ity and transparency of where our business is going. During the first half, we will provide insights around our strategy, origination, and our investing businesses. Then we will take a short break and then lead into the second half focusing on our capital formation capabilities, our culture, and our financial outlook. We are incredibly proud of the value that we've been able to create for our shareholders. Since we listed on the NYSE in 2011, our stock has appreciated sevenfold, outperforming the S&P by an average of 1,000 basis points per year. Today marks our fourth investor day and you can see the result of making these opportunities impactful both in terms of communicating our goals and then delivering results. Many of you have been with us for a substantial portion of this journey and we're extremely thankful for your continued support. For those of you who may be newer to our story, we believe we have the most shareholder-friendly structure among our peers. And you can see some of these differentiating characteristics on the page. We are also the largest eligible financial company for inclusion in the S&P 500. So if anyone here would like the address of where you can send a nomination form on our behalf, please see me during the break. And one final note, in addition to all the great live presenters we have for you today, we wanted to showcase a wider array of our high-caliber team. So we pre-prepared a series of short video reels that you'll see woven into the presentation. The first one starts right now. Enjoy.
Apollo is driving the investment universe forward. A real trusting partner and adviser, collaborative, entrepreneurial, and dynamic. Insightful, thought-filled, driven, creative, innovative. We look where others don't. We are constantly evolving. We're constantly looking for new opportunities and we're constantly pushing the envelope. Apollo really is an investor's investor. One of the strengths of Apollo is being able to think with a blank piece of paper about what it is that the client really needs. Rather than solve for an individual solution, we can actually flip it around and ask what do you need? Our integrated platform is really a unique aspect of Apollo. We are a long-term partner providing a quantum of capital that makes a difference. The capital needs in certain industries are going to be immense. A global industrial renaissance. There really is a growing home for capital like ours, patient, creative capital. The sustainable investing platform at Apollo is unique because it really is a platform approach. It touches every part of business, it touches people, it touches technology, it touches infrastructure, it touches resources, but it also has the opportunity to invest in the future. Together, the Athene and Apollo platform are really built around empowering retirement. Apollo and Athene are well positioned to help families and individuals achieve their best financial lives. Through our relationships with US pension plans, we are literally serving millions of retirees. We're allowing individuals to invest in their future. We spent over three decades developing expertise in private markets. Today, we're delivering those capabilities to global wealth clients. We started out in the US, then moved on to Asia and now are building our capabilities in Europe. I am extremely proud of the team that we have here. I really enjoy the people I work with. We are on the forefront of innovation across every different type of asset class. Whether it's global wealth, whether it's serving retirees, whether it's providing capital solutions that the banks and the markets are no longer providing, ultimate modern high-performance culture at Apollo. There's an excitement, there's an energy. You feel it walking around the halls here that we are building something special. The excitement, you can feel it every single day. There's a real sense of community of all of us pushing together to achieve the right goals. We think it through, then we think it new.
Good morning. For those I don't know, I'm Marc Rowan, CEO of Apollo. I want to thank you all for your interest and especially your willingness to spend between three and four hours with us. Hopefully, nothing will happen in the world that distracts all of us from the day, because this has been an amazing experience. There is no better time to be the CEO of a business than doing a 5-year plan. Anything we wanted to do, we've now compressed into a very short time frame. All the tough decisions have been on the table. The resource allocations, the level of focus. And if I give a top-level remark, what you're going to see in asset management, this is about choices. There is so much that we could do in asset management that this is about focus. Listen to what we chose not to do. In retirement services, we almost have the opposite focus. In retirement services, they have been so focused on execution of their business plan that it's now time to open the aperture and really go after the retirement market. And the two steps to the business, I think, create a very dynamic and exciting plan. So, as Noah suggested, this is not our first rodeo. This is actually our fourth investor day. You can see the results that are up there. And I know a number of you when we spoke in 2021 thought we were, shall we say, optimistic. I think even some on the team thought we were optimistic. But the team, particularly those of us who have been here a very long time, were supremely confident that we would deliver the goods. And I think short, we crushed it. Not everywhere, not every day, but for the most part, we feel really good about what we've achieved so far. And a number of us have very, very short attention spans for those of us particularly who work on trading desks or who make minute-to-minute decisions. So, if you're looking for an exit, right after this page is a good time to exit. In terms of what I think you should take away as financial targets, you know, for FRE, we're talking about 20% average growth over the next 5 years. For S sur, 10% average growth, $15 a share of ANI, 21 billion of capital. Then the only other number I'd really focus you on is the 275 billion of annual originations. I think the word origination and the tracking of origination is going to become more important to our industry and to the dialogue we have with all of you. We have been incredibly lucky. Reflect back on where our industry has come from. This is revenue seven times. But let me give you a more interesting stat. In 2008, all of the big firms that you think of as our peer group today, we were all 40 billion of AUM. Everyone was 35 billion of private equity and 5 billion of something else. In our case, that something else was credit. In 2023 when we ended the year, we were 650 billion. We grew assets between 16 and 17 times. No financial services business grows like that. We actually outgrew Apple. We outgrew Microsoft. We outgrew almost every growth company you could think of. And I think it's important to ask the question publicly that we ask the team, were we lucky or smart? We were lucky. We were smart only in that we positioned the business in front of incredible tailwinds. And those tailwinds basically powered our business to seven times revenue growth and they powered our business to 16 to 17 times AUM growth. Those tailwinds in 2008 every existing financial institution around the globe was playing defense. We were fortunate in that we started a new financial institution, Athene, in 2008 and we basically played offense for 15 years. The other thing that happened is as governments around the world pushed rates to zero both after the financial crisis and again during COVID, everyone who had made commitments to policyholders, to retirees, to contractual counterparties found themselves in search of yield and they found us. Those two tailwinds didn't just power us, they powered our entire industry. But we also have to be clear that those tailwinds are now gone. This is another thing that we're really working on at Apollo. Our industry has been so successful. Our company has been so successful. How do we get the organization to play to win and not just to play not to lose probably consumes most of our management time. We have woken the team up at 4:30 in the morning for meetings to prove to them that we need to do a wakeup call and something different. We've had outside speakers come in to scare the bejesus out of people. We've had cautionary tales. We're here to play to win. And the thing that I keep saying, change is coming. The tailwinds that got us here are not here anymore. They are going to be new. If we think we're going to succeed by doing more of the same, I think that's a fallacy and we have to adapt and we have to change. And this is not true just for us. This is true for everyone in our industry. How have we evolved? We've basically evolved focusing on capabilities and to keep us in front of these powerful tailwinds. Our whole industry and our firm, our founding was private equity. We were a small business with massive opportunity in front of us. So-called black art, not even an asset class yet. Post-GFC, credit, Athene. These were the big drivers of our growth. Over the past few years, many of you at the investor day said, 'Why merge with Athene? What capabilities? What are you going to get out of it?' We've gotten a lot out of it. The entire business revolves around the retirement ecosystem and Athene's centrality to our strategy is irreplaceable. They basically have put us in the platform business, in the capital solutions business. AIP which you'll hear a little bit about and wealth allows us to be the most aligned firm in our industry side by side. What are the new tailwinds? How do we think about where the business is going? Let's start with a little dose of reality. We are a small asset manager. We are circa 700 billion plus of assets under management. All the big four are in the 10 plus trillion dollars today. If we are really successful, our business will be twice its size in five years. We still will not be relevant in the scale of the big asset management. And I think in some ways this is the most exciting and the most comforting part of our strategy. We have four amazing opportunities, tailwinds that are in front of us that will push our business forward. Any one of which done well would serve to double our business. Our job now is focus and execution and to put ourselves in front of the tailwinds of these four massive opportunities which I will