. And the third and the one we don't talk about often enough is OpEx, which is very, very low for us on a relative basis. What we saw and so now step back and think about what's happened. We went through COVID and COVID offered some of the widest spread business we've ever seen.

That business will roll off as you know throughout 2025 and through a portion of 2026. But the volume by which we've been doing business has because you've seen a significant tick up in volume over the past few years. We've been doing that higher volume business at wider spread. The conditions we saw at in December and in the first quarter were not in my opinion healthy competitive conditions to put risk on the books. I can only imagine what's happening on a competitive basis given that we are 25 basis points ahead just on OpEx before you get to origination.

But what we chose to do was to massively increase our use of funding agreements, which are the least competitive channel for us and to pile up cash in Q1. That allows us and we do that by increasing cash balances, increasing treasury balances, by increasing agencies and by paying down repo and other forms of leverage including FHLB. All that sets you up to redraw that when spreads widen, which is what we saw in the April and as we put money to work. So now to your question of outlook. Outlook is in part driven by the interest rate environment.

As you know, we have some sensitivity on a reduced basis to interest rates. But relative to where we had been, we now have 1.5 more rate cuts. That is a headwind. We had competitive pressure in Q1. That is also a headwind.

However, we saw massive spread widening in the beginning of Q2. When Martin frames the year, the question is do we see a return to normal, which is what is presumed in what Martin has said, or do we see a continuation of widespread business that we're seeing in April? That will determine the direction. Martin has given you the conservative side of that because that is what we do. So the opportunities on upside here in my opinion are wider spread, derived by a lessening of competitive pressure in the liability origination and cost of funds area and a strong pipeline management at Widespread, which was particularly good and rewarding in April.

So that would be my macro and I'll let Martin add to that and see if we can do better.

at the earnings profile ahead of us, there's pieces that we know and can predict with high certainty. And that's the behavior of the existing business and how it rolls off over time contractually. And then there's pieces of it that are sort of expectations, which include prepays. And we obviously make assumptions and estimates about prepays, but given the extraordinarily tight conditions we saw on spreads in CLOs in Q1, prepays are running a bit higher than we had forecast. And then you get to the unknowns.

And the unknowns are the components that Mark laid out, which are rates and both face and spreads on putting that to work. So as I think about relationship between the cost of funds and the net the gross investment income, we're clearly under earning on the business that we wrote in the quarter relative to the potential it has. And it will take a period of time, which we're making estimates around to earn that back. And that's really the primary uncertainty both timing and spreads at which that outsized business is put to work.

Thank you. The next question is coming from Steven Chubak of Wolfe Research. Please go ahead.

Hi, good morning. Thanks for taking my questions. So I was hoping to get some perspective on the wealth outlook. It sounds like you guys are continuing to see really good momentum. I was hoping you could speak to how flows were in AAA this quarter?

Where you guys are in the distribution or platform journey at the moment? And if you could provide more context just on the durability of those April flows and how it informs your outlook from here?

Well, me start off and I'm sure Mark may have a couple of comments. But I would say if you go back twenty four months ago in terms of 2023, did $4,000,000,000 in the overall channel. If you then you go to 2024, we were at $11,000,000,000 We've been clear with $5,000,000,000 in the first quarter this year and we've laid out a number 33,000,000,000 for the year. We feel quite strong on that number. There's no doubt there's been breadth in a variety of vehicles ADS, AAA, ABC.

AAA had solid numbers across the quarter and was not an outlier to the upside or the downside. So what's clear to us is the and we mentioned this before, performance is critical, but it's also technology, it's education, it's breadth of platform, it's the ability to have portfolio solutions. In time, it will be your ability to fund and finance and really provide the breadth of product. So we didn't see any wavering in the April. April has been a strong month as well.

But it's we do live in a bit of an uncertain world, but we still feel very strong about the rest of the year in aggregate on this channel.

Thank you. The next question is coming from Alex Bostein of Goldman Sachs. Please go ahead.

Hey, guys. Good morning. Thank you. I was hoping we could expand the fundraising conversation a little bit more broadly. It obviously feels like retail and the wealth channel continues to be quite durable with respect to the current market uncertainty.

When you think about how your institutional client base is responding and appreciate you guys actually don't have a large flagship fund in the market today, which might be might actually be a good thing right now. But as you think about other sources of institutional demand in light of this volatility, How much more I guess durability do you see within that channel relative to maybe some of the other parts of the market?

