Apollo CEO Marc Rowan on what makes $APO different from other PE companies 

“You offer your clients judgment. Now, how is that judgement different from the Blackstone judgement, EQT judgement, KKR judgement?”

Marc: “The firms, although they are all in the alternative asset management industry, are actually different in terms of the deals they pursue, how they are structured, and over time we have become more different rather than more similar. Our business today is one of one. No one actually looks like we do today. Let’s start with – we are $700b of AUM, $350b of that was our own balance sheet, $350b is client money. We are generally the largest buyer of everything. The person that is the most impacted by growing too fast is us. It is a wonderful way to be aligned with your clients from a growth point of view and an investment point of view. And that is the third precept – the first is purchase price matters, the second is excess return per unit of risk, and the third is alignment. No one looks the way we look today. That implies other things. We also manage a disproportionate amount of fixed income. $550b of fixed income, $150b of equity. Our business is set up differently. What has been interesting about this is – this industry started with private equity. Almost for every firm you have mentioned. PE is a very expensive cost of capital. Think of it as a 20%+ rate of return, that is required. How many companies in the world, with leverage, are appropriate for that high cost of capital? The answer is – a few. Over time what we have done, is we have taken our skillset- our ability to originate, our ability to analyze, our ability to source, our ability to discern and we have extended it from investment grade to levered equity. We have actually lowered our cost of capital substantially over time. If you look at the average investment Apollo makes today, it probably has a 6-7% cost of capital. Very heavily tilted to IG. That is a reflection of where the world is. So I start with questions back – is the world cheap today? Is risk being rewarded today? No, spreads are tight. In a world with geopolitical risk where valuations are high and spreads are tight, why would I want to take lots of risk today?”