Interview, Fireside Chat
Leon Black, Chairman and CEO of Apollo Global Management
- Leon Black founded Apollo Global Management in June 1990, following the collapse of Drexel Burnham in February 1990, with initial capital of $800 million ($400 million managed for Credit Lyonnais and $400 million as the first Apollo fund).
- Over the first four years post-launch, Credit Lyonnais invested approximately $8 billion with Apollo, focusing on distressed debt, real estate, and private equity during a recessionary environment.
- Apollo distinguishes itself from competitors through three core structural differences: the ability to profit in both economic upturns and downturns, a strategic platform straddling both debt and equity, and an integrated model where specialists across silos communicate daily.
- The firm has grown its alternative credit platform from $20 billion to $200 billion, a sector that now represents the largest and fastest-growing portion of Apollo's business.
- Private equity currently constitutes approximately 25% of Apollo's total business, while the remaining 75% is driven by alternative credit and insurance operations.
- Apollo's insurance segment includes Athene (an $8–$9 billion public company managing ~$140 billion in assets) and Athene's European counterpart, Thor (managing ~$15 billion).
- The insurance strategy employs a "secret sauce" of not compromising credit quality while lengthening duration to generate an additional 100–150 basis points in yield.
- Because the insurance book is levered approximately 10 times, the 100–150 basis point yield advantage creates a significant impact on Internal Rates of Return (IRR) and return on equity.
- In the realm of Environmental, Social, and Governance (ESG) initiatives, 85% of Apollo's portfolio companies have actively worked to reduce greenhouse gas emissions.
- The Melanoma Research Alliance (MRA), co-founded 13 years ago, has funded 12 FDA-approved drugs in the last five years, leveraging immunotherapy breakthroughs that benefit melanoma and 32 other cancer types.
- Black modeled the MRA's grant process after Mike Milken's approach: shortening application times to four pages with one-month decisions, requiring a one-month turnaround, and mandating transparency regarding research successes and failures to prevent redundant efforts.
- Black remains a staunch believer in the private equity model's superior long-term returns compared to debt, real estate, or venture capital, citing the sector's role in supporting underfunded pension funds for public workers.
- Black cites Hillel's philosophical trilogy as his guiding life principle: "If I am not for myself, who will be for me?"; "If I am only for myself, what am I?"; and "If not now, when?" to balance self-interest, community responsibility, and urgency.
- Black views the low-interest-rate environment of the last decade as a significant secular tailwind that has immeasurably aided the growth of alternative credit platforms.
- Black anticipates the private equity industry will maintain its dominance in generating returns over the next decade, particularly as the industry addresses the underfunding of pension obligations.
- Black's investment philosophy has remained consistent since inception: value-oriented, willing to engage with complexity, and seeking opportunities across market cycles.