Apollo is coming out of the shadows.
CEO Marc Rowan said his firm will offer investors daily valuations for its private-credit funds by October, in a transparency-focused move to demystify and ease concerns about an opaque sector that’s dealt with record redemption requests this year. Expect more to follow.
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For its part, Apollo is managing choppy waters like a Deep-V hull (pretty well, for non-boating enthusiasts). The firm reported Wednesday that assets under management surpassed the historic $1 trillion milestone in the first quarter and delivered a record $728 million in fee-related earnings, 30% more than the same period last year. Adjusted net income rose 8% to $1.2 billion. That offset a loss in the firm’s asset-backed debt portfolio related to the collapse of British property lender Market Financial Solutions.
Meanwhile, Rowan said Apollo has de-risked its portfolio by slashing exposure to sectors like software and is holding $40 billion in cash to position it in case markets, which look “quite strong” at the moment, experience “out of the box” disruption from geopolitical events, inflation or AI. On an earnings call, he said the risk of a major shock is 30% to 35%, much higher than usual. That call is also where Rowan said his firm will aim to ease some current investor anxiety over loan defaults in the $2 trillion private credit sector by offering more transparent data about the value of non-bank debt:
- Apollo will publish daily marks for its entire $800 billion credit business by September 30, breaking with the industry standard of quarterly valuations. As it happens, the global watchdog Financial Stability Board issued a report Wednesday critical of private credit’s purported lack of standardized data and opaque valuation practices, concerns that Apollo appears poised to address proactively.
- The Investment Company Institute, an asset management trade group, recently argued that framing private credit funds enforcing redemption caps as “a sign of broader concerns” misses the mark and that the moves represent effective liquidity management that safeguards the funds’ long-term stability. Rowan, on Apollo’s earnings call, additionally suggested the sector is not intrinsically riskier than traditional lending: “Private credit is just credit: You underwrite it well and it performs, you underwrite it poorly and it doesn’t.”
Fighting Words: Rowan warned investors against funds that buy second-hand stakes in private equity funds and, soon after, mark them up in an act of “mispricing.” He also went off on the insurance sector, where Apollo is a major player, claiming some unnamed rivals are engaged in “egregious” activities to inflate balance sheets, such as deploying opaque offshore “Cayman” structures and collateral loans. “No games, just straightforward business,” he said.