Apollo Global Management, Inc. Q2 FY2025 earnings call

• Business execution was outstanding with record FRE, management fee growth, and ACS fees. Originated $81 billion from platforms and business in the quarter (excluding inorganic, would be over 90 billion with inorganic).
• Strong organic inflows of $61 billion across the firm; record AUM of $840 billion. The flywheel of origination, raising capital, and deploying was in full force.
• In asset management, FRE was driven by management fee growth, record capital solutions fees, growth in performance fees, and balance between investment and efficiency. In credit business, origination was broad-based with strong spread generation. In retirement services, there was significant demand for products, and the business was working to innovate and meet market needs.

Asset Management

• FRE: Record $627 million, 22% year-over-year; management fee growth 21% year-over-year; record ACS fees of $216 million; SRE $821 million.
• Credit business: All buckets of credit business performed well, core credit and opportunistic credit had 9%-12% return over latest 12 months and 2%-3% quarter-over-quarter. ADS had 9% plus annual return since inception, 2.3% in the quarter, size exceeds $20 billion.
• Private equity: Fund X had net IRR of 23% and DPI 0.2; Fund IX had net IRR of 16% and DPI 0.6; since inception, 39% gross, 24% net over 3 decades.
• Hybrid: 17% across franchise over latest 12 months, $75 billion AUM as of end of quarter, $7 billion raised year-to-date. AAA in Hybrid segment had 11.1% latest 12 months, 2.6% in the quarter.
• Retirement services: $21 billion of inflows in the second quarter, second strongest organic quarter. Fixed annuity or funding agreement was a strong contributor in the quarter.

• For FRE, tracking to the higher end of the 15% to 20% guide in a non-flagship PE fundraising year.
• For retirement services, expected mid-single-digit growth in 2025. Bridge acquisition expected to contribute approximately $100 million to FRE in 2026, with meaningful scaling in 2027 and beyond.

• Credit spread dynamics could impact the insurance business, with some products' spreads tightening to unsustainable levels. Competition in traditional channels like retail is a risk. Regulatory and market dynamics in new markets like the U.K. and Europe present uncertainties.

Q: Kyle Kenneth Voigt of KBW asked about institutional fundraising for AAA and equity replacement.

A: Marc Rowan said the institutional need and demand for AAA was a surprise, with institutions evolving to use the product, creating levered share classes, and seeing significant demand from institutions like [ICOLI] for the aligned and diversified portfolio.