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Behind Apollo’s and Blackstone’s Credit Businesses

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Apollo’s Credit division

Apollo Global Management’s (APO) Credit Division saw investments of $1.4 billion in 3Q17. These were focused on European non-performing loans, longevity assets, and structured credit investments. The division witnessed the significant YoY (year-over-year) rise of 17% in its AUM (assets under management) to $158 billion in 3Q17.

However, Apollo has opportunistic investments in sectors like industrials, technology, consumer, and materials. Its increase in FRE (fee-related earnings) and favorable investment income resulted in economic income of $180.5 million in 3Q17. Apollo’s liquid and performing funds contributed $42 billion to the credit division’s total AUM in 3Q17.

BX’s credit division

Blackstone Group’s (BX) credit division saw a YoY appreciation of 11% in its AUM in 3Q17, which came to $99.5 billion. Notably, Blackstone acquired Harvest Fund Advisors in October 2017, and the integration of Blackstone’s credit business and Harvest Fund’s business will be done in 4Q17.

Blackstone is expected to benefit from this acquisition plans to make the products of Harvest Fund available to limited partners, including retail wherein Harvest isn’t present. Blackstone’s credit division saw a significant fall in its total revenues in 3Q17 on a YoY basis, mainly due to unfavorable momentum in investment income.

Notably, peers (XLF) Blackstone Group (BX), Apollo Global Management (APO), KKR & Company (KKR), and Carlyle Group (CG) have beta values of 1.25, 1.19, 1.65, and 1.74, respectively.

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