By Isla Binnie and Prakhar Srivastava
May 6 (Reuters) – Apollo Global Management crossed $1 trillion in assets under management and beat Wall Street expectations for first-quarter profit on Wednesday after posting record quarterly fee-related earnings.
CEO Marc Rowan had set the lofty five-year target to double Apollo’s AUM to $1 trillion in 2021 as it tried to play catch-up with rival Blackstone by expanding its businesses across insurance, credit and private equity. The company is now aiming to hit $1.5 trillion in AUM by 2029.
Apollo, however, said its asset-backed finance portfolio booked a 1% loss due to a lower contribution from its Atlas SP unit, which had financed UK-based mortgage lender Market Financial Solutions.
MFS collapsed in February, fuelling concerns about lending standards at banks and credit funds. HSBC reported an unexpected loss on Tuesday, which sources familiar with the matter told Reuters was linked to its lending to Atlas and its financing of MFS. Apollo’s adjusted net income rose 8% to $1.21 billion, or $1.94 per share, from the same period a year earlier, boosted by a 30% increase in earnings derived from managing assets and arranging debt and equity transactions.
Analysts were expecting a profit of $1.93 per share, according to estimates compiled by LSEG.
Apollo shares have rebounded from lows hit in March but are still down about 10% YTD. They were last up 2.8% in choppy premarket trading.
However, Apollo and its fellow managers of alternative assets – which include private equity, private credit and real estate – have been facing rising investor pressure for months over fears about slower future growth and AI’s threat to some of their focus sectors including software.
Inflows totalled $115 billion in the quarter, partly driven by the acquisition of UK insurer Pensions Insurance Corporation (PIC) through Athora, a European group Apollo created. Wealthy retail investors pitched in $4 billion.
On an unadjusted basis, Apollo booked a net loss of $1.9 billion, compared with net income of $418 million a year earlier. This was due to a $2.1 billion unrealized loss it had booked on investments in its insurance unit.
Returns from its direct lending funds, a part of private credit that has come under intense scrutiny in recent months, were up by a modest 0.5% in the first quarter, compared with 8.5% over the last 12 months.
Smaller peers Blue Owl and KKR have also reported negative performances in that business over that period.
Apollo’s flagship PE fund posted a loss of 0.3%. Hybrid value, which CEO Rowan has singled out as a growth driver, returned 4%.
(Reporting by Isla Binnie in New York and Prakhar Srivastava in Bengaluru; Editing by Anil D’Silva)
Comments