discuss a little bit more in detail. Global industrial renaissance. The capital that is needed today in addition to the two trillion that the US government is borrowing to fund on an annual basis. What is it for? It's for infrastructure. It's for energy transition. It is for the next generation data and power. These are all long-dated. They're complex. They require creativity. In many instances, we're financing consortiums backed by the big companies who don't want assets on their balance sheet, but want the capabilities that are inherent here. These long-term solutions across a variety of cost of capital are not really appropriate for bank balance sheets who fund themselves short. They're not really appropriate for the plain vanilla of the investment grade marketplace. We and institutional investors are the long-dated capital necessary to do this. In every society, there are only two choices as to where debt capital comes from. It can come from the banking system or it can come from the investment marketplace. There is no third choice. Everywhere in the world, banks are being asked to do less and investors are being asked to do more. When we did the first investment grade financing for AGMB a number of years ago, many in this room and many of our competitors and most of the street said that $4 billion is the last $4 billion that you will ever do. That was a hundred billion dollars ago and 11 billion just for Intel. This is just getting started. We are at the beginning of this trend. This is just a secular trend, a driver of our business. Most of this is investment grade. Retirement. For better or worse, we're all getting older. We as a society have done a terrible job planning for retirement. The statistics are well known. The vast majority of Americans have not made adequate provisions for retirement. What? Think of the largest pool of retirees in the world and how they save. In the US, we have between 12 and 13 trillion in 401k plans. What are they invested in? They are invested in daily liquid index funds, mostly S&P for 50 years. Why? We don't know. We basically have the retirement savings of America. 10 stocks are 39% of the S&P. Four stocks have determined 100% of their returns for the last few years. And I jokingly say sometimes, we levered the entire retirement of America to Nvidia's performance. It just doesn't seem smart. We're going to fix this and we are in the process of fixing this. Every day we are seeing new products, new approaches, new additions. We don't have to make this up. This is happening. The most successful country in the Western world from a retirement point of view is Australia. Australia 40 years ago adopted something called superannuation. A fancy name for allowing investors with appropriate supervision to include private assets along with public assets in their portfolio. The outcome over 40 years of compounding is nothing short of spectacular. I believe we are on the cusp of revisiting this opportunity. More directly, you all of you and we have thought about retirement from the point of view of what Athene does. Athene is just getting started. If we're very focused on how we succeeded, we essentially took an existing product set in an existing industry dynamic and we made it better. Don't get me wrong, that's been great and the team has done a spectacular job, but we have yet to even show what this can be. You're going to see some of this in Grant's presentation and more importantly, you're going to see some of this over the next few years. As our competitors are just thinking about the business that we started and now dominate 15 years ago, we're moving to other places. Whether it is stable value, tax-advantaged products, going after 401k, or guaranteed lifetime income, there is no shortage of opportunities in retirement. And we truly have not even gotten started. We need to imagine this business not as an annuity business, not as a pension buyout business, but as a retirement solutions business. And guess what? Retirement is driven by fixed income, particularly high-grade fixed income with yield. Most of our conversations on our quarterly call revolve around what's happening in individual investors. Think about the following. For 40 years, our entire industry has basically been built out of the smallest bucket of our institutional investors called alternatives. We are now in front of us with individuals being presented with a market that is at least as large as the entirety of our industry. We are at the very beginning of attacking this business. We are at the very beginning of understanding what products and how the delivery to this business works and I already know we're going to be successful. It's not just we Apollo although I do think this is a large firm opportunity. This is not for every firm in the alternatives business. And the reason I know we're going to be successful is I can look at the most sophisticated of the individual investors called family office. Family offices are now more than 50% private. Family offices to us are nothing other than institutions and they are not generally guided by consultants or by other benchmarking or other restrictions. They are guided by common sense and the risk-reward of the principle. When I say 50% private, I do not mean 50% alternatives. I mean 50% private. Increasingly they understand that private is not just alternatives. Private is a way for them to get further diversification in their portfolio and to enhance their yield. We don't often spend a lot of time talking about family offices because in number they're not that numerous. This is a massive market and among the most interesting things in the world are happening now in family office exactly because of the reasons I've said. They are not limited by benchmarking and they are showing individuals. They're actually showing institutions the future. Let me flip to the bottom of that pyramid there. Mass affluent. We do not believe that Apollo or our peers will directly serve the mass affluent marketplace. These people are very difficult to reach. They have entrenched relationships. They are generally well served. They are not typically served by an individual adviser. They're not advised and in very limited circumstances do we believe they will actually do what is necessary from an education point of view to participate directly in the private market. That does not mean they are not going to have private assets. Whether it is us with State Street or us with Lord Abbott or our peer group with Capital Group, I believe this mass affluent market is going to be served by their existing asset managers by their existing advisory relationships and that the product set is going to change. We, our industry and we Apollo specifically, are going to be a part supplier to this portion of the high net worth marketplace. In high net worth which is typically what all of us talk about on the calls. This is a group that is advised by wealth systems, by RIAs, by advisers. Their adoption of private markets is limited only by education. It is how many days we're prepared to get on the road and explain this. I was joking with our head of wealth that last week I hit Austin, Houston, and Monaco in one 24-hour period. Now, luckily talking to high net worth investors is highly rewarding because you leave and you actually know exactly where you stand. Sometimes you actually leave with a ticket which is actually quite rewarding. This is a massive opportunity. So if I review retirement, massive opportunity, lots of demand for fixed income in particular, individual investors, lots of demand for alternatives plus fixed income and other opportunities and just getting started. This business alone individual could double our industry and double our firm. The one that gets me the most excited because I think it is the most near-term and the most tangible and the one that I think is going to go faster is this whole notion of rethinking public and private. Let's face it, for those of us who have been in the business 40 years, we have it beaten into our head that private is risky and public is safe. We know that in our bones. And the reason we know that is that probably was true 40 years ago. Private was three products, private equity, venture capital, and hedge funds. All of which have risk even if they are in fact very good investments. And public 8,000 public companies diversified portfolio of stocks and bonds. But what if we're wrong? What if it is not private risky and public safe? What if private is both safe and risky and public is safe and risky? We think nothing of Nvidia going 20-30% in a day, lots of fluctuations in equity. We don't think of that as risk. Yet the slightest deviation in private markets, we all lose our minds. I think the world we live in today is private is both safe and risky and public is safe and risky. And if that's right, everything we know about portfolio construction makes no sense. When something is risky, you put it in a small bucket. You call that bucket alternatives. You demand really high returns and you watch it closely. You put it in funds. You worry about your exposure. You worry about your concentration. You worry about your variability. That's the world we've lived in. But the world is changing. Recall that our entire industry has been built out of that small green bucket called alternatives. We are today getting access to the much larger red bucket called fixed income. Fixed income today is generally for our client base 50% larger than the alternatives bucket and it is 100% public IG. We are watching replacement take place in real time. And this replacement is something that is being aided by well-known gatekeepers called rating agencies. The presence of rating agencies is actually telling investors that something in the private market and something in the public market are of the same credit quality. So an investor can actually make decisions about liquidity or illiquidity and make explicit tradeoffs of risk and reward. I will say something that I know we will come back and talk about again. 