Inside Apollo Global’s Focus in the Face of 2H17



Positive outlook

Apollo Global Management (APO) appears to be well placed to see improved performance in 2H17, mainly due to fund flows and the performance of its private equity and credit divisions. Though further rate hikes by the Fed in 2H17 could impact Apollo’s Credit segment, the company has noteworthy competitive strengths including industry expertise, scale, and an integrated platform.

In its Private Equity segment, the company is seeking realizations, which would likely make a balanced mix between deployment and harvesting.

Apollo Global Management (APO) reported EPS (earnings per share) of $0.82 in 1Q17, beating the analysts’ estimate of $0.64. The company’s pretax economic income stood at $390 million on private equity net carry, which contributed $189 million.

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Net carry

Net carry refers to the share of profit of an investment paid to the general partner in excess of the amount that partner contributes to the partnership. Analysts’ expect Apollo Global Management (APO) to report EPS of $0.55 in 2Q17. The company expects to post AUM (assets under management) of more than $200 billion in the near future on strategic initiatives and organic fundraising.

In 1Q17, the company’s funds generated positive results across all segments. In its Credit segment, total gross return stood at 1.9% in 1Q17. In its Real Estate segment, the company’s combined gross return for Real Estate US Equity funds (Fund I and Fund II) stood at 3.8% during the same period.

The Private Equity segment invests in public and private companies. In this segment, public and private portfolio holdings appreciated 10% and 7%, respectively, in 1Q17.

About the asset manager

Apollo Global Management (APO) is an alternative investment manager that invests in credit, real estate, and private equity. The company manages and invests funds on behalf of sovereign wealth funds, endowments, and pensions, in addition to investments for individual and institutional investors.

APO’s private equity segment invests in debt instruments, distressed debt instruments, convertible securities, and control equity. Its Real Estate segment invests in real estate equity and real estate debt. APO’s Credit segment invests in structured debt and non-control corporate instruments.

Notably, alternative asset managing peers (XLF) KKR & Company (KKR), Carlyle Group (CG), and BlackRock (BLK) all beat their EPS estimates in 1Q17.


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