(Bloomberg) -- Apollo Global Management Inc.’s push to target wealthy individuals helped boost the firm’s assets under management to $733 billion, a 16% increase over the same period a year earlier.
The firm reported adjusted net income of $1.13 billion, amounting to $1.85 per share, in a statement announcing third-quarter earnings on Tuesday. That beat analysts’ estimates of $1.73 per share.
Shares of Apollo rose 7.3% to $149.56 at 9:44 a.m. in New York.
“We are building a next-generation financial services business uniquely positioned to win across massive market opportunities,” Chief Executive Officer Marc Rowan said in the statement.
Apollo took in $72 billion and $79 billion for its asset management and retirement services divisions, respectively, during the quarter.
Asset management fees increased 10% year-over-year, while fee-related performance fees increased more than 40% in the same period, boosted by funds raised from wealthy clients.
Apollo, like its peers, continues to target high earners for higher-fee-paying assets and has set a goal of raising at least $150 billion for its global wealth business by 2029. But the wealth business is going to be an opportunity for only a few firms, Rowan said during an analyst call.
“The reality is we’re still selling to 5% or 10% of their financial advisers and their clients,” he said, adding that the industry has yet to fully penetrate the system.
To do so, he said, “we have to make our products simpler. We have to be able to serve qualified and non-qualified investors, and we have to be able to do it with technological ease.”
So far this year, Apollo’s total capital raised from wealthy individuals has exceeded the total for all of 2023, the firm said in the statement. Earlier this year, Apollo’s co-president, Scott Kleinman, said it was selling about $1 billion a month across semi-liquid products to wealthy individual investors.
The alternative asset manager said it originated a record $62 billion across its core credit, high-grade capital solutions and equity origination businesses during the quarter. As it expands from its private equity roots, the firm is making origination — particularly in investment-grade assets — a key tenet of its growth strategy, as it caters to its insurance units that want to invest in less risky assets.
Returns from Apollo’s direct origination unit clocked the highest across the firm at 3.4% for the quarter, while its flagship private equity investments recorded returns of just 0.3%.
But Apollo said the exit environment is improving. The firm posted realized performance fees of $331 million in the third quarter, the highest level since 2021, attributing the phenomenon to a “few sizable monetizations.”
--With assistance from Erin Fuchs.
(Updates shares in third paragraph, adds comment from analyst call in eighth)
©2024 Bloomberg L.P.