18 months from now you and most investors will not know the difference between public and private IG. There will be no difference. It will not be the size of company. It will not be the size of issue. It will not be the rating. It will not be the provision of financial information. And it will not be the liquidity. Everything that exists in the public market for IG is going to exist in the private market for IG. We're watching this happen every day. But make no mistake, while this is our near-term target, I do not believe that replacement stops in the fixed income bucket. I think eventually replacement goes to the equity bucket. The world we live in has completely changed. The financial crisis, all the rules by which financial markets were governed were completely changed. The problem is none of us noticed because we printed as a country $8 trillion the next day and everything went up into the right. It's only for about the last 18 months that we've started to experience the world the way it is. Why is this taking place in fixed income first in terms of replacement? It's taking place there first because of rating agencies and second because there is no liquidity in public IG. It takes 5 days to sell an investment grade corporate bond. One of the outcomes of the financial crisis was this massive reduction in dealer capital to support fixed income trading which has not been picked up by the Jane Streets and the Citadels and the Susquehannas particularly in private markets. We will as you hear begin market making. Once we begin market making I believe others will market make. The 8,000 public companies that used to form diversified portfolios are now 4,000 public companies. Fewer than a hundred companies go public every year, more than 100 companies go private every year. We take for granted in the technology ecosystem that companies like OpenAI or Spotify can stay private a very long time and raise equity. Well, why doesn't that apply more generally? I think the future today we're going to talk about fixed income replacement but I think the future we're going to be talking about equity replacement. What is equity replacement? Think about what's happened to our equity markets. So much of the market is passive today. Active management is a small percentage. But more importantly, active management has actually failed. When you have a business where 90 plus percent of the time for 20 years you have failed to beat the index, you have to ask yourself whether these people have gotten stupider or whether the structure of the market has changed. And I assure you these people have not gotten stupider. The structure of market has changed. It is just much harder, much more skill required to make money in active management, particularly with daily liquid funds. To those who do it, I say hats off to you because it is a really, really hard task. I think in the future, investors will own equity that is private. Think of that as private equity not in a fund without the leverage. Active management may actually be both active management of buying and selling of stocks, but active management may also be the active running of companies. We have a business today 60-70 billion of something we call hybrid which you'll hear will be multiples of its size. Our industry, these four trends, these four planets, they are not only available to Apollo they are available to our entire industry and I expect our entire industry to benefit for what's going on. However, I believe that we have done a better job positioning ourselves to be squarely where we need to be to benefit from where the market is going. What do we think and what do we think as investors? What do we read in research? We continue to judge our business. We continue to shorthand success by things like AUM and capital raising. I believe that over the next few years, we're actually going to transition to thinking about what really constrains our business. If we're right, we're going to have demand for private assets coming from retirement. We're going to have demand for private assets coming from individuals and we're going to have demand for private assets coming from institutional clients from their fixed income bucket and eventually from their equity bucket. All of that demand I believe will produce an industry that is twice or three times the size of what it is today. That does not mean capital raising is not important. That does not mean partnerships are not important. There's a long way between today and the future. But I believe the trend we will find ourselves as an industry. Short ideas rather than short capital. Origination is in my opinion what is going to allow you to create value and is going to be the limiter of growth in our business. And it is not just origination for instance in private equity. It is origination that matches the right cost and form of capital. The world at the investment grade level is much larger than the world at the 20% cost of capital buyout level. In addition, I think we are all so far the beneficiaries of culture. We as an industry have attracted an amazing group of people to come to work on our platform, most of whom are escaping a larger institution. We should be very careful not to become that. This work on culture, we will not spend enough time on it today. But if I look at how I spend my time, this is half my job. Managing the careers of 200 people represent the leadership of Apollo, it is all about culture. Single best decision I've made in the past 12 months was to personally buy a frozen yogurt machine. We open the frozen yogurt machine when we have a team win. It turns out people prefer frozen yogurt to money. It's a recognition. I say this as a joke, but I want to give you some insight. We have to be very careful to watch what we do culturally in this business. We want to be in the north star about how we run the business. We want to be the single best place to be a partner in financial services. If we do that, if we get you to spend your whole career at Apollo, we will have your judgment throughout the entirety of your career. And our business is fundamentally built on judgment. And if our partnership is stable, the next generation will look ahead and they will say, 'This is all worth it.' And then young people coming into our business, many of whom work incredibly hard, including the group that helped put together today, they will have two amazing generations of mentors. If our partnership is stable, it all works. If the partnership is not stable, none of it works. Culture, top home for talent. We do that by how we do it, the environment in which we do it. But we also do it in a way that aligns with our investors. No one is more invested in their company, in their funds, in how they're compensated than we are. And this is a hallmark of how we come to market. If only one thing sticks for the whole day. This is what should stick. I believe and we believe that the ability to originate assets that offer alpha excess return is the key driver of our business. For those who don't follow all the nominations that are at Apollo, Chris Edson has now been promoted to head origination. So of the roughly 9,000 people in our ecosystem, 4,500 of them report to Chris Edson. So try to sit next to him at lunch. Me, I check on his health every morning to make sure he just gets to the office. This is an incredibly important part of what we do. I also believe that the dynamics of what's happening around origination is what allows you to keep your fees stable or increasing. Think about the dynamic I've just described. We have incredible demand coming for private assets from people who have not historically been in private assets. I believe we will have a shortage of private assets. I also have said that the liquidity or illiquidity premium is going to disappear for a big part of our marketplace. What is going to give you excess return? The capacity to originate, the capacity to structure, the capacity to control a deal I believe is what is going to contribute excess return. We judge ourselves, yes, by our financial metrics, but ultimately it's about the capacity to originate. Building and owning origination is essential to what we do. You'll hear a lot about that today. 4,000 employees wake up every day. They do not carry an Apollo business card. They work in 16 platforms. We've spent more than eight billion dollars building this over the last 15 years. This is the largest concentration of employees at Apollo. The entirety of our asset management business, 3,000 people. Our retirement services business, less than 1,500 people. This is platforms. This is high-grade solutions. The kinds of things we've done for Intel and AB InBev and Air France and AT&T. It is also partnerships with people like Citi. Our industry is really, really dynamic right now. We are not in any way at war with the banking system. We have never been better partners with the banking system. Look at what's happened just this week in terms of announcements with Citi, announcements with BNP. The banking system has figured out that we do not want what they want. We don't want their client. We can't sell their client anything. We can't sell them advice or M&A or foreign exchange or derivatives or payments or credit cards or any other service. If a bank loses a client to another bank, they lose it all. If a bank loses an asset, which by the way they generally do not want under new capital regime, they retain the client, they retain the fee revenue. This is just beginning to be accepted more widely. I think what we've done with Citi while large and dynamic I think you'll see lots more of this. We are not the enemy of the banking system. We are in fact amazing partners with the banking system. Let's pivot a little bit. Let's talk about the structure of our business. For those who were with us at our last investor day, we certainly took a lot of grief for our dog and its tail. We were trying to explain the benefit of being a principal versus just being a fee provider. But think about the market we've just described. We believe that assets are what is going to be scarce rather than capital. If we're right, as a business, we should want to make as much money as possible in an aligned fashion on every asset that we originate. How do we do that? Well, for some of those assets, we get a fee plus 100% of the profit. Think of that as a theme balance sheet. The amount we can do there is limited. It's limited by capital. It's limited by diversification. It's limited by our desire to do and grow other parts of our business. For some of our business, we have a full fee plus a third of the profitability. We call that ADIP. For those who follow our business, this is an insurance partnership where outside investors own two-thirds and we own one-third. And finally, we have a business for which we earn a full fee and we have no retained interest in the profitability other than a promote or some form of upside. We like all three