Apollo CEO: Private Markets, Investment Alpha and Risk Management
Nov 13, 2024
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Marc Rowan, CEO and co-founder of Apollo Global Management, shares insights on navigating the fast-changing financial landscape. He discusses the transformative role of private markets and credit, emphasizing innovative strategies amid regulatory shifts. Rowan highlights the balance of investor returns and unique investment philosophies while reflecting on servant leadership and effective team culture. He delves into personal leadership experiences and the critical nature of communication in business, offering valuable lessons for future professionals in the industry.
Marc Rowan reflects on Apollo's rapid growth post-2008, highlighting adaptability as crucial for success in volatile markets.
Apollo's approach to credit includes matching long-term liabilities with investment-grade opportunities, fostering a strong, diversified portfolio.
Rowan emphasizes servant leadership and open communication to empower team growth and innovation within Apollo's evolving financial strategies.
Deep dives
Mark Rowan's Career Journey and Apollo's Growth
Mark Rowan reflects on his early career and the foundation of Apollo Global Management, emphasizing that his early doubts about timing and success were not accurate. He likens the initial phases of establishing Apollo during financial recessions to subsequent growth periods, particularly after 2008, when Apollo rapidly expanded its assets under management to over $700 billion. This growth was attributed not only to skill and talent but also to positioning the business to take advantage of market changes and tailwinds. Rowan underscores that success in such a volatile market requires adaptability and a keen strategic vision.
Apollo's Dual Business Model: Asset Management and Retirement Services
Apollo operates two primary business lines: asset management and retirement services, with a significant focus on credit origination. The retirement services division, particularly Athene, started with modest capital and has grown to manage $400 billion in assets, leveraging the demand for guaranteed retirement income. Apollo’s approach to credit involves not just originating loans but understanding the long-term liabilities of insurance and matching them with suitable investment-grade counterparties. This strategy has allowed Apollo to maintain a strong and diversified portfolio while addressing the increasing needs for retirement financing.
The Shifting Dynamics Between Private Credit and Traditional Banking
The discussion highlights the evolving relationship between private credit markets and traditional banks, particularly concerning direct lending and investment strategies. While banks historically dominated the private credit landscape, this role has shifted, allowing firms like Apollo to step in and provide long-term capital for complex projects. Rowan notes that private credit encompasses a broader spectrum than just leveraged loans, asserting that much of it is investment-grade, which positions Apollo favorably against banks. The essential role of diversified credit origination in this transitional landscape is emphasized, as firms adapt to new market demands.
Investment Strategies in the Current Economic Environment
In today's economic landscape, Apollo adopts a cautious investment strategy, reflecting a focus on generating alpha while minimizing risks. Rowan believes the current geopolitical climate and market valuations require a more defensive approach, preferring senior positions in capital structures. Additionally, there is a recognition that indexed and correlated investments dominate public markets, which can pose liquidity challenges during downturns. By emphasizing the importance of judgment and market timing, Apollo aims to navigate these complexities effectively.
Leadership Philosophy and Future Directions
Rowan articulates his leadership style as one of servant leadership, prioritizing the growth and development of his team at Apollo. He emphasizes the importance of open communication and mentorship in fostering a culture where team members feel empowered to contribute and innovate. The focus on aligning individual and organizational goals helps ensure sustained success while adapting to market changes. Looking forward, Rowan envisions a future where both public and private investing converge, with Apollo positioning itself as a leader in this evolving financial landscape.
What does it take to stay resilient in a fast-changing financial world? How are private markets transforming the way we invest? And how does Apollo approach risk? Nicolai Tangen meets with Marc Rowan, CEO and co-founder of Apollo Global Management, to discuss the rapidly evolving world of finance and explore what it takes to stay ahead in an industry full of risks.
In Good Company is hosted by Nicolai Tangen, CEO of Norges Bank Investment Management. New full episodes every Wednesday, and don't miss our Highlight episodes every Friday.
The production team for this episode includes Isabelle Karlsson and PLAN-B's Niklas Figenschau Johansen, Sebastian Langvik-Hansen and Pål Huuse. Background research was conducted by Isabelle Karlsson.