管理層發言
Good morning, and welcome to Apollo Global Management's Second Quarter 2025 Earnings Conference Call. This conference call is being recorded. This call may contain forward-looking statements and projections, which do not guarantee future events or performance. Please refer to Apollo's most recent SEC filings for risk factors related to these statements. Apollo will be discussing certain non-GAAP measures on this call, which management believes are relevant in assessing the financial performance of the business. These non-GAAP measures are reconciled to GAAP figures in Apollo's earnings presentation, which is available on the company's website. Also note that nothing on this call constitutes an offer to sell or solicitation of an offer to purchase an interest in any Apollo Fund. I would now like to turn the call over to Noah Gunn, Global Head of Investor Relations.
Great. Thanks, operator, and welcome again to our call this morning. As usual, I am joined by Marc Rowan, CEO; Jim Zelter, President; and Martin Kelly, CFO. Earlier this morning, we published our earnings release and financial supplement on the Investor Relations portion of our website. For those who tuned in early and enjoyed our pregame hold music, we played a Blues track called 'Take Out Some Insurance' by Jimmy Reed. However, no insurance was necessary to protect against our performance this quarter as the results are simply outstanding. Strong execution like this is only made possible because of the tremendous efforts of our global team. We're all excited to discuss in further detail. So I'll now pass it over to Marc.
Thanks, Noah. Appreciate it, and good morning to all. And again, thank you for your interest in spending time with us. As Noah suggested, the second quarter was, in fact, very strong. Just to give the basic metrics; record FRE, $627 million, 22% year-over-year; management fee growth, 21% year-over-year; record ACS fees of $216 million; with respect to SRE, $821 million; with most of the metrics we care about in the right place. And both Martin and I will discuss that. What makes this possible? It's always about team. But if I dissect the business and really talk about what's going on here, the power of what we do from origination was really on full display. $81 billion originated from our platforms and our business in the quarter. That excludes inorganic. With inorganic, it would be in the 90s. Spread over treasuries, 350 basis points. Jim will spend some time talking about the quality of originations.
Buying something or originating something is not the secret here. Buying something that has excess return per unit of risk is actually what creates value in our business. Robust inflows of $61 billion across the firm; record AUM, $840 billion. The flywheel of what we do, our originating, raising capital, deploying was really in full force for the quarter. The business was strong and the business is getting stronger, and Martin will detail that and some expectations for the rest of the year. In terms of first dealing with asset management, what matters in asset management is ultimately performance. All buckets of our credit business, the largest of our business, performed the way they should. Whether you were core credit or opportunistic credit, between 9% and 12% over the latest 12 months, 2% and 3% quarter-over-quarter. A couple of things that I would call out. ADS, 9% plus annual return since inception, 2.3% in the quarter, now exceeds $20 billion in size.
What's interesting for me is that it shows that you can grow a business and scale the business while adhering to the principles that we espouse in our investment business. Top of the capital structure, large company, lower leverage, no PIC, we can do this safely by originating the right risk and not trying to grow the business faster than it needs to grow. At $20 billion, the team there is doing a great job and more to come. Performance without reaching, performance without trying to just grow AUM is really how we think about success in this business. In the equity business, starting with private equity business, Fund X continues to perform well. Net IRR as of the end of the quarter, 23%, DPI 0.2 versus on average 0 for the rest of the industry. Fund IX, net IRR of 16%, 0.6 DPI versus 0.3 for the rest of the industry. Since inception, 39% gross, 24% net over 3 decades. Alpha on the buy, alpha on the build and alpha on the exit.