businesses, but to date we have as an industry and you as analysts and people who follow the stock, we've been focused on capital light. Some of our competitors do this differently. They hold assets on their balance sheets. Some hold assets elsewhere. We have the most efficient way to hold assets and that is in partnership with retirees through our Athene retirement services business. This is a partnership that is built on fundamental need. Athene's business basically relies on excess return in investment grade fixed income. We start with a belief that there is no excess return in publicly traded fixed income. The only excess return comes from originating investment grade. Therefore, their entire business needs long-term safe yield with spread. What we've done is we've built the capacity to originate. As Athene got bigger, we had to get bigger. This has been a mutually beneficial partnership. It is not a gimmick for asset raising. It is not something one should do lightly. It is a fundamental full-on activity and very few if any of our competitors actually understand this business and what they are doing. How do you win? Well, to win, I think you need all five of these things. If you don't have these things, and most people who are entering the business, and most traditional companies don't have any of these things, what do you do? Well, what you do is you take assets and liabilities to Cayman. You put up 50 cents on capital, you avoid a bunch of rules and that's what we're watching. Anytime someone tells you they're taking their business to Cayman, read that as short-lived and lacking in any of these things. These five things, I believe, are necessary to succeed. And in our competitive set, only one of our competitors has actually taken the time to build something of substance. Asset outperformance. Back to this notion of private is risky and public is safe. Look down at the pie charts down below comparing Athene to the industry. 97% NIC 1 and 2 which are the most highly rated categories, approximately 5% alternatives, 1% stocks. If you cannot generate investment grade private, you do more alts and you do more stocks. This is what our industry has done. They also own real estate equity of which we own none. They also own high yield. What we have built is proprietary origination fixed income investment grade and we are earning 150 basis points plus of spread on that for the portion of the portfolio that is allowing us to derisk the portfolio rather than risk the portfolio. In every cycle we have performed better. Our credit losses are fewer. Our credit upgrades are more. Our attraction of third-party capital is the greatest. This is just an amazing story and kudos to Jim and Grant and the leadership team at Athene for what they've done. But this is a symbiotic relationship with Apollo. Distribution. The chart moves up and to the right. The team has done an amazing job building a service culture, but at its core, how did we win? How did we go from zero to better than every brand name you possibly can mention? We took a little bit of the asset outperformance and we gave it to customers. And guess what? Customers prefer more to less. And over the past 15 years, we've built the number one market share in retail. And I won't steal any of Grant's thunder as he takes you through this business, but suffice it to say, if you do not have ratings and you do not have service and you do not have this, what you're doing is you're buying secondary blocks of business with degraded surrender charges and degraded protection and you are paying more for them than originating new business. Not a great way to run. Distribution is key. Capital. The reward for good performance is trust with capital. The entire industry over the past decade has raised 28 billion of capital. We've raised 20 billion of capital. We are now the second greatest capitalized business in our industry and we have the luxury of retaining vast amounts of capital which Jim will take you through. Capital gives us ratings flexibility. It takes down our cost of funds, but most importantly, it positions us for a rainy day. We grow in stair steps when the industry is short of capital because that's when spreads are widest. That's when economics are the best. Cost structure. Other insurance companies have six or seven product lines. We have one product line. We have driven cost to an incredibly low level while retaining a service culture. And the 'we' in this case is Grant and the team in Des Moines where more than 12,200 people work. It is not the 'we' at 9 West 57th who are high-cost producers of everything. None of this though is possible without management. If you approach this as an asset gathering business, you will lose. Anyone who is in insurance to gather assets and try to do it on a regular basis is actually on a fool's errand. Sometimes the market lets you grow, sometimes the market does not let you grow. We are principals in this business. We have been principals in this business by running it as a principal and taking our foot off the gas sometimes and stepping on the gas other times. We attract third-party capital. We get to do ADIP. We get to grow when no one else can grow. We get widespreads. What that results in is stair steps. You should expect us to be in the stair-step business going forward. We will not grow this business other than if it makes sense to grow this business. The other thing you need to do in this business is you need to manage interest rate risk. The business itself is actually not susceptible to rates. You can look on this page and you can see that we have had amazing years when rates are low and amazing year when rates are high. In general, we prefer higher rates because that's better than consumers. But it actually does not matter because the cost of funds and the rate available in the marketplace essentially track each other. The only place it gets messy is in transition from a high rate to a low rate or a low rate to a high rate marketplace. Management has done an amazing job to do this. When rates were very, very low, we had a massive floater position. What does that mean? That means we gave up income for every one of those years to position the business to benefit or to protect from rates going up. We paid the tuition, if you will, for doing that. In 2022 and 2023, we got the payoff for that. What did we do after that? We massively derisked the book because now that rates are high made no sense for us to hold anything other than a modest floater position. Doing this back and forth, the willingness to give up current income, the willingness to position the business is actually what management's job is in addition to growing in stair steps. What does this mean? It means that we have to accept that we sometimes will consciously take down the profitability of our business. Far from suffering through, oh, '24 wasn't so good. '24 was actually awesome. The problem is we did a poor job adequately explaining that the 3.1 billion that we booked in '23 we consciously reduced by $300 million to remove the interest rate risk through hedges and portfolio rotation. You can see organic business, optimization of the portfolio and shockingly an interest rate benefit because recall that we actually follow SOFR not market-based SOFR for many of our floaters on a year-on-year basis from the rebased up 14% year-over-year. Doesn't make it any less satisfying or any more satisfying that we really rang the bell in 2023. And so the growth from '23 to '24 reported more anemic. What do we think goes forward? Essentially more of the same. We told you at our last investor day that we would reach three billion in 2026. I assure you we will be well above three billion in 2026. And that line will continue to be above our projection line from our last investor day. Will it be a straight line? I don't think so. I think it will have stair steps and it will reflect us risking and de-risking the portfolio to do good things as principal. One of the things that we also need to explain the ecosystem in which we participate is actually growing much faster than our S sur. This is a choice. If we want to grow faster, we can retain more business anytime we want. If we want to grow slower, we can give more business within
We have a range to ADIP anytime we want. Given the choice and given how much capital Athena will produce, we have a lot of levers at our disposal to figure out where on that 10% growth line above or below we want to be. But it all begins and ends with we're in a growing market for retirees. And we have all five attributes of success which none of our competitors have at any size and scale. In short, just like last investor day, the team here is incredibly confident that we will deliver the goods on average 20% growth in our fee related business, on average 10% growth in our spread related business and nearly 21 billion of capital generation. The drivers are everything we've done over the past three years in terms of the foundation that we've built. They will continue to grow. The accelerated growth, think replacement, third party credit, equity, global wealth, replacement. We're not done there. I believe that at the end of the day, private will win over public. That doesn't mean replace public. It just grows faster. Private will win over banks. Again, they won't replace banks, just grow faster. We are a small asset manager with vast opportunities around us. And for us, the limitations are not the business to do. Particularly in the asset management business, this is a choice of what to do and what not to do. Hopefully today, you'll take away what we've chosen to focus on and how we're going to build the plan. As investors, I also step back and think about where this is going. The financials were 2.3 trillion in 2014. They're 3.4 trillion today. All of you have recognized much of what I've said. Our group has gone from 4% to 12% of the total capitalization and the capitalization of our indices of our companies and our index have grown five times. I believe this trend will continue for all the reasons that I've suggested. Massive market. I think we're the best position for the tailwind. I hope the plan is clear. I know it's clear internally. Finally, I'll come back to culture. One of the things I like to say in the business, we get to do this. We really do have a really good time doing what we do. And if you come in too many days in a row and you don't feel this way, it's time for you to do something else at Apollo. Thank you.
