Apollo confirms hybrid debt fund as credit revenues soar

Following a successful year for credit returns, Apollo Global Management is planning a hybrid debt and equity vehicle for 2018.

Apollo Global Management is to launch a mixed debt and equity vehicle this year to target capital solutions, structured equity, non-control stressed and distressed investment opportunities.

The new vehicle was first mentioned at a Goldman Sachs conference in December 2017 and will target returns in the low to mid teens.

The new fund was confirmed during Apollo’s full-year earnings call on Thursday.

Apollo’s credit division overall saw its assets under management increase by 20 percent year-on-year to $164 billion with approximately $100 billion in permanent capital vehicles.

Gross returns from credit were 2.2 percent in the fourth quarter and 8.3 percent in the full-year, with Apollo attributing the biggest growth to its drawdown funds and permanent capital.

Total management fees from credit in Q4 were $186.1 million while carried interest raised $90.6 million. This was significantly higher than in the same quarter of 2016, when management fees totalled $151.6 million while carried interest income hit $60.9 million. Total revenue including advisory was $296.95 million in Q4 2017.

This formed a significant slice of Apollo’s total Q4 revenues of $869.5 million, which were up 26.9 percent from $685.4 million in the same quarter of 2016. Full year revenue for the firm climbed 32.5 percent to $2.61 billion.