This is not a complex business, but it is a disciplined business that requires tremendous execution. Sometimes trends work for you. Sometimes the IPO window is open or it's closed. Sometimes the debt market is open or it's closed. If you have a fundamental view of value and how to execute over a very long period of time, you can produce outsized returns, and that's what we've shown in our private equity business. Hybrid, 17% across our franchise, latest 12 months, $75 billion as of the end of the quarter with $7 billion raised year-to-date. On a percentage basis, as you know from our 5-year plan, we expect this to be our fastest-growing business segment. To give you a sense of our flagship vehicle, AAA, Apollo Aligned Alternatives in the Hybrid segment, we are closing in first 11.1% latest 12 months, 2.6% in the quarter, with a fraction of the volatility of public equity markets. This is what the team is supposed to do, deliver better than equity market long-term performance with a fraction of the volatility.
The reward for doing that is investor confidence. This vehicle will likely surpass $25 billion at year-end. Fundraising is strong, particularly in the institutional channel, which now for this quarter exceeds the retail channel, which is a surprise for us as institutions begin really exploring the notion of equity replacement, something happening much earlier than we thought it was going to happen. The reward for good performance is strong inflows, better than $40 billion, just in the asset management business in the quarter. Jim will take you through that, but the strength was across both institutional and the wealth business, and we continue to remain very well positioned with $72 billion of dry powder. Moving now to retirement services. We continue to observe very significant demand for retirement services product. The annuity market is a multiple of the size it was just a few years ago.
High rates certainly – higher base rates certainly play a factor in that, but we expect demographics to contribute to a permanently higher level of retirement services product need on the part of consumers. And it is our job, as I have suggested, not just to provide them with the product set that exists, but to anticipate where the product set might go. The challenge in front of the management team is to take the success they've had in the base business and really shake up the industry and have new products account for a very, very significant portion of their inflow over time. $21 billion of inflows in the second quarter. Second strongest organic quarter. We have a choice, given our size, scale, credit rating and breadth of distribution as to how to originate. We can originate in any one of a number of markets. In this particular market, fixed annuity or, I should say, funding agreement was a very strong contributor in the quarter.
In other quarters, other products will be a very strong contributor. Our job is to both serve the market demand as well as earn adequate spread for our equity investors and for ourselves. When we run this business for long-term profitability, it is supported with not just our capital, but with outside capital. It allows us to retain capital. It allows us to earn high returns. Ultimately, in this industry, to grow and to get to scale, we need to produce reasonable rates of return. In our case, we produce those reasonable rates of return while allowing the asset manager to garner a market standard asset management fee. That is not the case with lots of people who are trying to enter this business, where asset management fees are supplementing what they're doing.
Thanks, Marc. Much has been written covering the second quarter in terms of macro events that led to periods of uncertainty followed by a resurgence of confidence and risk on mentality. For Apollo, the attributes of our model were on full display. As stated previously, our North Star is to be an all-weather equal opportunity investor, private and public, primary and secondary, combined with speed and scale across the entirety of the investment-grade and non-investment-grade ecosystem as well as the equity ecosystem. In the aftermath of Liberation Day, we deployed $25 billion in a condensed time frame and we're well regarded as the market leader in that period. As the quarter progressed, confidence returned, markets reopened and risk assets recovered. In this environment, we continue to lead with scale, conviction and certainty of execution. In particular, I would highlight the performance of our high-grade capital solutions business, where we originated more than $8 billion across 4 transactions, including transactions for AES, BP, Mumbai Airport and EDF, which I will touch on shortly.
In aggregate, as Marc mentioned, we originated $81 billion of assets during the quarter, representing nearly a 50% growth year-over-year. This result was driven by activity across our diversified origination channels, platforms, core credit, high-grade capital solutions, equity and hybrid. Within platforms, volumes were led by ATLAS and MidCap, which posted combined volume growth of approximately 30% quarter-over-quarter, while maintaining solid historical spread. Within core credit, volumes were led by CRE debt, large-cap direct lending and fund finance, which in a combined basis doubled quarter-over-quarter. It is very important to draw the distinction that all origination is not equal, and we believe there is a fundamental difference and significant value capture between directly originated versus purchasing others originated assets. Of our total origination in the quarter, $75 billion was debt comprised of $60 billion of investment-grade credit with an average rating of A- and $15 billion of sub-investment-grade credit with an average rating of B. On our investment-grade origination, we generated excess spread of approximately 290 basis points over treasuries or approximately 190 basis points over comparable rated corporate debt.
