Private equity has had a tough third quarter as the decline in markets led to a lower value of portfolios, while buying and selling assets has become more challenging as markets fluctuate and debt financing remains tight.
Last month, peer Blackstone Group as well as the private equity segments of banks such as JPMorgan Chase & Co and Goldman Sachs reported losses in the third quarter. KKR is due to report results on Friday.
Apollo, which invests in real estate and capital markets as well as private equity, posted economic net income, a measure of operating profit, that showed a loss of $1.14 billion, compared with a year-earlier profit of $315.3 million.
“Although volatile global equity and credit markets resulted in lower unrealized values in our portfolios during the third quarter, today’s environment plays to our strength as a contrarian, value-oriented investor,” Apollo Chief Executive Officer Leon Black said in a statement.
Apollo’s main loss came from unrealized carried interest in its private equity funds due to lower valuations of equity and debt holdings such as Charter Communications Inc and LyondellBasell Industries NV.
Adjusted ENI per share, which takes into account compensation and taxes, came to a loss of $2.89, according to Reuters calculations. The analysts’ average forecast was for a loss of 80 cents, according to Thomson Reuters I/B/E/S.
Apollo declared a third-quarter dividend of 20 cents per Class A share, 4 cents less than the previous quarter.
Founded in 1990 by Black, a former Drexel Burnham Lambert banker, Apollo went public in March. Since then the company has lost some 30 percent of its value, although it’s up almost 50 percent from an Oct. 4 low.
With roots in fixed income and an appetite for investments in distressed assets, Apollo has supplemented its private equity management portfolio with businesses such as credit trading and collateralized loan obligations.
Apollo’s total assets under managements stood at $65.1 billion at the end of September, up 12.6 percent from three months ago, it said. The company added that it had $9.4 billion to spend on private equity investments.