Good morning. I'm Jim Zelter and welcome again for those who we've not met. So following Mark, we travel a lot at Apollo, just go to a lot of meetings and everybody when you walk in, they say, 'What is your crystal ball? You see so much. You cover so much of the marketplace. What's going on day-to-day?' And we can either talk about the macro or bring Torsson in, but what really happens is we really end up talking about market structure and we talk about origination. So it was very clear a few years ago where we were going with origination and today I'm going to take you on a journey of the rest of where that crystal ball tells us the origination and the world of alternatives is going. We are contrarian investors. We think about the world a bit differently. So it's not a surprise if the world is focused on capital formation AUM. We turn that upside down. We have a different north star as Mark talked about and clearly in our view origination is the lifeblood of the business and with that is really the capacity to originate is our north star day in and day out and we're purposely built to create and to lead the industry in that regard. So let me take you on a tour. We sit here today with capital needs that are unprecedented. We talked about what's going on in energy power and digital infrastructure. Dramatic IG needs across the world and power alone to keep us busy for a decade. On the right hand side, you see a variety of things happening in the cyclical nature of the non-IG market. But certainly the scale of the left hand side is what really drives us and the scale is more important than any one detail. And we've actually seen this movie before. If you go back almost a hundred years ago, the advent of the early 1900s with railroads, capital needs of utilities, the capital needs were long dated at that point in time. And if you go back in history, the insurance companies and the balance sheets of the insurance companies of Equitable, of New York Life, they were the primary players and providers of capital at that point in time. They played a critical role at that point in time about the growth of America. The next stage 1990 to 2020, the period of great globalization in the markets, massive deregulation, lower rates around the world, the capital markets and the banks played a critical role. And actually when you think back what's going on today, the end of Glass-Steagall in '98 was the convergent of origination and advice and the advisor and originator coming together. That set the stage for that great term one-stop shopping. And that was a period of time that certainly as I said before the banks and the capital markets grew dramatically. So as we sit here today, as we confront the needs of what the world needs today in terms of this secular capex or global industrial renaissance, the open question is who is going to finance it. It's a huge open question and you don't have to ask us, but actually ask some of these companies in the investment grade universe because they're asking themselves the same question day in and day out. At the same time, this globalization of the financial markets, a lot of big powerful trends, three that I'll talk about this morning. The evolution of market structure, you know, we think about ETFs, you think about daily liquidity, you think about the single manager hedge fund business to the multi-manager, really dramatic change in how the markets operate. The second is the changing and evolving environment of the banking system. Financial regulation on all the continents and as Mark talked about the massive transition of human capital from the sell side to the buy side. The bottom line of all these trends great for investors, great for liquidity, great for transparency in a very very narrow portion of the market and there was a great benefit to investors but there was unintended consequence. The unintended consequence is you can borrow as much as you want in a very very short duration. Ask Mars. They just borrowed 34 billion in a 364 facility. The reality is this migration to short-term capital has flooded the market and it leaves a massive unintended consequence for capital formation and capital raising. So with this paradigm shifting, it's obvious to us in our crystal ball that private capital is going to play a critical pivotal role. It's all about having the long-term capital, having the unlevered capital, having the deep client relationships. And if you put this all together, in our view, Apollo and Athena are the partner of choice. We have the flexibility on term and structure. We have the ability to interact as a solution provider and certainly that combination of breadth of capital as well as that principal mindset that's the solutions approach that really drives our business and is the differentiating factor which we're going to talk about. So let me talk to you a little bit about where I've been. I've been at Apollo almost 20 years. When I got to Apollo, the traditional way, it was really about the primary or secondary call. What could you do to make sure that Goldman, JP and the various institutions made you a prioritization and that was a traditional manner to source and we saw where the industry was going and we have built a special machine that you'll see is irreplaceable. The first thing and Mark touched upon it so I'll go quickly, it's our origination platforms. Every day these 4,000 people coming in generating senior secured risk at spreads 2, 3, 400 over the comparable treasury or the comparable investment grade. They do it every day. They have great insight wheels with fleet leasing with PK on the aviation side. You see their names, Midcap, Reading Ridge. And again, we spent a decade building this. We spent 8 billion of capital. We built some, we bought some, we grew some. But for many of our peers, this is where origination starts and stops. And many have tried to follow. We see from investor day presentations the banging of the drum about we now have these platforms. But for Apollo, it's really just the beginning. What we've done over the last several years, we've brought this toolbox, this integrated solutions approach to create great investment grade, private investment grade returns of plus 200 to 300 over comparables. You've seen the names, don't need to replicate them, but this is in the early stage and we've taken an open architecture view of this. At the same time, we've done the same thing in the sponsor universe, bringing an open architecture to sponsors of all of our products, not sourced by a fund or a narrow team, but by the breadth of our platform. And this is when you come in, you'll see that not every transaction where it starts is very different than it ends. If you talk to the management team of any of our investment grade companies, they had a need. They didn't know how they were going to solve it and through our process and people which I'll talk about they've ended up at a very very creative thoughtful scale solution. This is a massive stark contrast to others who have bespoke platforms that bespoke products and serving one product at a time to a group of clients. The final piece is the open architecture with banks and our clients. This is very important. This mirrors what was going on with Glass-Steagall years ago. This open architecture and BNP in the asset-based business and Citi and direct origination. These are landmark transactions that will be replicated but we are certainly out first. At the same time, what we've done with our clients in open architecture with Mubatala and AIA and AMCO and BCI, they are now partners with us in critical parts of our business to originate and scale and build our third party business up. And where we sit here today, this is the decade of work, massive tuition. But what is clear is Apollo now is the must call if you are a CFO around the globe with a capital need. If there's one slide to remember of the presentation today, it's this slide. We believe this is our Mona Lisa. It's irreplaceable. Others will try to create it. They'll try to hire small teams. But we have set the stage for the evolution of our industry. You know, Intel's critical because you see all the numbers on the right hand side. The last investor day we talked about Hertz and the numbers are important in terms of the years of dialogue, the number of teams, the amount of people that touch this. But really what we're really talking about here is the breadth and depth of our business is really incomparable. We're the envy of our industry right now. But this is what Mark used this term principal. We operate as a principal with our business. We operate as a principal with Athene. And we operate as a principal when it comes to origination. And this is what a principal originator does. And this is our vision of how it's all come together because of our open architecture, our integrated platform, the five wheels of success and origination. And again, it brings together asset management, origination as a principal adviser. That's a killer combination and a killer app as we think about the objective and challenges ahead. Another benefit of owning origination, one of the most popular investments out there today, and we are an active player in it, is the concept of synthetic risk transfers. It's simply how a bank takes a variety of their loans, a 100 loans at a time, packages them in a structure, and sells the bottom piece to a sophisticated investor like us. And they are interesting, but the reality is you don't have any control. You're not fully aligned. And there are some counterparty issues, but this is where banks are turning their attention to reduce RWAs and we do pivot and we participate in this. But in owning origination with what we did with Atlas, it turns this whole equation upside down. We put that collateral together. We make the 100 loans. We have full control, full alignment. There's no counterparty issues and we can customize that bespoke structure. So time and time again, it's the ability to go from a retail buyer where your only differentiation is how much money you're willing to spend is the marginal buyer versus owning origination and scale across the platform that we've done. It takes a great concept and really alters the risk-reward. As we transition from origination to the clients, this unified front end, it really is a product-driven comparison that we feel that we have been able to lead with these capital formation pillars. Clients are embracing this. As you see on the left hand side, we've been very clear and John will talk about how we've organized our business and really in our perspective, the ability to organize our business this way. The pathway is very clear for a broad solution in the public and private markets, but clearly fixed income replacement is a massive focus. David and Matt will talk about the equity ecosystem and how we've organized our pillars. And certainly in due course in due time equity replacement will be a target which we will make sure that we've committed the resources and are paving the path for that to succeed in the future. But bleeding from the front with the broadest base of capital, the flexibility, it allows us to be solutions-oriented than really trying to tie our narrow product into a client which really doesn't work over a long period of time. Why do you want to be our partner? Why do you want to be a shareholder? Because we control our destiny. If our vision is right, it's not just about AUM. It's about origination. We have led the way to make sure that we control our destiny in terms of the best way to achieve our vision. We've created a moat with scale, with capital, and with talent. And as you can see, an originated transaction touches every part of our financials. First and foremost, excess return to us and our balance sheet with Athene, but also to our third party clients. Obviously, what it does to Athena and ADIP in terms of that spread and then the third party syndication between FR, S, ACS fees, and certainly our overall principal promote. It touches every part and it's a very logical approach to our business and this is why you want to be our partner. So as I think ahead and I think about our crystal ball, we clearly when we came up here four, three, four years ago, we had a vision of where we wanted to take the business. We've executed it, but our crystal ball is actually very clear. Last investor day, we targeted 150 billion in origination. This year will come in 160, 165 plus and 275 is clearly in our target for the future. So that is our story on origination. We are leading the pack. It's irreplaceable. And with that, I'll pass it along to John to talk about the credit business.
