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Apollo reports record jump in earnings as asset divestments rise

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  • APO-PA

By Chibuike Oguh

NEW YORK (Reuters) -Apollo Global Management Inc said its distributable earnings rose to an all-time high in the third quarter driven by more asset sales in its private equity portfolio and income from its credit business.

Apollo joins peers Blackstone Inc and Carlyle Group Inc that reported record distributable earnings last month due to strong asset sales, as economic recovery from the COVID-19 pandemic and low interest rates drove mergers and acquisition activity to new highs.

Distributable earnings, which is the cash used to pay dividends to shareholders, rose to a record $752.1 million, up from $205.1 million a year earlier. That translated to distributable earnings per share of $1.71, which surpassed the average Wall Street analyst estimate of $1.10, according to Refinitiv.

A big chunk of Apollo's earnings came from the $248.8 million it generated from the divestment of its annuities platform Venerable to a fund it manages and its insurance subsidiary, Athora, Apollo Chief Executive Marc Rowan said during an analyst earnings call.

"In our view, Venerable is not a great product to be part of a public company, given the inherent volatility of GAAP results if business is run properly," Rowan said.

Apollo reported a drop in net income under generally accepted accounting principles (GAAP) to $249.2 million, down 5% from the prior year, owing to an uptick in compensation expenses and income taxes.

Its shares were trading down 1.67% at $75.05 on Tuesday morning after the call.

The New York-based firm said it cashed out $8.8 billion worth of investments in the third quarter, including selling down its stake in financial firm OneMain Holdings Inc and profits from education provider Apollo Education Group.

Apollo said it invested $28.3 billion to acquire new assets, including its $5 billion takeover of Yahoo from telecoms giant Verizon Communications Inc.

Apollo said its private equity funds appreciated 4.8%. Its corporate credit funds and real estate, infrastructure and principal finance funds rose 1.7% and 6% respectively. Blackstone's private equity funds rose by 9.9%, while Carlyle's buyout funds rose 4%.

Total assets under management rose to $481.1 billion, up from $471.8 billion in the prior quarter, driven by growth in premiums from its insurance businesses Athene Holding Inc and Athora.

Apollo ended the quarter with $46.9 billion in unspent capital and declared a dividend of 50 cents per share.

(Reporting by Chibuike Oguh in New York; Editing by Stephen Coates)

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