From the archives: Apollo seeks to standardize

The $24.7 billion Apollo Investment Fund IX was the world’s largest-ever private equity fund when it closed in 2017, with 350 distinct limited partners, with 85 percent of Fund VIII LPs reupping. Apollo manages such a large LP base by standardizing as much as possible. “We try to have all investors subject to a similar process,” Kelly told the 2018 forum. “As soon as you start to deviate from that you create exceptions, and exceptions create work and potential issues.”

Thanks to streamlined and scalable processes across the business, Apollo did not have to make new hires on the finance team or the investment professional side on the back of the fundraise.

“We’re at a point where we’re really quite scaled and we have domain expertise in the 10 industries that we cover on the deal side, and then the finance and compliance and marketing teams are pretty well scaled around that,” he said. As a CFO, Kelly has spent a lot of time visiting current and prospective shareholders to understand how they view and value the firm. “We’re very, very cyclical, we’re volatile in terms of our earnings, and so how do we appeal to shareholders and provide the right information to do that?” Kelly said. “We had to create a language internally at the firm which was ‘What are the most important metrics for us in terms of running the firm? How do we assess the performance of businesses today as they grow, as we start new products or new asset classes, as we look to buy things?’ It’s been a fairly long process to do that, but we think we’ve got a pretty good handle on that now.”

Looking to the future, Apollo planned to find ways to grow its nascent real estate business, as well as make in-roads in infrastructure. Kelly also saw robust growth on the horizon for the firm’s permanent capital vehicles, the best example of which is fixed-annuity insurance company Athene. 

“We see that as a way to grow out our business both here and in Europe. We think the opportunity to do that in Europe is vast actually, with Solvency II coming in and restrictions on the insurance companies,” he said, regarding the European regulatory framework for EU insurers.