23 million people played tennis last year. How many do you think you play? How many people do you think played pickleball? A sport I hadn't even heard of 5 years ago. 36 million people played pickleball last year. And I attended the Central Park Major League Pickleball Tournament two weeks ago. And I'm looking around, sold out, and I'm like, how did this possibly happen so quickly? And you looked around and it was just a little bit of change, a little bit more dynamic, a little bit just adaptability around the sport, a little quicker, also solved a little bit of retirement problems, but it just made it so accessible. It was exactly what the market needed. Four years ago, we did a transaction for InBev. It was a $6.4 billion transaction for an S&P 500 company. And it was a private investment grade transaction that Apollo led. At the time, no one thought of us really as an investment grade lender, let alone a very large retirement service business. And I received calls from every single market participant saying, 'Nice job on InBev, last time you're going to be doing an investment grade company financing, I suspect.' And they kind of blamed COVID. And they blamed other things. But the reality of that transaction, you saw all of the great things about Apollo. You saw the creativity, you saw the duration of our capital, the matching of our ability to actually meet with a corporate and actually design something that fit their needs. And you saw what was going on in the market backdrop with the capital. It was a great outcome both for our investors but also for the client and that led to a hundred billion dollars of private IG in the last four years obviously led with Intel but it's our capital it's our DNA it's how we grew up in the business it's something that I don't think you can create again and it's what makes us so unique and it's exactly what the market needed. Traditional credit managers, you know, you can see the top of the page, loan, high yield, IG, emerging. We've been doing this, the market's been doing this for decades. When we walk in every day, we come in with a very principal mindset, but obviously an asset management mindset. We want to take the single best risk-reward every day. How do you do that? You do that by having lots of options. We call it origination, but you can see on the bottom of the page, I am fortunate enough to sit in a seat that we have teams that have been doing this on behalf of our own balance sheet for 15 years, sourcing balance sheet and understanding a framework for risk-reward that fits our balance sheet and fits our asset management balance sheet that enables us to make the best decisions every day and allows us to take the most appropriate risk. If you don't have all those options, you really can't do it. And in the future, where we're going, all the things that Mark and Jim are talking about, you have to be able to make the best decision on behalf of your own balance sheet, but also on behalf of clients' balance sheets, because that's going to result in the best risk-adjusted returns over time. And I think we've built all the capabilities to do that and actually executed that in a way in the way that we've built our business. So, we manage 562 billion. Everyone knows we are one of the largest, we are the largest alternative manager in the credit business today. What's unique about us is over half our capital is our own balance sheet. We're 365 billion in corporate, just under 200 billion in asset backed and we have all the products on the bottom of the page. You'll see here, but we're broadly diversified. What's unique about us is that many of the businesses we start, we don't start till we've invested hundreds of billions of dollars on our own balance sheet. We don't just launch products. In asset back, we launched a product 10, 15 years after investing on our own balance sheet, hundreds of billions of dollars with tons of data. We work it all out on our own balance sheet. We understand what works and doesn't work. And with that, I think that's the most exciting part of our story. And I'll go through that in a bit more detail, but very diversified across all the different asset categories. I'd focus on the right side of the page here. One thing that is unlike anyone else and what I think exactly what the market needs is we lead in debt origination 151 billion in the light blue, but we also are a top five market participant in the secondary market with 134 billion of transactions. Every one of our competitors either is a leader in the light blue and nowhere in the orange or a leader in the orange and nothing in the light blue. We're both. So we can go between markets at any time. And you really saw this during 2020 private market shut down. We were the largest market participant in secondary volumes and we were able to achieve earn great risk-adjusted returns during that time period where if you only had a private mindset and it's hard to describe but it's a very DNA focused mindset around risk-reward and primary and secondary and not looking at things as private and public. It's looking at things just as credit as just open architecture. And we touch every single sponsor. We have 4,000 originators. I joined here over 12 years ago and we had less than 50 and we touch every one of these companies with 3,900 companies covered today. So when we go into a company, when we go into Intel, we're already one of their largest lenders. It's not like we go in without any understanding. We are talking to the company every quarter whether or not we're doing a private IG transaction or we own that debt in some part of the capital structure. Again I mentioned this earlier but we have the widest funnel. We have the ability to make the single best decisions every single day. It's not about private and public. It's not about corporate or asset back. It's about what is earning relative to the risk, relative to the shape of the risk. What is going to earn the best risk-adjusted return? And it sounds kind of obvious. I know it sounds kind of obvious. Of course, let's take the best risk-adjusted return. But the entire industry mostly, partly because I'd say investors are set up this way. It's very narrow, very siloed. You have a private business, you have a public business, you have an asset back business, you have a corporate business. We have none of that. We just think people are going to come to us and say, 'Here's a credit allocation team. Do the best you can, very similar to what you do for your own balance sheet.' And you've seen some very large sovereigns set themselves up this way. And I think you're going to continue to see a framework where people change the way they look at the markets. So Mark mentioned this a little bit but we've done a fantastic job of servicing the green really in our equity and high returning franchises. The industry has serviced the green in a way that has achieved great risk-adjusted returns for people. The dark blue has been the fixed income business has effectively been a liquidity provider to the markets. It's been zero innovation. The people who work in credit are have probably if you ask who sits in the fixed income business, it's probably someone who you wouldn't think as the innovator of any firm. And what I love about our firm is that in our credit business, we've been trying to innovate for the last 15 years. In our origination business, we've tried to innovate in the last 15 years. And I think in fixed income, you're going to see some of the most, you've seen it with Intel and some of the high-grade, but you'll see some of the most innovation in product design, in origination, in the way that you invest capital, the people that are investing that capital. It's going to be way more interesting of a business. It's going to require super high touch in terms of how you originate assets. It's just different than anything that you'll see. And it's a huge opportunity for us given our balance sheet and given where I think all the innovation is going to come. So this is just a small subsegment of what we're doing. What's unique again about us is we own all of the investment grade on balance sheet today. So if we want to create a product that is 100% originated by Apollo but also monthly liquidity we can do that because we have demands for that product. So you see in our IG business versus the benchmark you can buy our total return investment grade fund. It's effectively 100% originated assets by us. You have to go from daily to monthly liquidity but you pick up close to 200 basis points of yield. And we think we're going to create replacement product after replacement product. It'll be investment grade. It'll be double B. You can see our single B products, but the investment grade part of the world where we already own several hundred billion of the risk. We're going to share in some of that risk and owning a vertical slice in a fund format and we're going to provide monthly liquidity and we're going to be obvious as Mark mentioned provide more liquidity around some of these assets. This is going to be completely unique. It's going to take a little bit of time, but when people realize it, they'll realize that taking a going from daily to monthly for 200 basis points of yield is an extreme outperformance over a 10 and 20 year period and will be solving a lot of the retirement problems we have today in the system. 