Apollo collects $12 bln for Fund VIII

Apollo Global Management reported ENI of $528.6 million for the third quarter, compared to $379 million in the same period in 2012. The firm reported collecting total commitments for its flagship Fund VIII of $12 billion.

Press Release

Apollo Global Management, LLC (NYSE: APO) (together with its consolidated subsidiaries, “Apollo”) today reported results for the third quarter ended September 30, 2013.

“adjusted cost of all unrealized portfolio investments”

Apollo reported ENI after taxes of $528.6 million for the third quarter ended September 30, 2013, compared to $379.0 million for the same period in 2012. The $149.6 million increase in ENI was driven by favorable performance in Apollo’s Incentive Business, which reported ENI of $552.1 million for the third quarter ended September 30, 2013, compared to $380.4 million for the same period in 2012. The $171.7 million year-over-year increase in ENI for the Incentive Business was largely the result of higher carried interest income from Apollo’s private equity segment during the third quarter of 2013 compared to the same period in 2012.

Apollo’s total AUM was $112.7 billion as of September 30, 2013, an increase of $3.0 billion compared to $109.7 billion as of September 30, 2012. Fee-generating AUM was $79.3 billion as of September 30, 2013, an increase of $1.6 billion compared to $77.7 billion as of September 30, 2012. Subsequent to the end of the third quarter of 2013, Athene Holding Ltd. (together with its subsidiaries, “Athene”), for which Apollo currently provides a full suite of investment management services, closed its acquisition of the U.S. annuity operations of Aviva plc (“Aviva USA”). As a result of that transaction, pro-forma AUM for Apollo at September 30, 2013 was approximately $157 billion.

U.S. GAAP results for the third quarter ended September 30, 2013 included net income attributable to Apollo Global Management, LLC of $192.5 million, or $1.13 per Class A share, compared to $82.8 million, or $0.55 per Class A share, for the third quarter ended September 30, 2012.

“Apollo delivered strong results in the third quarter of 2013 driven by solid gains across our investment portfolio,” said Leon Black, Chairman and Chief Executive Officer. “Our value-oriented, opportunistic and flexible approach to investing has produced a steady stream of realizations and yielded $3.95 of cash per share for our shareholders during the past four quarters. In addition, we have raised nearly $14 billion of new capital across the firm in the past four quarters, positioning us to capitalize on attractive investment opportunities as they present themselves.”

Combined Segments

Total revenue for Apollo’s combined segments was $1,153.4 million for the third quarter ended September 30, 2013, an increase of $394.3 million, or 52%, compared to the same period in 2012, driven primarily by a $376.2 million increase in total carried interest income. Total expenses for Apollo’s combined segments were $584.9 million for the third quarter ended September 30, 2013, an increase of $206.7 million, or 55%, compared to the same period in 2012, driven primarily by an increase in profit sharing expense.

Total revenue for Apollo’s Management Business was $203.2 million for the third quarter ended September 30, 2013, an increase of $18.1 million, or 10%, from the same period in 2012. This includes management fee revenues of $165.2 million for the third quarter ended September 30, 2013, an increase of $5.0 million, or 3%, from the same period in 2012. There was also $28.9 million of advisory and transaction fees for the third quarter ended September 30, 2013, an increase of $13.7 million from the same period in 2012, primarily due to increased monitoring fees related to Athene in the third quarter of 2013.

Total expenses for Apollo’s Management Business were $160.3 million for the third quarter ended September 30, 2013, an increase of $19.9 million from the same period in 2012. Total compensation expenses, including salary and benefits and equity-based compensation, were $97.8 million for the third quarter of 2013, an increase of $16.5 million from the same period in 2012. The year-over-year increase in compensation expenses was primarily driven by increased headcount across Apollo’s platform in connection with the company’s continued growth. Non-compensation expenses for Apollo’s Management Business were $62.5 million during the third quarter of 2013, an increase of $3.4 million from the same period in 2012.

