Apollo Global Management posted record third quarter profits, helped by rapid asset sales as the company began to cash in after an unprecedented buying spree that peaked during the pandemic.
Distributable earnings, a measure of earnings available for return to shareholders of the company, reached $ 752 million in the third quarter, compared to $ 205 million in the same period last year.
The results reflect the dynamism of the US financial markets, which recorded gains in all asset classes, the support of governments and monetary policymakers having avoided commercial bankruptcies linked to the pandemic.
KKR, an investment group competing with Apollo in markets ranging from real estate and insurance to private equity, also reported strong results on Tuesday, with quarterly after-tax distributable profits more than doubling for reach $ 925 million.
Hailing an “exceptional quarter”, Co-Executive Chairs Henry Kravis and George Roberts said they had “never felt better about the positioning of KKR”. Last month, Kravis and Roberts stepped down as co-CEO of the company. Their successors are Scott Nuttall and Joe Bae, who oversee a diversified asset manager with $ 459 billion in assets under management.
Apollo’s results were notable for the outsized contribution of its private equity funds, which contributed more than half of Apollo’s quarterly profits, even though they accounted for just a fifth of the $ 481 billion in earnings. ‘assets under management of the investment group.
Disposals for the period include a stake in the OneMain Financial credit group, a personal loan group in which it invested in 2018.
The sale was so rapid, in fact, that assets under management in the private equity industry declined 3% in the quarter, resulting in a 7% reduction in management fees for the division.
Apollo said the declines were “normal dynamics during times of heightened achievement”, and Managing Director Marc Rowan added in a statement: “Our business is booming and we are accelerating on all fronts.”
The company will soon begin raising a new private equity fund that will be “as big as or bigger” than the $ 25 billion vehicle it raised in 2018, co-chairman Scott Kleinman told investors this month. latest.
It will be one of Apollo’s biggest fundraisers since Leon Black stepped down as chief executive this year, following an independent investigation into his professional contacts with late sex offender Jeffrey Epstein.
Some pension funds said at the time that they would consider halting their investments with Apollo. But analysts believe Black’s departure, along with the strong performance of the private equity division, will ease the concerns of most investors. Black was not convicted of any wrongdoing.
Apollo’s last two private equity funds, raised in 2013 and 2018, are expected to more than double the money they invested, Kleinman told investors.
The 2018 fund had reached a gross internal rate of return of 47% at the end of September. This exceptional result on a key measure of financial performance exceeds any private equity fund Apollo has raised since 2001, although the figure may fluctuate in the future as many of the fund’s investments have not been sold.