Apollo just set a goal to manage $1.2 trillion in private loans by 2029. These 7 slides show how it will get there.

Alternative asset managers like Apollo and Blackstone have been the stars of the last ten years in financial services. The industry’s market cap has grown from $2.3 trillion to $3.4 trillion since 2014, but alternative asset manager’s market caps have grown from only 4% of all financial services to 12%, and they’ve grown five times over in ten-years.

Rowan looked back to 2008, when all of the largest alternative managers were roughly $40 billon in assets under management. By the end of 2023, when the firm was at $650 billion, it had grown between 16 or 17 times over, numbers that Rowan said are rare in financial services.

“We actually outgrew Apple, we outgrew Microsoft, ” Rowan said. “We outgrew almost every growth company you could think of.”

Apollo forecasts up to $100 trillion in capital expenditures in three interconnected growth areas over the next 10 years: $30 trillion to $50 trillion in energy transition, $30 trillion in power and utilities, and $15 trillion to $20 trillion in digital infrastructure like data centers.

But while banks and the capital markets fueled the last great era of growth amidst low interest rates and globalization, the firm thinks that this “new era” may look like a much older era, 1890 to 1920.

“We’ve seen this movie before,” James Zelter, copresident of Apollo Asset Management said. Insurance companies, like New York Life, were the main sources of the capital necessary to finance the infrastructure of a new era, such as railroads and electrification.

“The capital needs were long-dated at that point in time,” Zelter said. With a new turn towards a new era of infrastructure, capital needs have again become much longer than the balance sheets of the banks, or the public capital markets, can handle.

Apollo’s merger with Athene brought life insurance and retirement capital to its balance sheet and is a key part of Apollo’s future strategy. Athene’s balance sheet has $235 billion in assets under management, plus an additional $69 billion from its Apollo-Athene dedicated investment program, and an additional $392 billion in third-party capital from clients.

That capital, especially Athene’s capital, which needs to pay out life-insurance annuities, is looking for long-term, safe yield. While many alternative firms are working with life-insurance capital, Apollo has brought it in-house. This allows the firm to lend in a wide-variety of ways over the long-term.

As banks scale back their own lending, Apollo expects to step in and finance the future.

“These long-term solutions across a variety of cost of capital are not really appropriate for bank balance sheets who fund themselves short,” Rowan said.

Apollo has its own capital to invest, but it also of course invests on behalf of other investors. And through that activity, it sees allocations to fixed-income and debt, rising, the firm’s executives said on Tuesday.

“If you showed me the page from 1994 to 2022 and this is the allocation of fixed income, I would have told you it would be a horrific career decision to be in fixed income from 1994 to 2022,” Zito said. “We built our business as everybody was taking money out of fixed income.”

Still, the firm grew multiple fixed-income business lines, which now should give it a head start and help attract investors.

“There are many of our competitors who literally do not have a credit allocation team because they got completely out of the business,” Zito said. “They’re just starting to build the business back up.”

The private market has made a large impact on the sub-investment grade market over the past ten years, taking up $1 trillion of the roughly $3 trillion market. But it’s barely even tapped the surface of the $9 trillion investment-grade market, of which Apollo is a clear leader with its Intel and AB InBev deals.

Additionally, there’s a $20 trillion asset-backed finance market with only $500 billion in funds raised, a pittance.

“In asset-backed, no one’s really done it,” Zito said. “It’s very small. We think it’s one of the biggest drivers of our business over the next decade.”

While Apollo’s Athene transaction brought huge amounts of capital to its balance sheet, the firm was quick to silence any naysayers who said that was the firm’s only large growth bucket.

“Many people look at our growth and they’ll always say, okay, it’s driven by Athene, not third party.” Zito said. “You’re seeing we grew third-party revenues in the last five years by 20%. The next five years, we anticipate third-party revenues to grow by 25%.”

While Apollo plans to explore new frontiers over the next five years, it definitely hasn’t forgotten its original DNA of making returns for its third-party investors.