Apollo’s Incentive Business reported $950.2 million of total carried interest income for the third quarter ended September 30, 2013, an increase of $376.2 million from the same period in 2012. As a result of the increase in carried interest income, Apollo reported total profit sharing expense of $424.6 million for the third quarter ended September 30, 2013, an increase of $186.8 million from the same period in 2012. The increase in total carried interest income during the third quarter of 2013 was driven by increased valuations of a number of investments held by funds managed within Apollo’s private equity segment, including Sprouts Farmers Market, Inc. and Athlon Energy, both of which completed initial public offerings during the quarter. During the third quarter ended September 30, 2013 the Incentive Business generated $638.9 million of realized gains, which was largely attributable to dispositions relating to a number of investments held by funds managed by Apollo, including LyondellBasell, Realogy, Evertec, Berry Plastics, Norwegian Cruise Lines, and Countrywide.

Private Equity Segment

Apollo’s Private Equity segment generated ENI of $538.8 million for the third quarter ended September 30, 2013, compared to $236.5 million for the third quarter ended September 30, 2012. The year-over-year increase was largely driven by higher carried interest income of $852.4 million for the third quarter of 2013, compared to $340.6 million for the third quarter of 2012.

Apollo’s private equity funds continued to perform well as measured by internal rate of return (“IRR”) and appreciated by 18% during the third quarter ended September 30, 2013. From its inception in 2008 through September 30, 2013, Fund VII generated an annual gross and net IRR of 38% and 29%, respectively. Fund VI, which began investing in 2006, generated an annual gross and net IRR of 15% and 12%, respectively, since its inception through September 30, 2013. The combined fair value of Apollo’s private equity funds, including AP Alternative Assets, L.P. (“AAA”), was 65% above cost as of September 30, 2013. Uncalled private equity commitments were $16.1 billion as of September 30, 2013 and $0.1 billion of private equity capital was deployed during the third quarter ended September 30, 2013.

During the third quarter, Apollo raised approximately $3.3 billion for its newest flagship private equity fund, Apollo Investment Fund VIII, L.P. (“Fund VIII”), bringing total committed capital for the fund to $10.0 billion through September 30, 2013. As of today, Apollo has received total fund commitments of approximately $12 billion for Fund VIII.

Management fees from Apollo’s private equity segment were $64.8 million for the third quarter ended September 30, 2013, which decreased by $3.7 million compared to the same period in 2012 due to a change in the contribution from funds generating management fees and their respective fee basis. Total Management Business expenses within the private equity segment were $61.3 million for the third quarter of 2013, which increased by $11.1 million compared to the same period in 2012. As of September 30, 2013, Apollo’s private equity segment AUM was $42.8 billion, compared to $39.0 billion at September 30, 2012.

Credit Segment

Apollo’s credit segment generated ENI of $79.2 million for the third quarter ended September 30, 2013, compared to ENI of $198.7 million for the third quarter of 2012. The year-over-year decrease in ENI resulted from a decrease in carried interest income, which was $94.5 million for the third quarter of 2013, compared to $228.6 million for the third quarter of 2012.

Management fees from Apollo’s credit segment were $87.0 million for the third quarter ended September 30, 2013, which increased by $6.2 million, or 8%, compared to the same period in 2012. Total Management Business expenses within the credit segment were $80.0 million for the third quarter of 2013, which increased by $4.0 million compared to the same period in 2012. As of September 30, 2013, Apollo’s credit segment AUM was $59.4 billion, compared to $60.1 billion at September 30, 2012.

Real Estate Segment

Apollo’s Real Estate segment had an economic net loss of $3.1 million for the third quarter of 2013, compared to a loss of $1.7 million for the third quarter of 2012. Total revenues for the real estate segment during the third quarter of 2013 were $16.7 million, an increase of $1.0 million, or 6%, compared to the same period in 2012. As of September 30, 2013, Apollo’s real estate segment AUM was $9.3 billion, compared to $8.1 billion at September 30, 2012.

