Ambitious Apollo plans Hong Kong build-out
Apollo Global Management unveiled an ambitious growth and it is looking to expand its operations in Hong Kong as part of that.
“Asia represents a very interesting embedded option in the business,” Apollo’s CEO and founder Marc Rowan told an audience at the company’s investor day on October 19.
Matthew Michelini, a senior partner at the firm, is relocating to Hong Kong as the firm’s Head of Asia-Pacific. He will continue in his role as global co-head of Apollo Hybrid value and support the growth of Apollo’s private equity business in Asia.
The firm has 15 professionals in its private equity team in Asia Pacific, spread across offices in Hong Kong, Mumbai and Tokyo, but as one of the world’s leading alternative asset managers, is also looking to grow other aspects of its business, including raising a new Asia real estate fund as well as developing its retirement services platform Athene Holdings, which it merged with Apollo earlier this year.
Last month took a $400m stake FWD Group Holdings, the Hong Kong-based insurance company run by Richard Li which is planning a US listing. “This is a product relationship, a retirement services relationship and an asset relationship,” Rowan told investors.
Globally, Apollo is planning to double overall assets under management over the next five years and to grow its private equity and hybrid business by 150% over the same period, and will launch a new private equity fund in 2022.
While outlining the strategy, Rowan also stressed the importance of culture. “If I had to choose between strategy and culture, I would take culture all day every day and twice on Sunday.”
Most of the bank’s senior partners have been with the firm for 20 years, and Rowan stressed the importance of retaining and developing staff. “The only product we offer is judgement. Judgement only comes when you’ve been at Apollo for a long period of time. So if you’re at our firm we want you to spend your entire career at Apollo.”
By expanding its offering in Asia, Apollo can provide the same sort of opportunities that are on offer at big investment banks.
For example, Michelini’s hybrid business sits between the firm’s credit and equity business and boasts $47bn in assets under management and is defined as investments that generate a return in the 10% to 18% range, typically providing flexible capital to corporate asset-backed and real estate businesses.
Hybrid capital used to be provided by mezzanine funds and then banks until they exited after the financial crisis due to changes in regulations. “Through a corporate lens, hybrid is an alternative to junior debt or an alternative to issuing equity,” said Michelini.
Michelini will be using Hong Kong as his base, but Rowan has his sights across the region, and wants to tap into the vast pool of retirement savings in Japan. “Any free day we should spend in Japan,” he added.
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