Apollo Global Management experienced considerable growth in the first quarter of 2011, as total revenue jumped 211 percent to $696 million from $224 million in the same period last year. The performance was largely driven by the group's private equity segment, while its real estate arm posted a net loss for the quarter.
The first quarter results are Apollo's first since it listed in a $565 million initial public offering at the end of March.
The New York-based alternative asset manager firm said revenues grew to $696 million, driven by $559 million of carried interest income during the quarter. That carried interest figure also saw a surge, up 414 percent from the same quarter last year. Economic net income rose by 406 percent from $77 million to $390 million.
Apollo also grew assets under management by 25 percent from $56.2 billion as of 31 March 2010 to $70 billion as of 31 March this year. The group said: “The growth in total AUM was driven by both strong appreciation in the underlying value of the fund investments managed by Apollo as well as new capital raised.”
Of the total AUM, the fee-generating portion rose by 10 percent from $43.8 billion to $48.3 billion, it said.
Apollo’s private equity segment reported quarterly net income of $287 million, a significant jump from $47 million last year. That surge in income was due primarily to a $372 million increase in carried interest income to $442 million for the first quarter. That included unrealized gains of $323 million from the appreciation of Fund IV, Fund VI and Fund VII investments, as well as $119 million in realized gains driven by the sale of certain Fund VII investments.
Uncalled private equity commitments, or “dry powder,” totaled $10.2 billion at the end of the quarter, Apollo said.
The group revealed Fund VII had generated an annual net IRR of 32 percent since its inception in 2008. Fund VI, which began investing in 2006, had generated an annual net IRR of 12 percent, and Fund V 45 percent since its inception in 2001. Finally, Fund IV generated a 9 percent net IRR since its inception in 1998.
The group's real estate arm reported more mixed results.
Apollo said total revenues from its real estate operation reached $9.3 million—a $7.7 million surge from $1.6 million one year ago—due to increased management fees following its acquisition of Citi Property Investors (CPI) in November 2010. However, the firm also acknowledged that its CPI acquisition led to higher expenses for its real estate segment, causing an economic net loss of $5.4 million for the first quarter, compared to a $3.8 million loss for the same period one year ago.
Apollo's efforts to build its global real estate team have led to substantial growth in its real estate assets under management. As of March 31, AUM had reached $6.5 billion, two-and-a-half times greater than the $2.5 billion it reported one year ago. Helping that figure, in addition to the acquisition of CPI, was the launch of AGRE US Real Estate Fund, a closed-end private investment fund targeting real estate-related investments principally in the US. The fund held an initial closing on $108 million in equity in January 2011.
In terms of the overall business, Apollo reported total net income of $390.2 million for the first quarter, up 406 percent from one year ago. According to the firm, the increase was driven by Apollo’s Incentive Business, which reported $361.9 million of net income for the first quarter. That was an increase of $296.2 million compared to the first quarter of 2010, resulting largely from higher carried interest income in Apollo’s private equity segment. Apollo’s Management Business reported $28.3 million of economic net income for the first quarter of 2011, an increase of $16.9 million compared to the first quarter of 2010.