We feel extremely positive about the traction and the dialogue that we're getting from investors around the globe, notwithstanding some of the actions would have taken place in the administration. I would take a step back. We believe we have under hit our weight in terms of grabbing our fair share over the last couple of years. We're continuing to grow that. And when I see the dialogue that Mark described is our purchase price matters.

We are not on the apology tour around the globe. And people have seen the breadth and success of a variety of our investment strategies from the equity business across the board to our hybrid business and the breadth of our credit business. So the call notes that we see, the engagement we see, the results we see make us very, very positive not with standing a bit of a macro headwind about how global investors might see The U. S. So we feel our share is going to whatever is out there, we're going to gain share.

The dialogues have been increasing. And I think our strategy in terms of what we see going on in terms of how we run our business from purchase price matters to our origination focus to our leadership in ABF to our leadership in the hybrid areas. These are all areas where people institutional investors are refocusing their attention and we're garnering a very strong share.

Let me I'll just add and frame what Jim said. If you go back in just a little of history, we were fortunate in the creation of Athene and participating in Athene's growth. But Athene in its early days was growing much faster than Apollo. And so it was not we were not in a position to really expand the credit business in particular, but hybrid as a secondary matter substantially with third party clients. Athene was taking everything we produced and more.

About four years ago, we finally crested the hill if you will on origination and we have continued to diversify. So Jim is putting his finger on it. We have historically under earned our fair share of assets from the institutional channel. That has left us with more fertile opportunities going forward. If I look at where the dialogue is coming right now, insurance is a really strong part of this business.

Not only are they seeing having to deal with the same tight spreads and therefore need to find ways to diversify, but just the acceptance of private assets as a more mainstream activity is really increasing the opportunity set across the board in insurance. I would say we are origination constrained rather than client constrained in the investment grade portion of the business. Everything we can originate at widespread, there's a home for. And that business will grow as fast as we can grow origination. And we have to be careful as not to simply raise all the money because we can.

We have to try as best we can to pace the growth of the capital side of our business with the growth of origination in our business. And this is a different way of thinking about traditional asset people who cover traditional asset managers, but it is how we live every day.

I have to add here. Mark's bringing up a point. When you think about how you all and how the marketplace looks at our business from a direct lending, it's very, very important for you to be able to commit to that sponsor a solution. The same analogy is going on in the high grade capital solutions. You can't really work as agent.

You need to be investor and being able to go to that counterparty and deliver a solution with capital on the screws, there's a reason why we've done a vast, vast majority of transactions in the investment grade capital solutions business. And we will continue to do so because of our platform and the way that we engage with this aligned capital. You can't go out and source an idea and then say we'll come back in six weeks when our clients want to buy it. And that's the differentiating factor in our platform. So origination is so tied into capital formation and that flywheel that we are taking a garnering a greater share as deserve it because of our platform.

Thank you. The next question is coming from Bill Katz of TD Cowen. Please go ahead.

Mark, couple of big picture questions for you. I always appreciate your perspective on this. You talked about sort of the intersection between public and private and you've been positioning your franchise for that for a while. But a couple of your peers, as you mentioned, it's sort of linked up on that sort of migration with the traditions trying to change the private side and expanding distribution on both sides. So you have KKR now with Capital Group, Blackstone working with Wellington and others.

Where do you stand in terms of maybe a broader linkage to potentially participate in that? And then secondly, just given the strong momentum of the business, how are thinking about large scale M and A? I guess there's a large transaction out there where Apollo has been now sort of publicly linked to that. I'm sort of curious of your appetite to sort of build into that channel as well. Thank you.

Okay. So we have two announced public partnerships, one with State Street and one with Lord Abbott. I would say this is a very active portion of our business so much so that if as you follow Apollo closely, you'll notice the peeling peeling off of what we call a new markets group specifically to focus on traditional asset managers. And I have said internally in the firm that I expect traditional asset managers to be potentially one of the largest sources formation for us. But I also want to give you the following perspective.