On our sub-investment-grade origination, we generated excess spread of over 470 basis points over treasuries or approximately 200 basis points over comparably rated high-yield corporates. Overall, we observed stable spreads quarter-over-quarter and saw modest widening in July. Achieving record origination volume while generating excess spread is particularly impressive, as Marc said, when considering we are in a market where many areas within credit, such as CLOs or BB crossovers have gravitated to decade-plus or even generational type spreads. Our origination activity continues to be broad-based with several diverse flows across channels. We had some excellent wins in the quarter. And as I highlighted, in particular, was our GBP 4.5 billion financing for Électricité de France, EDF, which marked the largest sterling-denominated private credit transaction to date. Proceeds from the financing will be used to finance EDF's electronuclear projects in the U.K., most notably the Hinkley Point C nuclear power station.
This bespoke large-scale HGCS financing supports EDF's vital role in advancing the European energy and power infrastructure. We see a broad pipeline of these transactions, and it reinforces our reputation as a trusted adviser, making us a partner of choice for companies in need of secular CapEx investments. More broadly, Europe is an area we are investing significant time and resources to expand our dominant presence. Over the coming years, we see substantial origination opportunity as the region commits infrastructure investments, defense, reindustrialization and power generation. In Germany, which I visited 3 times during the quarter, we have made a significant commitment to support the country's growth initiatives and have committed to deploy over $100 billion over the next decade. We see a large direct lending opportunity as well, given over 90% of the firms with revenue greater than $100 million are still private. We also see a major opportunity in the asset-based finance strategy, particularly if meaningful securitization reform takes place, which we saw in the beginning of the quarter.
Thank you, Jim, and good morning, everyone. Our second quarter results, as you've heard, underscore the increasing momentum across our platform and demonstrate consistent execution of our long-term strategy. I'll briefly walk through the quarter's financial results and highlight the drivers that position us well for the remainder of the year. FRE. In Asset Management, AUM increased by 22% year-over-year to a record $840 billion, while fee-generating AUM grew 22% to $638 billion. Nearly 60% of our total AUM and 75% of our total fee-generating AUM is comprised of perpetual capital, which is highly scalable and largely insulated from cyclical drawdown fundraising. Perpetual capital is benefiting from strong flows in our Global Wealth business as well as Athene. We generated $627 million in fee-related earnings in Q2, a new quarterly high. FRE grew by 22% year-over-year, driven by the following 4 items: one, 22% overall management fee growth with 25% growth in credit, reflecting a strong origination volumes and spreads that Jim described across our asset-backed and other high-grade businesses.
Notably, the acquisition of Irradiant by Redding Ridge further builds out the capabilities of Redding Ridge. While this contributed to AUM, it did not contribute to growth in fee-paying AUM or management fee growth in any meaningful way. With respect to equity, S3 has contributed catch-up fees for the last 3 quarters including approximately $15 million in Q2, as we closed out a very successful $5.5 billion fundraise.
分析師問答
Our first question today is coming from Alex Blostein of Goldman Sachs.
So really impressive results across the business. I was hoping to maybe double-click into credit spread dynamics and importantly, how that could impact the insurance business perhaps beyond 2025, just taking into account your ability to sort of flex and move between products, but also rising competition in some of the more traditional channels like retail. And then again, to your point, fairly tight credit spreads across the ecosystem?
Thanks, Alex. It's Marc. I'll start and then I'll let Martin finish up. I think the way to think about the quarter, in credit spreads, in products that we have historically bought CLO, that are now more readily accepted and readily available, have tightened to levels that we think are unsustainable and uneconomic for the risk. We have been able to pivot the origination to maintain spread. Coming back to what Martin said, we are originating new business in the context of this tight spread environment at 130 basis points at numbers consistent with historical rates of return in amounts that we have never done before that we feel very comfortable doing. Why isn't the business growing faster? The business is not growing faster because the profitability of what we had done in the COVID era was just extraordinary. And so what you're watching is the business itself is incredibly healthy, and we're just amortizing, if you will, the flow-through of the business that took place in the COVID era. And as soon as that business runs off, we would expect a meaningful tick up in SRE.
