Apollo beats profit expectations as lending surges, assets jump to US$938 billion

Storm clouds form above the New York Stock Exchange building in New York City. (AP Photo/J. David Ake)

Apollo Global Management reported a 13 per cent rise in fourth-quarter profit on Monday, surpassing Wall Street expectations, buoyed by strong debt origination and inflows of fresh client money.

The growth was driven by origination of a record US$97 billion in new loans and other investments in the quarter, Apollo said in a statement. Its shares rose more than four per cent in premarket trading.

“This was a strong quarter by Apollo,” Piper Sandler analysts said in a note.

Apollo began life in 1990 with a focus on private equity before expanding into corporate credit. It has become a major lender and built up a large insurance business, taking control of retirement services company Athene in 2021.

The group raked in $42 billion in the quarter, pushing total assets under management to $938 billion. CEO Marc Rowan has set targets to manage $1 trillion by 2026 and $1.5 trillion by 2029.

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Fee-related earnings from managing assets and arranging debt and equity transactions hit $690 million, a 25 per cent jump over the year earlier.

Rowan said the firm was focused on “financing the industrial renaissance, advancing retirement solutions” and “enabling new buyers to access private markets at scale.”

The New York-based alternative asset manager posted adjusted net income of $1.54 billion for the last three months of the year. That translated to $2.47 per share, while analysts on average estimated $2.05, according to data compiled by LSEG.

Apollo’s capital solutions unit, which extends credit in different forms, including direct lending and asset-backed finance, generated $226 million in fees in the quarter.

Its so-called hybrid value fund, which grants financing that sits between debt and equity, logged 3.6 per cent returns, versus 1.9 per cent for its flagship private-equity fund.

Management fees in equity bounced 42 per cent year-on-year, but remained at less than half the value of fees in credit.

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Demand for investments among wealthy individuals has become an increasingly important source of business for asset managers.

Apollo reported $4 billion of quarterly inflows into that part of the business, a slower pace than the previous three-month period. Flows were focused on semi-liquid products, which allow investors to take periodic payouts, and alternatives to traditional government or corporate bonds.

Earlier on Monday, Apollo announced a partnership with British money manager Schroders to launch new investment products in wealth and retirement.

Markets gyrated last week on concerns that disruption from artificial intelligence could undermine investment theses in large sectors such as software. The jitters spread to asset managers, including Apollo, prompting several of its peers to disclose the weighting of software in their portfolios.

(Reporting by Isla Binnie in New York and Utkarsh Shetti in Bengaluru; Editing by Shilpi Majumdar)