Capital and Liquidity

As of September 30, 2013, Apollo had $1,137 million of cash and cash equivalents and $728 million of debt. These amounts exclude cash and debt associated with Apollo’s consolidated funds and consolidated variable interest entities (“VIEs”). As of September 30, 2013, Apollo had a $2,332 million carried interest receivable and corresponding profit sharing payable of $1,078 million, as well as total investments in its private equity, credit and real estate funds of $425 million, excluding investments held by consolidated VIEs and consolidated funds.

Distribution

Apollo Global Management, LLC has declared a third quarter 2013 cash distribution of $1.01 per Class A share, which comprises a regular quarterly distribution of $0.07 per Class A share and a distribution of $0.94 per Class A share primarily attributable to fund realizations. This distribution will be paid on November 29, 2013 to holders of record at the close of business on November 22, 2013. Apollo intends to distribute to its shareholders on a quarterly basis substantially all of its net after tax cash flow in excess of amounts determined by its manager to be necessary or appropriate to provide for the conduct of its business. However, Apollo cannot assure its shareholders that they will receive any distributions.

Conference Call

Apollo will host a conference call on Thursday, November 7, 2013 at 10:00 a.m. ET. During the call, Marc Spilker, President, Martin Kelly, Chief Financial Officer, and Gary Stein, Head of Corporate Communications, will review Apollo’s financial results for the third quarter ended September 30, 2013. The conference call may be accessed by dialing (888) 868-4188 (U.S. domestic) or +1 (615) 800-6914 (international), and providing conference call ID 73061311 when prompted by the operator. The number should be dialed at least ten minutes prior to the start of the call. A simultaneous webcast of the conference call will be available to the public on a listen-only basis and can be accessed through the Investor Relations section of Apollo’s website at www.agm.com.

Following the call, a replay of the event may be accessed either telephonically or via audio webcast. A telephonic replay of the live broadcast will be available approximately two hours after the live broadcast by dialing (800) 585-8367 (U.S. callers) or +1 (404) 537-3406 (non-U.S. callers), pass code 73061311. To access the audio webcast, please visit Events in the Investor Relations section of Apollo’s website at www.agm.com.

About Apollo

Apollo is a leading global alternative investment manager with offices in New York, Los Angeles, Houston, London, Frankfurt, Luxembourg, Singapore, Mumbai and Hong Kong. Apollo had assets under management of approximately $113 billion as of September 30, 2013, in private equity, credit and real estate funds invested across a core group of nine industries where Apollo has considerable knowledge and resources. For more information about Apollo, please visit www.agm.com

Forward-Looking Statements

This press release may contain forward looking statements that are within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include, but are not limited to, discussions related to Apollo’s expectations regarding the performance of its business, its liquidity and capital resources and the other non-historical statements in the discussion and analysis. These forward-looking statements are based on management’s beliefs, as well as assumptions made by, and information currently available to, management. When used in this press release, the words “believe,” “anticipate,” “estimate,” “expect,” “intend” and similar expressions are intended to identify forward-looking statements. Although management believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that these expectations will prove to have been correct. These statements are subject to certain risks, uncertainties and assumptions, including risks relating to our dependence on certain key personnel, our ability to raise new private equity, credit or real estate funds, market conditions, generally, our ability to manage our growth, fund performance, changes in our regulatory environment and tax status, the variability of our revenues, net income and cash flow, our use of leverage to finance our businesses and investments by our funds and litigation risks, among others. We believe these factors include but are not limited to those described under the section entitled “Risk Factors” in the Company’s Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 1, 2013, and such factors may be updated from time to time in our periodic filings with the SEC, which are accessible on the SEC’s website at www.sec.gov. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this press release and in other filings. We undertake no obligation to publicly update or review any forward-looking statements, whether as a result of new information, future developments or otherwise, except as required by applicable law. This press release does not constitute an offer of any Apollo fund.