Yes. The only thing I'd add is, obviously, it's a very dynamic and fluid environment. Q1 market spreads were historically tight, and we spoke about that on the call. I spoke about our investing spreads for the year, for the half at 130 basis points. It was wider than that in Q2. It was inside that in Q1. And then in the month of July, we've seen it wider than that. So the setup for us as far as we can tell right now looks promising. And so we're managing that in view of the existing portfolio that Marc mentioned. So we're clearly focused on 10% through cycle growth. That remains our objective here, and we're managing that through an environment, which is dynamic.
The next question is coming from Patrick Davitt of Autonomous Research.
My question is actually on Athora-PIC. I understand there's still a lot of regulatory hoops to jump through, so it might be tough to give specifics. But is there any color you can give on potential FRE impacts or even the Athora valuation impact on Athene's balance sheet when that closes next year?
I think your preface kind of sums it up. It is early, and there are still a number of regulatory hurdles. What I will say is we expect this transaction, should it close, to be accretive to Athora's valuation, and over time, to be accretive to FRE. The scale of PIC relative to the U.K. market is the scale of Athene relative to the U.S. market. And I'm going to speak about it in strategy terms rather than numbers, which I know you will find unsatisfying, but it's where we are. We have a massive need for assets in the U.S. as a result of Athene. That has incented us to create massive amounts of origination. And since we are a diversified investor, that origination that we create, a portion of it goes to Athene, but a portion of it builds our third-party business, which is aligned with us. We have not heretofore had an incentive to massively create pound-denominated assets.
The next question is coming from Glenn Schorr of Evercore.
Simple question. I'm curious, you mentioned ADS is like $20 billion now and scaling well. So my question is, can ABC scale in right trail behind and tailwind of ADS? Meaning, can you talk about the platform approval pipeline, the scalability, uniqueness of the product? Like where do you think this can go maybe using ADS as an example?
Thank you, Bill. I think you have a valid point. We definitely recognized that with ADS implementing the strategy Marc discussed, even though it didn't reach its goal, the use of the Apollo brand has clearly established us as one of the top two or three players in that sector. Following that example, we believe we have a first-mover advantage in the ABF arena with ABC. This area relies heavily on origination. The acquisition of ATLAS a few years back, with its 300 established relationships, is contributing to this. Early approvals are very robust, and the variety of clients, both institutionally and within Global Wealth, approving the product is impressive. Therefore, we see a clear path for this product to replicate the success of ADS.
The next question is coming from Bill Katz of TD Cowen.
It certainly feels like there was a step function of earnings power and just throughput of the platform. And when I look at some of these numbers on the origination or deployment, they are significant. And I'm sort of curious, what has changed in the last couple of quarters here? Is it just the breadth of clients that you're working for? Is it the capacity at the origination platform? Because it seems like not only to be sustainable, but they're sort of accelerating. I'm just trying to understand what the incremental driver has been.
Sure. I think what you're seeing, and it's a correct insight, it's just the power of the ecosystem. What Marc talked about in the CLO business, which was a black hour 20 years ago and now has become commoditized to some degree. And we're still a very large player in it, but it fits a different role. We're seeing that right now, even though we've increased our leverage, our capabilities in direct lending. Any 1 product can become commoditization, but if you deliver the entirety of the toolbox to either corporates, to finance companies, to financial sponsors, we're finding the power of that integrated toolbox is compelling. 24 months ago, we brought all of our origination globally under the leadership of Chris Edson. Certainly, there's many, many folks that contribute to that. But when we see delivering the consolidated toolbox and where you may get a product from a U.S. or a European financial sponsor, it may be a direct lending product, but it also may be an inventory finance, it may be fund finance, it may be a CLO issuance. So the crossover impact is dramatic.
