Sujeet Indap, Wall Street editor at the Financial Times, and Eric Platt, senior corporate finance correspondent, dive into the intricate world of Apollo Global Management. They explain how Apollo shifted from traditional asset management to a key player in corporate lending. The duo discusses asset-backed lending, the complexities of new credit dynamics, and the economic implications of changes like telework. They also dissect Boeing's potential despite its challenges and reveal the intriguing future of News Corp amidst its unfolding drama.
Apollo's expansion into lending demonstrates a strategic shift towards higher returns by financing significant projects rather than focusing solely on traditional private equity.
The evolving practices of asset managers like Apollo raise concerns about regulatory adequacy, highlighting the need for updated oversight in financial operations.
Deep dives
Diverse Housing Strategies
A strategy that incorporates a range of housing types can effectively diversify investments across various income brackets and age groups. This approach not only broadens the potential market but also allows investors to cater to different demographic needs, enhancing stability. By recognizing the valuable interplay between multiple housing formats, investors can create a more resilient portfolio that withstands economic fluctuations. For instance, combining multifamily housing with single-family homes and assisted living facilities may result in a well-rounded real estate investment.
The Evolution of Asset Managers
Asset managers like Apollo are expanding their operations to include lending to large corporations, a shift from their traditional roles in private equity. Historically focused on low-risk investments through annuities, these firms now seek higher returns by financing major projects, such as semiconductor plants or aluminum can facilities. This model allows them to provide capital in a manner that resembles equity rather than traditional debt, appealing to businesses wary of credit rating impacts from extensive borrowing. By structuring these investments as joint ventures, they mitigate risks while still accessing lucrative financial opportunities.
Regulatory Implications for Asset Managers
As asset managers adopt banking-like practices, questions arise regarding the adequacy of regulatory frameworks governing these new operations. Unlike traditional banks that face multiple stringent regulators, firms like Apollo operate under different insurance regulations while managing potentially risky loans. The evolving nature of these investments calls for a reevaluation of regulatory oversight to ensure stability in the financial system. As the marketplace adapts, understanding the risks tied to these asset-backed structures becomes crucial for investors and regulators alike.
Apollo Global Management is publicly traded and one of the largest alternative asset managers in the world. But what does it really do? Today on the show, Rob Armstrong asks reporters Sujeet Indap and Eric Platt to describe the parts that make up Apollo. Also they go long Boeing and long News Corp.