No one firm can serve as Capital Group or State Street or Lord Abbott or BlackRock or anyone else. We are all in the early days and these partnerships are about experimentation. If we are right, the scale of demand for private assets coming from traditional asset managers is going to be quite large. I believe we you will eventually adopt the kind of thinking that we have, which is this is not about how many of these partnerships I can get papered. It's about how many assets I can originate that are worthy of inclusion because they offer good risk rewards.

It's a really weird dynamic over forty years because for forty years, we've gone from a small group of firms doing alternatives to now a fewer number of sizable firms doing private markets. We've always been measured by or limited by our capital base. We're now in my opinion limited by our capacity to find good assets. And as Jim said, it is inextricably linked to capital formation because demand for private assets I believe does in some sectors today and will going forward exceed supply of private assets. And most people who cover our industry also cover traditional asset managers who historically have been judged the quality and growth of their AUM.

I believe that our industry will need to be much more closely looked at the quality of our origination. And I like these early partnerships because we are learning a tremendous amount, But none of us have the size and scale today or in the future to serve the needs of the 10 largest asset managers on an exclusive basis. I'm very comfortable focused origination. And if I have a good asset, it will have a home. I don't worry about that.

Thank you. The next question is coming from Patrick Davitt of Autonomous Research. Please go ahead.

I have a follow-up on that last point. You have been quietly launched on I guess more quietly launched than others on this hybrid illiquid product with Lord Abbott, I think a few weeks before the other big partnership launched. Could you give more color on where that stands in getting distribution? And any broader thoughts on being able to talk about when you think there could be a more tangible view of what demand even really looks like for these hybrid products? Thank you.

Well, think Mark touched upon it. I mean, these there's a reason why folks are partnering with those traditionals because of their reach of distribution. We're not traditionally a direct to consumer franchise. And so we believe that our ability to whether it's new product creation like we've done with State Street and Lord Abbott or just basic selling them SMAs or partnering on JVs, there will be a whole litany of types of partnerships just like there's bank origination partnerships. Five years ago, when one of us announced a partnership it was thought to be exclusive.

And now a variety of banks across a variety of asset classes have partnerships with us and many of our peers. That's what's going to happen in the traditionals as well. There will be a degree of open architecture. There will be a degree of desire not to have concentration in one manager. And so these are all early stages to where the business is going.

And again, when we think about the when you think about the limiting capacity, it's not just aligning yourself with the platform and getting a product on it. It's actually producing the rare commodity, which is these private assets. Traditional managers historically have dealt in a sandbox with public stocks and public investment grade bonds. And the sandbox of opportunities is limited to what has a CUSIP. We're bringing in a completely different perspective of actually originating bespoke solutions, we apply.

And so again, I do think Lord Abbott's been out there because we had to originally file it over a year ago. Not surprised by what we're seeing out of KKR and Capital Group. But as Mark said, we believe that when we have these calls in the ensuing years, you've talked about the institutional business, you've talked about global wealth, we believe there will be a pillar traditionals in the broad brush perspective is what we talked about.

Thank you. The next question is coming from Ken Worthington of JPMorgan. Please go ahead.

Hi, good morning. Thanks for taking the question. You talked about tokenization as one of the innovations, that will be meaningful for private assets over time. I was hoping you could help us link the two and how you see tokenization driving maybe its greater alternative access and ultimately, driving greater alternative asset growth. But help us link the two together.

Yeah. I think again, I think you have to tie together. You have to have a view of a degree of open architecture. And we do not hold ourselves out as leading front edge pioneers in the world of digital finance. But certainly there's been a tremendous amount of assets raised a variety of stable value stable coin structures.

And as those institutions decide to expand beyond pure treasury investments, UST or otherwise, they will choose other yielding assets. And from what we've seen interval funds because of the daily NAV and the subscription attributes are particularly attractive to a variety of potential digital platforms. And so we noted on our call, I believe either last call or two calls that we had had one of our interval funds over a period of time a variety of subscription into that performing debt vehicle. And I suspect again in the breadth of open architecture in scale of distribution, this will be something that potentially expands over time.

Thank you. The next question is coming from Mike Brown of Wells Fargo Securities. Please go ahead.

Hi, good morning. Thanks for taking my question. So there's been a lot of negative headlines related to foreign LPs and endowments and kind of reducing their allocations to private markets or foreign LPs allocating less to The U. S. So Mark from your perspective, is this a true risk for the industry?

Apollo Global Management (APO) Q1 2025 Earnings Call Transcript

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