Apollo Global Management Q2 FY25 earnings call APO

Apollo showcased its origination capabilities, generating $81 billion in assets (excluding inorganic, which would push it into the $90s billion) at attractive spreads. This included $75 billion in debt, with $60 billion in investment-grade credit (average A- rating) yielding ~290 bps over treasuries, and $15 billion in sub-investment-grade credit (average B rating) yielding ~470 bps over treasuries. The firm's credit business performed well, with core and opportunistic credit delivering 9-12% over the last 12 months.

Athene recorded $21 billion in organic inflows, its second-highest on record, contributing to an 18% year-over-year growth in net invested assets to $275 billion. The blended net spread for Q2 was 122 bps, with new business spreads at approximately 130 bps in H1, consistent with historical long-term averages. Management highlighted Athene's low cost of doing business at 16 bps, significantly lower than competitors, enabling sustained profitability.

Apollo is expanding its European footprint, particularly through Athora's agreed acquisition of PIC in the U.K. This transaction, pending regulatory approval, is seen as a significant entry into the U.K. retirement market, mirroring Athene's role in the U.S. The U.K. regulatory environment is encouraging private capital for long-term projects, creating a substantial opportunity for pound-denominated asset origination.

The firm identifies five new sources of demand beyond traditional institutional alternatives: individuals (wealth), insurance, institutional fixed income replacement, institutional equity replacement, and the 401(k)/defined contribution marketplace. These new channels are expected to drive long-term growth, with the 401(k) market alone representing $12-13 trillion in savings, offering potential for significantly better outcomes through private asset inclusion.

Apollo emphasizes innovation in product delivery, aiming for simpler, more accessible retirement products and exploring new uses for spread-based products. The firm is also focused on technology applications, such as TAMP managers and tokenization, to enhance client transparency, education, and confidence, believing these will expand the private credit ecosystem and facilitate liquidity.

The High-Grade Capital Solutions (HGCS) business originated over $8 billion across four transactions, including a GBP 4.5 billion financing for EDF, the largest sterling-denominated private credit transaction to date. This reinforces Apollo's role in financing large-scale infrastructure and energy transition projects, with over $60 billion deployed into energy transition since 2022, surpassing its 5-year goal two years early.

Apollo's capital formation engine generated $61 billion in total inflows ($49 billion organic), with $40 billion from asset management and $21 billion from Athene. Global Wealth inflows reached over $4 billion, the second-best on record, with year-to-date inflows up 40% year-over-year. Flagship products like AAA and ADS are scaling rapidly, with AAA expected to exceed $25 billion AUM by year-end.