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Hello, everyone! Today, we’re diving into the story of one of the largest private equity venture capital firms in the market: Apollo Global Management. We’ll explore how they built a staggering $600B+ portfolio, primarily through private credit, and how they strategically grew their firm across various asset classes.
For more insights on investment strategies and firm growth, check out the Fund Launch Blog!
The Founding of Apollo Global Management
Apollo Global Management was founded in 1990 by three primary partners: Leon Black, Joshua Harris, and Marc Rowan. These visionaries came from Drexel Burnham, a top investment bank in the 70s and 80s that went bankrupt before the 90s due to poor investment and management decisions. This downfall served as a critical lesson: if businesses want to fail, they should borrow short and lend long—a mistake that echoed during last year’s banking crisis.
Seizing the Opportunity in a Challenging Era
In the early 90s, the economic landscape was bleak: high unemployment, a sluggish real estate market, and a savings and loan crisis were dominant. However, this challenging environment presented a unique opportunity for private credit.
“What happens in eras where traditional banking is dried up? It creates an opportune time for private credit.”
Lincoln Archibald
Unlike many other firms, Apollo’s founders acted quickly, closing their initial raise of $400M in under 6 months—well below the industry average of 12 to 24 months. By 1993, they had enough capital to launch a real estate fund, and by 1996, they were expanding internationally. Their strategy allowed them to gain exposure to every major asset class.
The Growth of Apollo: $600B+ AUM with $400B in Private Credit
Today, Apollo Global Management has grown into a $600B firm, with $400B of that in private credit. A significant part of this growth came from their investment in Athene, a retirement-planning business.
In 2009, Apollo initially invested a small stake in Athene. As Athene grew, Apollo increased its stake to 35%. This partnership culminated in a merger in 2021. Of Apollo’s $600B AUM, Athene now represents $275B—demonstrating the power of private credit in driving their success.
The Apollo Strategy: Produce Alpha and Maintain Momentum
Apollo went public in 2011, with Athene following in 2017. Marc Rowan, one of Apollo’s founders, shared key insights into their strategy:
1. Produce Alpha
“You can only grow as fast as you are able to generate a return per excess unit of risk. If we are not able to offer excess return per unit of risk, we do not exist.”
Fund managers should constantly be underwriting themselves, bringing in the right people to make smart management and investment decisions.
2. Maintain Momentum
Rowan emphasized the importance of momentum, both internally within the firm and in the companies they invested in. “There’s not a lot of things that can stop positive momentum,” he said, highlighting its role in sustaining growth and success.
Conclusion: Building a $600B+ Firm Through Strategic Private Credit Investments
So, how did Apollo Global Management build a $600B+ firm through private credit? The founders capitalized on a unique opportunity, made wise investment and management decisions, merged with a winning company, produced alpha, and maintained strong momentum.
Click here to listen to the full podcast on “Funds that Won!” If you want help starting your own investment fund, visit Fund Launch! And don’t forget to check out the Fund Launch Blog for more free content!
Thanks for reading,
Bridger Pennington
Want to get direct guidance for your fund? Schedule a time with my Fund Advisors!
DISCLAIMER: This content is for educational and informational purposes only. It is not to be taken as tax, financial, or legal advice. You should always consult a legal professional before taking action. Furthermore, this is not a recommendation to buy or sell any security. The content is solely just the opinion of the authors.
