Apollo Management(US:APO)2025-05-02 12:30Financial Data and Key Metrics Changes - The company generated record fee-related earnings (FRE) of $559 million, representing a 21% increase year over year [6][44] - Spread-related earnings (SRE) excluding notable items were $826 million, with adjusted net income of $1.1 billion or $1.82 per share [5][45] - Assets under management (AUM) increased by 17% year over year to $785 billion, with record inflows of $43 billion in the quarter [6][34] Business Line Data and Key Metrics Changes - The credit business showed strong performance with origination of $56 billion, a nearly 30% growth year over year [31] - Private equity fund performance was highlighted, with Fund 10 achieving a net IRR of 19%, significantly outperforming industry peers [15] - In retirement services, the company raised $26 billion in the first quarter, driven by strong demand for guaranteed income products [18][38] Market Data and Key Metrics Changes - The company noted a tightening of BBB corporate spreads below 100 basis points, a level not seen since 1998 [12] - The equity market saw significant concentration, with 10 stocks in the S&P 500 accounting for 40% of the index [11] - The company experienced increased competition in retail sales of fixed annuities, despite tighter spreads [17] Company Strategy and Development Direction - The company emphasized a focus on origination as a source of excess return, willing to reduce leverage and wait for favorable market conditions [8][10] - The strategy includes a pivot towards private assets, with expectations of increased demand from traditional asset managers [22][24] - The company is actively pursuing partnerships with traditional asset managers to integrate private assets into their offerings [88][90] Management's Comments on Operating Environment and Future Outlook - Management described the current market as volatile but expressed confidence in the company's positioning and ability to navigate challenges [27][41] - The outlook for the company remains positive, with expectations of continued strong performance in capital formation and asset origination [34][40] - Management acknowledged potential headwinds from competitive pressures and interest rate changes but remains focused on long-term growth [47][60] Other Important Information - The company announced the acquisition of Bridge Investment Group for approximately $1.5 billion, expected to enhance its real estate capabilities [49] - The company has $64 billion of dry powder available for investment, positioning it well for future opportunities [14] Q&A Session Summary Question: Can you break down the lower SRE and the conditions that could make you less conservative? - Management explained that they underwrite based on spread and ROE, with a focus on maintaining a mid-teens ROE. They are currently prioritizing cash and lower-risk assets to prepare for wider spreads in the future [55][61] Question: How are flows in the AAA channel and the durability of April flows? - Management reported strong momentum in the wealth channel, with AAA flows remaining stable and a positive outlook for the rest of the year [67][68] Question: What is the outlook for institutional demand amid market volatility? - Management expressed optimism about institutional demand, noting that they have historically under-earned their fair share and see significant opportunities for growth [72][78] Question: How does the company view the potential backlash from foreign LPs reducing allocations to U.S. markets? - Management acknowledged the risk but emphasized that the U.S. capital markets remain essential for global funding needs, suggesting that Apollo is well-positioned to navigate these dynamics [102][104]