Asset manager Apollo Global Management LLC (APO.N) posted quarterly earnings nearly five times that forecast on Wednesday, helped by a recovery in the oil market and a mark-up in the value of its insurance holding company.
Its strong earnings underscored the respite U.S. buyout firms have enjoyed in the second quarter, when a crude price rally snapped a long slump, lifting the value of energy investments.
Apollo’s shares jumped 4.5 percent to $17.73, far outperforming the 0.2 percent rise in the benchmark S&P 500 index .SPX.
“We’ve demonstrated time and again that some of the best investments our funds have ever made have been when markets appear to be at their worst or most volatile,” said Leon Black, chairman and chief executive officer of Apollo.
Apollo’s second-quarter economic net income, a key metric for U.S. private equity firms that accounts for unrealized gains or losses in investments, came to $394.9 million after taxes. On a per share basis, it more than doubled to 98 cents from 38 cents a year earlier, the best performance in nearly three years.
Analysts on average had expected 20 cents per share, according to Thomson Reuters I/B/E/S.
In its earnings release, New York-based Apollo said income earned from its private equity investments roughly quadrupled from a year ago to $250.2 million in the second quarter. It said it invested $4.6 billion into private equity in the second quarter, the highest quarterly level since it went public in 2011.
Earnings from its credit investments also more than doubled to $206.3 million, helped in part by a 20 percent increase in the fair value of insurance holding company Athene Holding Ltd.
The buyout firm said Athene’s fair value was raised to reflect “significant business growth and continued progress towards its initial public offering.”
While Apollo said the fillip in oil prices shored up its credit investments, it remained to be seen if the energy market could continue to buoy earnings.
Oil prices Clc1, which leapt 26 percent in the second quarter, have headed south once more and have fallen around 16 percent so far this quarter.
Apollo declared a dividend of 37 cents per share for the second quarter.
Photo: Apollo Management LP Managing Partner Leon Black speaks at the panel discussion “Global Opportunities in Private Equity” at The Milken Institute Global Conference in Beverly Hills, California May 2, 2011. Reuters/Fred Prouser