Alternative asset manager Apollo Global Management LLC (APO.N) on Wednesday unveiled a $250 million share buyback after posting a disappointing 69 percent slide in fourth-quarter earnings on the back of falling oil prices.
The results echoed those of Blackstone Group LP (BX.N), the world’s largest alternative asset manager, where earnings also took a beating last quarter as plunging oil prices depressed energy investments.
Apollo, which manages around $170 billion in assets, said it planned to buy back $250 million of its own shares to underscore its confidence in its own business.
The firm’s economic net income (ENI), which accounts for unrealized investment gains or losses, fell to $32.9 million between October and December, or 8 cents per share. That is down from $106.1 million, or 26 cents per share, a year ago.
Analysts had expected Apollo’s ENI to rise around 12 percent to 25.8 cents per share in the fourth quarter, Thomson Reuters I/B/E/S.
“We do not believe the current share price of Apollo reflects the strength of our business,” Apollo founder and CEO Leon Black said.
Apollo shares have shed nearly 15 percent since the beginning of the year to touch a more than three-year low. They fell 2.6 percent to $12.60 in early trading on Wednesday on the New York Stock Exchange.
The U.S. private equity industry has had a rough start to 2016. Not a single high-yield bond – the staple financing for leveraged buyouts – has been issued this year as banks are struggling to sell them to customers, a development that some bankers say hasn’t occurred in more than 20 years.
Banks are also lending fewer of the riskiest junk-rated loans that fund buyouts, further tightening financing conditions.
Credit and private equity investments, which account for 71 percent and 22 percent of total assets managed by Apollo, posted negative returns last quarter.
The value of Apollo’s credit investments shrunk 1.4 percent on a net basis, dragged by unrealized mark-to-market losses against a “challenging market backdrop,” Apollo said.
The firm’s private equity investments were also dented by lower oil prices, and a $45 million charge it expects to pay to the U.S. Securities and Exchange Commission over disclosure failures linked to a type of fees it charges portfolio firms.
But like Blackstone, Apollo continued to attract more funds from investors even as its investments faltered. It pulled in $12.3 billion of new funds in the fourth quarter, boosting the amount of funds managed to $170.1 billion.
Photo of Apollo CEO Leon Black courtesy of Reuters.