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Understanding Apollo’s Private Equity Division’s Performance in 2017

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Dec. 29 2017, Updated 9:03 a.m. ET

Substantial rise in revenues

Apollo Global Management’s (APO) Private Equity division saw a substantial rise of 96.6% in total revenues in 9M17 compared to 9M16. This increase resulted from a significant rise in total carried interest income. The division generated more carried interest income related to Fund VI, Fund VII, and Fund VIII.

The Private Equity division saw a substantial decline of 52.5% in its net advisory and transaction fees in 9M17 compared to 9M16. This trend resulted from the downward momentum seen in the net advisory and transaction fees with respect to the companies in the Fund VIII portfolio.

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Rise in total expenses

The Private Equity division of Apollo Global Management (APO) posted total expenses of $435.8 million in 9M17 compared to $210.5 million in 9M16, reflecting a substantial rise in unrealized profit-sharing expenses. The division posted total compensation and benefits expenses of $378.4 million in 9M17 compared to $153.7 million in 9M16.

The Private Equity division witnessed a rise of 54.9% in its placement fees in the first three quarters of 2017 compared to the same period of 2016. This increase occurred mainly because more fees were incurred in relation to Fund IX’s fundraising activity.

On an LTM (last-12-months) basis, Apollo Global Management delivered a return of ~22.3% on its assets. Its peers (XLF) Oaktree Capital (OAK), Ares Management (ARES), and Ameriprise Financial (AMP) delivered returns of ~9.6%, ~2.1%, and ~1.2%, respectively, on their assets.

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