Apollo Targets Retail Clients via Asset Managers
(Bloomberg) — Asset managers that reach retail clients have become a new market for private investments, Apollo Global Management Inc. Chief Executive Officer Marc Rowan said.
He sees those firms as potentially becoming one of the largest blocs backing private assets — alongside institutions, insurance companies and individuals — with exposure to those investments increasing inside mutual funds, exchange-traded funds and “products of all types” offered to retail clients.
“This will allow our industry to reach clients we would never on our own reach and who want exposure to private assets, but will not get exposure to private assets directly,” Rowan told analysts on an earnings call Tuesday.
Apollo aims to reach individual investors through the asset managers that already serve them, executives said on the call after the firm reported third-quarter results that edged it closer to $1 trillion of assets under management.
Read More: Apollo Profit Beats Estimates as Assets Approach $1 Trillion
The company plans to use these partnerships to expand beyond the traditional backers of alternative assets — including pensions, insurance companies, endowments and sovereign wealth funds.
Rowan also said that another new market has opened up in the form of defined-contribution retirement plans such as 401(k)s. Apollo and other alternative asset managers won a major victory in August, when President Donald Trump signed an executive order that’s expected to boost the presence of private investments in 401(k)s.
Apollo has already struck partnerships with traditional asset managers to bring private assets to individuals. Apollo paired up with State Street Corp. on a private credit ETF and Lord Abbett on an investment-grade interval fund.
“Private assets are becoming more and more acceptable and more and more in demand,” Rowan said.
Like its peers, Apollo has been trying to attract more capital from wealthy individuals as fundraising from institutions has decreased in some areas.
Earlier this year, the firm launched its New Markets division to tap retail investors. Apollo attracted roughly $5 billion from wealth channels during the third quarter on continued demand for semi-liquid funds, it said, bringing its total this year so far to about $14 billion.
Institutional clients like pension funds are increasingly opting to shift public debt and equity investments into private-markets assets, Rowan said. This has become yet another market for Apollo, he said, and one he expects to grow significantly in the coming years.
As private assets become more prevalent, they also have to become more transparent, the CEO said. The ability to provide a daily net-asset value for private assets has become “table stakes to be able to work with traditional asset managers,” he said.
“The work we’re doing around transparency and liquidity — which some in our industry oppose because we’re shining a light on the assets, the quality, the ratings and the pricing — this is what gives you entry to traditional asset managers,” Rowan added.