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. We built our business as everybody was taking money out of fixed income. We've had a ton of tailwinds and Mark talked about them at length. This was not exactly one of the tailwinds. This forced us to innovate in a way we it really bolstered our liability business. It really forced us to be super creative around how to generate returns and for the last two years now and I think on a go forward basis you're going to see a much more balanced approach. The last 15 years was the anomaly in terms of asset allocation. There are many of our investors literally do not have a credit allocation team because they got completely out of the business. They're just starting to build the business back up and many of our projections do not anticipate any sort of tailwind in terms of just asset allocation which I think will further the acceleration of our business. Again the markets we touch are very large. The direct lending business the sub-IG market which we call UC has really penetrated with private assets in the last decade. Since 2010, we've gone from effectively zero of the three trillion to one trillion penetrated. But again, IG is a nine trillion dollar market. Barely penetrated. Huge TAM for us over the next 10 years. And in terms of product design, again, direct lending, we've designed incredible products. The industry has done a great job servicing the sub-investment grade space. It's penetrated 1.7 trillion over the $3 trillion addressable market. But in asset back, no one's really done it. It's very small. We think it's one of the biggest drivers of our business over the next decade. We feel like we've invested the capital through our 8 billion in platform acquisition, our 4,000 originators, managing those assets on our balance sheet for 15 years already and having the same team in place. Again, I think this will be our market-leading product and you've already seen that with the design of our asset back business and you'll soon see a wealth product. Since our investor day, you can see we've grown by one and a half times in non-third party and three times in third party. In the future, I suspect these numbers to be significantly higher in terms of growth. The next five years we could see north of three to five times in terms of our growth over the next five years on the third party AUM and this is happening in other businesses we didn't really, we didn't have a non-traded BDC, we didn't have, we traditionally did most of our direct lending in specialty finance company which has been fantastically successful but we launched a non-traded BDC three years ago we targeted first lien top of the capital structure and senior here. We've raised 12 billion in 3 years and this will be one of the largest businesses at Apollo in the next 3 to 5 years. And 5 years ago, people told us that going over two times in 5 years from 248 to 562 was very ambitious. As Mark likes to say, we believed in the numbers and we achieved the numbers, but we think we'll go over two times in the next 5 years. Again, both a combination of everything going on in Athena, a full acceleration of our third party business if I could tell you the amount of investors that still have yet to penetrate globally both in wealth, Asia, Europe, Europe could be one of the largest fastest growing markets for us in the next 5 years and you can see it here many people look at our growth and they'll always say okay it's driven by a theme not third party. You're seeing we grew third party revenues in the last 5 years by 20%. The next 5 years we anticipate third party revenues to grow by 25. We are just starting in terms of penetrating many of the institutional and wealth markets. And we're pretty excited about new markets particularly fixed income replacement. So the private and public markets they're clearly converging. We've made a bet that we've set up our business to actually win when that happens. Many people in the industry have yet to get there. I think it's completely clear that that's where it's going. We think we're ready to win. And you don't have to really believe us. Think about it's pretty much like pickleball. It's kind of what the market needs. So, thank you.
All right, good morning everyone. I'm David Samber, co-head of private equity along with my partner Matt Neword. We're happy to talk to you about all the exciting growth opportunities in our equity business. Before we start, I just want to say that Invited Clubs, a Fund 9 portfolio company, is the largest operator of pickleball courts in the United States of America. So, it shows you the fantastic synergy of our business. I'd like to start off challenging convention. So, challenging convention is one of our corporate values here at Apollo. I'd like to challenge one right now. So, the firm's entering its 35th year of existence. We got our start in 1990 and we got started with a very simple idea that permeates almost every one of our businesses. Mark talked a lot about culture. This is the bedrock of our investing culture. It's this notion of flexibility. This notion of capital preservation and downside protection. This notion of leaning in when other people lean out and being contrarian. And we rode that unique investing culture to a preeminent position in our private equity business and now across our credit business. And we built 135 billion of assets under management in our equity business, developing products with this investment culture in mind and penetrating the alternatives buckets of capital allocators over the last 35 years. And our 39% growth, 24% net compounded return since inception have really been the rocket fuel that's driven our business. And we think there's a lot of exciting growth left to be yet to be had by consolidating our share in what is still a growing market. But I'll submit to you that misses the much bigger opportunity. And the much bigger opportunity is the big picture that Matt and I are so excited to talk to you about today. So, we have a very exciting and compelling growth story for our equity business. It starts with our corporate private equity business. You're going to hear a little bit more about this later, but yet again, 2022 marked that moment in time, that pivotal moment in the market when our patience and persistence was rewarded yet again. Matt and I chuckled a lot in 2020 and 2021 when all the crazy stuff was going on, cryptocurrencies, memes, NFTs, are we stupid by not following the herd? And then '22 happened and we said no, we're not stupid for not following the herd. And investors appreciate our consistency. That's the bedrock of our business. That's what drives our strong returns in any market environment. And we continue to believe that we will take share in our growing private equity business. On top of that bedrock foundation, we have four really exciting businesses that are hitting that inflection point. We're going to see massive growth over the next 5 years. Two of them are in what we call hybrid and equity replacement. These are the products that are going to start us on our journey and we already are market leaders to penetrate individual investor portfolios and institutional investor portfolios that are simply put looking for better products than what exist in the private and public markets. And then these other two products are very closely aligned with big mega trends that Apollo's focused on, our climate and infrastructure business and our secondaries business which falls under the umbrella of the convergence of public and private and providing liquidity to otherwise illiquid markets. And then on top of that, we've got really compelling long-term what we call upside drivers, namely our equity replacement mission, and it is a mission. And then penetrating retirement markets where we already have products in our product suite that are now being allocated into 401(k) plans in America. All right, this is going to be a fun one. So on the left hand side of this page, this shows you from 2013 to 2023 how the private equity industry performed. What were the sources of value creation? And even though from 2013 to 2022 the industry had very strong returns, I would argue the quality of those returns was very poor. The mission of our business I think we think is supposed to be superior risk-adjusted returns, excess returns per unit of risk. You have to be able to do that in all market environments. If you look at the industry, 50% of returns over the decade that we just experienced were driven by multiple expansion. Tremendous historical amounts of multiple expansion and the other 50% was driven by topline growth. Almost no return was generated by operational improvement or alpha. That is not a high quality return. That's not a sustainable repeatable investment model. You look at our business to the right of that, 85% of our returns were driven by repeatable building blocks that we could access in any market environment. Indeed, we actually produce better returns when the market is poor. This is the bedrock. This is this investing culture that I'm talking about. I think the industry has to look itself in the mirror and really ask itself and indeed our clients are asking us what's the purpose of investing in private equity if it's just levered beta on steroids. We don't want to be levered beta on steroids. If you look at our returns, if you look at all of our investing products, it's all about simple, repeatable processes that will allow us to generate superior risk-adjusted returns in any market environment. Matt.