The next question is coming from Wilma Burdis of Raymond James.
Could you talk a little bit more about the other inflows in retirement services and what the outlook is there? I think the footnote mentions defined contribution plans, and we'd just like to get a little bit more color there.
Yes. It's some of the emerging areas that Marc has been speaking about. Specific to that line item, it's stable value products. And that's an area that we are spending a lot of time around developing capabilities and distribution points. And we think that, that's 1 of several new markets that will be the seeds of growth for Athene's business in the years ahead.
I think, Wilma, first up, thank you, and apologies for the last quarter, for what happened. We ended up not being able to take one of your questions last quarter. But just to expand on that a little bit for you. The industry has not really created that many new products. We have lots of variations on the theme. And when you think about what's happened, and I've said this publicly before, the first insurance policy ever issued was 1 page, Scottish Widows. When you die, you get this. Now to buy a retirement product and annuity is 100 pages. Very few people can understand what they're buying. When people are uncomfortable with what they're buying, you tend not to buy as much of it.
The next question is coming from Ken Worthington of JPMorgan Chase.
Can you talk about GeoWealth and what you aspire to do with this partnership?
Yes. I think like Marc just described, our whole goal is to continue to innovate on a journey that we don't know the exact destination, but we understand the objectives. And there's no doubt that the technology application of these types of TAMP managers, that skillset and that technology that allows us to deliver a product set with information with transparency, with clear information. And this was in the past, documentation and technology were barriers. We're looking at this to be part of the successful journey that arms us with the tools to be able to be more client-friendly, more client transparency, more information education.
The next question is coming from Ben Budish of Barclays.
I wanted to follow up on Alex's question from earlier in the Q&A session. Could you help us understand how the business might change as the COVID-related activities decrease? What is the expected timing for this? What was the average duration of the liabilities you were writing? Once we move past this point, should we expect the aggregate spreads to normalize back to 130? How do you anticipate this will affect the P&L on a quarter-over-quarter basis?
Yes. I think the best evidence of that is part of the question you asked, which is when do the net spreads stabilize. And so we will expect to see that business continue to run off through next year. And so you should expect to see the reported net spreads decline slightly through that period of time. It will decline for the balance of the year and then stabilize. And then we are past the period of very low-cost liabilities and very rich assets against those liabilities running off through the system. So that's what we see. That's what we model. That's what we're seeing in the actual numbers. It's clearly quite predictable. And so at the same time, we're managing top line growth of the business in view of the macro environment to achieve the growth ambitions.
The next question is coming from Michael Cyprys of Morgan Stanley.
I just wanted to ask about 401(k). I think you mentioned that you're on the cusp of serving the 401(k) marketplace. Just curious if you could elaborate a bit on how you see that opening up? What sort of changes, regulatory or otherwise, you're anticipating the timeframe there? And then if you could talk about some of the steps that you're taking to ensure that you're going to be a winner as that marketplace opens up.
Look, I'll do my best in the context of the call. I think Jim and I were just smiling looking at each other. First, the order is not out yet. So it's always dangerous to speculate on what does not yet exist. And then I do think the question will probably involve a whole day of answers. But my take on it, the need is there. Everywhere in the world where private assets have been added to public portfolios, you've gotten better outcomes. The shining example is the Australian system, but it's the Israeli system, it's the Mexican system, it's the Chilean system, it's a number of other places. And as I said in my discussion, it's not a little bit better outcomes. It's 50% and 100% better outcomes. This is not something that we need to sell.
Great. Thanks, operator, and thank you again to everyone for all the time and attention this morning. If you have any follow-up questions regarding anything we discussed on today's call, please, of course, feel free to reach out to us, and we look forward to speaking with you again next quarter. Thank you.
Ladies and gentlemen, this concludes today's event. You may disconnect your lines or log off the webcast at this time, and enjoy the rest of your day.