Apollo targets $ 1 trillion in assets, aiming to overtake Blackstone

Global management of Apollo Inc.

APO 9.80%

said he expects his assets under management to double to around $ 1 trillion by 2026, setting up a race with fellow investment giant Blackstone Inc.,

which has set itself the same ambitious goal.

Apollo awaits merger with insurance subsidiary Athene Holding Ltd.

ATH 9.69%

, which is slated to close in January, to fuel much of the expected growth. The company released new financial guidance ahead of Investor Day scheduled for Tuesday. Apollo managed $ 472 billion in assets at the end of the second quarter.

To hit the $ 1,000 billion mark by 2026, Apollo would need to grow its assets even faster than Blackstone, which managed $ 684 billion at the end of the second quarter. Blackstone has set a 2018 goal of reaching $ 1,000 billion in assets by 2026.

Apollo also said it expects strong growth in its distributable earnings, or the portion of earnings that could be returned to shareholders. It expects to generate $ 5.50 per share in 2022 and $ 9 per share by 2026. The company’s distributable income was $ 2.02 per share in 2020.

Apollo stock climbed 7% in morning trading to $ 73.04.

“I think people have always known us as good investors,” Apollo CEO Marc Rowan told The Wall Street Journal. “I don’t think they understood how good a company we are besides being good investors.”

Mr Rowan, who took over from longtime CEO Leon Black in March, said he expects growth in the company’s insurance-focused lending business to outpace growth in its capital unit. -investment, because too rapid growth of the latter would mean sacrificing the performance of investments. .

As Athene grows, its assets will flow into the Apollo investment machine, fueling the growth of the company’s business across the risk spectrum. The insurance unit will particularly strengthen the Apollo segment which focuses on lower yielding and less risky investments that serve as an alternative to traditional corporate and government bonds.

Shares of private equity firms have been in tears since markets began to recover from their coronavirus-driven downturns. Apollo stock, which at Monday’s close had returned 82% with dividends included in the past 12 months, posted the worst performance among its major competitors in the period.

Apollo on Tuesday also forecast annualized growth in expense earnings of 18% over the next five years before accounting for any invested capital.

The company, which is expected to release its third quarter results on Nov. 2, said it expects to generate $ 15 billion in cash flow over the period, two-thirds of which will flow back to shareholders in the form of share buybacks. or dividends. The remaining third will be reallocated to the growth of the company.

Write to Miriam Gottfried at [email protected]

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