Apollo Global’s Q4 earnings rise 77% but miss estimates

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FILE PHOTO: Marc Rowan takes part in a panel discussion in Beverly Hills

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By Chibuike Oguh

NEW YORK (Reuters) -Apollo Global Management Inc said on Thursday its fourth-quarter adjusted net income rose 77% owing to strong earnings from its retirement services business, although that was partly offset by a steep decline in its private equity portfolio.

The New York-based firm said adjusted net income rose to $853.2 million, up from $483 million a year earlier. That translated to adjusted net income per share of $1.42, which was below the average analyst forecast of $1.50 per share, according to financial data provider Refinitiv.

Apollo’s shares were down 6.33%, underperforming the private equity index, which was trading higher.

The growth in Apollo’s earnings was largely the result of the $685.2 million income it generated from investing the capital of retirement services provider Athene Holdings.

Apollo completed its merger with Athene in January last year, helping the firm to report a big year-on-year jump in earnings even as its rivals posted lower income especially in the second half of 2022.

Financial market volatility, inflation, recession worries and geopolitical tensions have made it difficult for private equity firms to sell assets for top dollar. Blackstone Inc, KKR & Co Inc, and Carlyle Group Inc all reported lower earnings because of slower asset sales.

Apollo also saw its profits from its private equity portfolio fall by 86% to $27.7 million as it cashed out on fewer investments during the quarter.

Apollo had announced on Wednesday that it had created a new unit, Atlas SP Partners, to house the majority of the Securitized Products Group (SPG) assets it purchased from Credit Suisse Group last year. The new acquisition is set to help Apollo reach its annual target of originating $150 billion of investment grade credit by 2026, Apollo Chief Executive Marc Rowan said during an analyst call on Thursday.

“We now have 15 platforms, including seven platforms, which were new additions during 2022,” Rowan said. “We are definitely on track here to meet or exceed our $150 billion annual target at the end of 2026.”

Apollo said its income from management fees rose 16% to $561.3 million as Apollo benefited from the fees stemming from acquiring U.S. asset management firm Griffin Capital, increased capital flows from Athene and strong fundraising. That helped fee-related earnings reach a record $394 million.

“Apollo continues to execute on its strategic plan with solid growth and we expect 2023 momentum to remain robust, though fourth-quarter spread-related earnings dynamics could marginally weigh on expectations,” Goldman Sachs analysts wrote in a note to investors.

Apollo said its private equity funds appreciated 5.4%, its corporate credit funds rose 2.6% and its hybrid value funds gained 3.9%. The private equity funds of Blackstone and Carlyle rose 3.8% and 1% respectively, while KKR said its private equity funds were flat.

Under generally accepted accounting principles (GAAP), Apollo’s net income more than doubled to $584 million, up from $244 million a year earlier owing to investment gains from Athene.

Apollo said its raised $28 billion of new capital, retained $51 billion of unspent capital, and had total assets under management of $548 billion. It declared a quarterly divided of 40 cents per share.

(Reporting by Chibuike Oguh in New York; Editing by Jamie Freed and Andrea Ricci)

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