The past two decades have been marked by flows out of public markets and into private markets. The biggest winners of this have been the biggest private equity players – Blackstone, KKR, Carlyle, Brookfield and Apollo amongst them. This article takes a deep dive into Apollo to better understand the private equity business model.
Assets under management in private equity have growth at roughly 11% a year over the past six years, taking it to $13 trillion globally. Estimates are that this growth rate will continue for the next 5 years, suggesting there is still plenty of demand for this space from the big money managers – endowments, sovereign wealth, and high net worth individuals. There is also a suggestion that these big money managers are planning to consolidate their relationships across the alternative asset space, which should benefit the biggest players (primarily the five we listed in the paragraph above).
Turning to Apollo specifically, the company manages half a trillion dollars on behalf of clients across three main businesses – asset management, retirement services and principle investing. This article unpacks some of the opportunities that Apollo’s management see in the coming years, including building out the retirement services business, investing in clean energy and producing new products that are more accessible for retail investors.
A quick reminder: while this article is clearly outlining the pro-Apollo thesis, you need to do your own research and come to your own conclusion. We thought this was a good example of an investment thesis and a look into the private equity business, but there are plenty of other investment options, both in the private equity space and the broader stock market, that may be more suitable for your time horizon and risk tolerance.
This is an excerpt from our Thought Starters email. Once a week we send you 5 interesting articles that have caught our attention, to get you thinking. No spam, we guarantee.