Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Apollo Global Management chief executive Marc Rowan says a wave of partnerships between alternative and big asset managers will shake up Wall Street.
Rowan predicted that large private capital companies would increasingly distribute their investments, such as corporate buyouts, to traditional asset managers that had prioritised raising their clients’ exposure to unlisted assets.
He said companies such as Apollo could create co-branded investment funds or “massive managed accounts” with traditional asset managers that would widen investors’ ownership of unlisted assets.
“I see a very good marriage between our industry, our company, and the public or traditional asset managers who I believe are going to reinvent their businesses spurred on by competitive forces,” said Rowan during Apollo’s fourth-quarter earnings call.
For the quarter, Apollo’s adjusted net income rose 15 per cent to $1.36bn from a year earlier. The firm’s shares closed 2.7 per cent lower on Tuesday.
Rowan said BlackRock’s acquisition of private credit manager HPS Investment Partners and infrastructure group Global Infrastructure Partners should be taken as a “wake-up call” to the investment industry.
Those megadeals signalled a need for traditional investment groups to offer private funds, which would lead to greater “convergence” between public and private investment portfolios, he said.
His comments come as the industry’s largest private capital groups, such as Apollo, Blackstone, KKR and Brookfield, have hitched their growth to managing money for wealthy individual investors and, ultimately, ordinary retirement savers.
Executives predict that they will manage trillions of dollars for individual investors in addition to the $13tn that the industry manages for institutions.
Traditional asset managers have prioritised investing in unlisted assets, which carry higher fees and greater diversification than public markets. Those efforts come as fees on public funds fall and investors increasingly view public stock and bond portfolios as commodity products.
“Our industry and our firm will be a supplier of products similar to traditional asset managers as they seek to make their products more competitive given the incredible amount of indexation and correlation,” said Rowan.
Last year, Capital Group — one of the world’s largest asset managers — and KKR launched two co-branded private funds as part of a broader partnership between the groups. KKR on Tuesday reported slightly better than forecast adjusted earnings for its fourth quarter, but its shares closed 8.5 per cent lower after its fee-paying under management assets slightly missed analyst forecasts.
Such partnerships between two areas of finance that have for decades been treated as distinct markets mirror the increasing lending ties between private capital groups and the broader banking system.
Since the collapse of Silicon Valley Bank and Credit Suisse in 2023, private capital groups have formed loan origination ventures with large banks, such as Citigroup and JPMorgan, which curtailed lending owing to regulations and capital constraints.
In these partnerships, private capital firms use their investors’ cash to fund loans sourced by the large banks. They have also formed flow arrangements to distribute slices of the loans they originate, selling off pieces to large banks in search of higher-yielding assets.
In 2024, Apollo originated a record $220bn in debt and has a dozen partnerships with banks to boost its lending capacity.
Rowan said that the Trump administration would roll back bank regulations that had constrained the banks’ lending businesses, reviving competitiveness.
“Banks will be stronger competitors in what we call direct lending or a small portion of our private credit business,” said Rowan of the deregulatory push. He also predicted “a tremendous consolidation of regional banking” during the Trump administration.
