Apollo tops profit estimates on strong fee-related earnings, inflows
Shares of the investment giant surged nearly 5% to $148.90 and were set to open at their highest in nearly a week if current gains hold.
Founded in 1990 with a focus on private equity, Apollo branched out to become a major corporate credit investor and took full control of insurance company Athene in 2021, steps that have allowed it to somewhat stabilize earnings.
Apollo posted adjusted net income of $1.18 billion, or $1.92 per share, for the three months ended June 30, surpassing analysts' expectation of $1.84, according to estimates compiled by LSEG.
Fee-related earnings of $627 million, up 22% from a year ago. Management fees in credit rose 25%, dwarfing the 12% jump in fees from equity.
Capital solutions fees rose 4%, thanks to growth in debt origination. The origination business, which raises loans for companies globally, clocked up volumes of $81 billion.
The company generated $61 billion in net inflows, stemming from outside investors, assets added through the purchase of a smaller manager and its insurance arm Athene.
Total assets under management rose 21% to $840 billion.
Against a tough backdrop for private equity's traditional model of buying and selling companies, Apollo said it earned $219 million in fees, reflecting "a few sizeable monetizations" or asset sales.
However, it said activity "remains prudently delayed amid an uncertain exit environment".
"In a dynamic environment, we remain focused on investing and innovating behind long-term growth themes — retirement, wealth, industrial renaissance, and the public-private convergence," CEO Marc Rowan said in a statement.
The company has aligned itself with increasing investor interest in private markets, driven by the need to diversify away from traditional asset classes.
The company is coming up with new ways to tap into that demand, including a tokenized feeder fund, opens new tab and a private credit exchange traded fund with State Street (STT.N), opens new tab.
"Most days I wake up concerned more about the supply," he said in May.
Still, market sentiment has remained weak as its shares have lost nearly 14% of their value so far this year, compared with a nearly 8% gain for the benchmark S&P 500 (.SPX), opens new tab index.
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