Apollo Global Management Inc.’s shares hit a high after it reported a record profit as higher interest rates and strong inflows powered results at its Athene annuities business.
(Bloomberg) — Apollo Global Management Inc.’s shares hit a high after it reported a record profit as higher interest rates and strong inflows powered results at its Athene annuities business.
Second-quarter adjusted net income rose 75% to $1 billion, or $1.70 a share, New York-based Apollo said Thursday in a statement. That beat the $1.65 average estimate of analysts surveyed by Bloomberg.
Apollo shares hit a record high to trade at $84.78, a 4.2% gain, at 9:57 a.m. in New York.
“As the industry and investors begin to understand the full potential of private credit, the fruits of our labor are becoming increasingly evident,” Chief Executive Officer Marc Rowan said in the statement.
Spread-related earnings, the key profit measure for the Athene insurance unit, rose 76% to $799 million, fueled by strong inflows and higher interest rates. Net investment spread rose 66% to $1 billion as income derived from higher interest rates offset an increase in cost of funds.
Fee-related earnings rose 30% to $442 million on higher management fees and gains in the capital solutions business, a key strategic growth area for the firm.
The results reflect Apollo’s continuing tilt toward credit and insurance, with Athene contributing almost 80% of adjusted net income in the second quarter.
Read More: Marc Rowan Wants to Turn Feared Apollo Into Admired Stalwart
The firm ended the period with $617 billion of assets under management, a 20% increase from a year earlier. Athene’s gross inflows totaled $19 billion, driven by retail annuities and a pension risk transfer deal with AT&T Inc. Apollo expects more than $60 billion of organic inflows to Athene this year, Rowan said Thursday on a call with analysts.
Asset management gross inflows were $16 billion, coming from various strategies including Apollo’s 10th flagship private equity fund. That fund closed in mid-July with about $20 billion after 12 months of fundraising, Rowan said.
Apollo executives touted the growth of the firm’s business originating private credit investments to syndicate to insurance companies and other third-party buyers.
“The market for private investment-grade could be as large outside the insurance industry as it is inside the insurance industry,” Noah Gunn, head of investor relations for Apollo, said on the call.
Other second-quarter highlights:
- Principal investing income from asset sales was $20 million, unchanged from a year earlier, as the dealmaking environment remained muted
- Dry powder totaled $56 billion as of June 30
- The private equity portfolio gained 2.1%, while the firm’s hybrid value strategy and direct origination both increased 4%
(Updates share price in third graph and adds comments from executives starting in eighth)
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.