Interview, Fireside Chat
Marc Rowan, CEO and Co-Founder of Apollo Global Management
- Apollo Global Management is a publicly traded holding company with approximately $550 billion in assets under management (AUM) as of year-end.
- The firm's business model relies on generating "excess return per unit of risk" by providing illiquid alternatives to public markets, where it asserts that "alpha" is no longer available in indexed, correlated public fixed-income or equity markets.
- The organization is split into two primary verticals:
- Athene and Athara: Representing roughly $275 billion, these are the world's largest retirement services entities that offer no traditional insurance but exclusively insure retirement savings; Apollo owns 35% of Athene.
- Apollo Asset Management: Managing the remaining $275 billion, composed of:
- $400 billion in investment-grade alternative credit.
- $75 billion in hybrid equity (lower risk/reward).
- $75 billion in traditional private equity.
- Apollo is the largest investor in most of its deals, a strategy that aligns incentives and allows the firm to take a "25% ownership in everything" approach that appeals to third-party clients competing with Athene.
- The firm's strategic goal is to reach $1 trillion in total assets by 2026.
- Regarding 2023-2024 objectives, CEO Mark Rowan stated "no new toys," indicating a decision to pause new acquisitions or product launches to focus on operational efficiency and integrating existing scale.
- Apollo currently employs roughly 2,600 people in its asset management business, having grown from a small team to hiring 400 new employees annually in recent years.
- The 2021 merger with Athene was a "merger of capabilities" rather than consolidation, resulting in "no cultural surprises" after over a decade of operating together since a $16 million initial investment in 2008 grew into a $330 billion entity.
- Rowan identifies three structural market shifts driving Apollo's growth strategy:
- Liquidity transformation: Market-making capital remains at 2008 levels despite markets tripling in size, making public assets less liquid on the downside and narrowing the gap between public and private liquidity bands.
- Disintermediation of banks: U.S. money-center banks now provide less than 20% of debt capital to UK businesses, with investment firms like Apollo filling the void as the primary underwriters and securitizers.
- Indexation: The dominance of ETFs and passive funds means the marginal buyer is often a derivative trader or algorithm, forcing fundamental investors to seek returns in alternative, non-public markets.
- Technology is viewed as a revolutionary force in the sector, with Rowan noting that "there is a fintech competitor to every process in the financial services industry," including record-keeping, lending, and asset management.
- The firm has transformed its wealth management operations from manual, opaque processes to fully digital ecosystems featuring e-signatures, automated KYC/AML, and real-time portfolio visibility.
- Rowan observes that innovation in financial services is often "naive" to persist in the status quo, noting that the regulatory "rails" for future fintech solutions are frequently being built in the unregulated gaming sector.
- Leadership philosophy centers on "judgment" cultivated over time, with a goal to make Apollo "the single best place to be a partner in the financial services business" to ensure retention and effective mentorship.
- A key management metric for CEOs is creating organizational "momentum," defined as the ability of a team to overcome any obstacle rather than viewing challenges as impediments.
- On talent development, Rowan states that an MBA is not a requirement for success at Apollo but remains highly valuable for individuals pivoting from non-traditional backgrounds or those seeking to "finish out what you do."
- Personal lessons emphasized by Rowan include the importance of being "curious rather than defensive," advising leaders to remain silent for 30 seconds during disagreements to learn more and build relationships.