Great. Thank you. So, we are incredibly proud of our private equity business. For 35 years, we have maintained our discipline and used our creativity to generate excess returns. Private equity continues to be an important driver of our business. Not just in the financial sense, but in all the ways that the private equity DNA permeates the broader Apollo ecosystem. Private equity has been an incubator of talent and many of our senior leaders started their careers in the private equity business and we are using the capabilities that we've honed in PE to grow our entire platform and build on that history of innovation. And we are particularly proud of our performance in our two most recent private equity funds, funds 9 and 10. So, as David alluded to, when the rest of the industry was paying 11 or 12 times cash flow for assets, we were paying six or seven and we were using less debt and we were executing our value creation plans. And so, as a result, we have massively outperformed. Fund 9's IRR is currently 29%. Fund 10's IRR is currently 47%. And Fund 9 has also returned $14 billion of capital so far. So DPI, which is a measure of realizations for the industry, Fund 9's DPI is three times the industry average and Fund 10 has gone off to a very good start as well. All of that is to say that we are really well positioned for Fund 11. So for Fund 10, we've currently deployed about half the fund. We're two years in, so we're right on pace. And I would expect us to come back for Fund 11 late next year. And based upon our performance and all the positive receptivity we've received, we would expect Fund 11 to be larger than Fund 10. And so that is the foundation, continued execution in funds 9 and 10 and positioning ourselves for a very successful Fund 11 fundraiser. Building on that foundation, we've positioned ourselves for growth in huge markets, infrastructure, climate, secondaries. There is a generational need for capital, which we've been talking about this morning. And our platform is incredibly well positioned to capitalize on that opportunity because of our scale of capital, our creativity, our ability to play up and down the capital structure. We have raised funds in each one of these scaling strategies and in some cases we've already raised multiple vintages. Performance is strong and we currently have $20 billion in assets under management across these strategies and we would expect these businesses to be two to three times their size over the next couple of years. And even with that level of growth, we would just be scratching the surface relative to the hundred trillion dollar market opportunity ahead of us. And the other market opportunity that we're very very excited about is hybrid. So as you heard us talk about this morning, for investors who are beholden to benchmarks, equity allocators have been looking for 20% plus rates of return. And while that worked in a low rate environment, chasing those returns, being forced to try and chase those returns today doesn't make sense because debt is more expensive and it limits your flexibility. You have less downside protection. And so we see a sweet spot in less levered equity and structured equity where you're still generating mid-teens rates of return, but you're doing that with much more downside protection, much more flexibility. It's the best risk-reward we see and that is the hybrid opportunity and sophisticated investors, those who are not beholden to benchmarks want access to this because they also recognize it's the best risk-reward. The supply demand dynamics for hybrid are incredibly favorable demand because there's enormous demand for the flexibility that hybrid offers and a historical lack of supply or capital formation because hybrid hasn't fit neatly into either credit or equity buckets. We are also uniquely positioned to capitalize on this hybrid opportunity. We've built our entire business on being unconstrained, thinking about intrinsic value, pivoting to where we see the best risk-reward at any one time. And we already have a massive head start. $70 billion in assets under management to hybrid related strategies including our hybrid value funds where we're getting ready to launch hybrid value fund 3, hybrid SMAs where we've already raised several billion dollars in hybrid SMAs and then the growth of AAA which is already one of the largest funds across our entire platform.
So, as Matt explained, we define hybrid as superior risk-adjusted returns in equity, less levered equity, structured equity, and it's how we've invested our own balance sheet for the last decade. We made the decision to open up our alternatives balance sheet, which we call Apollo Aligned Alternatives or AAA, to the market just two years ago. And we gave investors both institutional investors and individual investors access to the very way we invest our own capital in alternatives. And the results have been fantastic. You could see that this is already now the second largest fund at our firm. And we think very soon it'll be the largest and there's a lot more to go. And the reason is very simple. We're offering something unique, something special that the market needs and they're just not getting. This is a product that we've developed that's got a fantastic track record investing in lower risk, less volatile equities. It's produced S&P plus rates of return over the last decade with a fraction of the volatility. There's a product that's had one down quarter in the last decade. A tremendous track record that now is available to qualified purchasers and to institutions. And they're coming in and they're investing alongside of us. And this and the hybrid structure is the bedrock of what we're talking about with hybrid and equity replacement. And the real opportunity is this. If you think back 35 years ago to when our business got started, you know, it wasn't even an industry. It wasn't even a business. It was a fund. And a lot of pioneer work was done by some folks that are in this room to go out and to get people excited, get institutions excited about investing in alternatives. And they put those allocations, as Mark said, in a very small bucket that has grown over time. And our penetration of that bucket has fueled our growth and the industry's growth. But our market opportunity is multiples of that going forward. And that really is what our plan is going to deliver. If you think about the opportunity to penetrate with these products and other products that we're working on, the equity bucket, which I would argue is the bucket that people are least satisfied with, where they've generated the least alpha, the least excess returns, the market opportunity for the next 35 years is going to make the last 35 years look like a tiny dot in that solar system that we're talking about.
And I know there's some public equity folks in the room, so I'm going to be careful not to offend, but most people that we talk to, it's not a hard argument to win when we talk about how the public equity markets are simply put broken, right? You've got almost 60% of public equity markets being indexed. You've seen active management fail to perform over the last 20 years, as Marc said, not because people suddenly didn't get good at their jobs because, simply put, the structure of markets have changed and made doing that job so fundamentally difficult. But the products haven't changed. The products haven't changed yet. Everyone that we talk to recognizes a need for retirees, for pensions, for endowments to get diversified equity exposure and they're simply put not getting it. They're investing in seven companies that are a third of the index and they're not getting the exposure they want. In defined contribution, we now are live with AAA as of August with one of our wealth partners. We've got a long pipeline of opportunities after that. This is going to be the product that allows us to provide better income and better capital appreciation for retirees in America. That is a multi-trillion dollar opportunity that we are uniquely well suited to penetrate.
So to summarize, we have a high growth equity business. 5 years ago, we had 84 billion in assets under management. Today, that's 135. And we would expect the business to double again over the next 5 years. So not only do we have a growing business, but the rate of growth is accelerating as well. And this is high margin AUM which obviously drives returns to shareholders. So the road map is simple. Continue execution in funds 9 and 10. Raise fund 11. That's the foundation. Continue to scale in our scaling strategies across climate, infra, secondaries, and then execute and capture the entire hybrid opportunity in each of those strategies. We have funds we're raising new funds. Those funds are going to get larger in subsequent vintages. So the seeds have already been planted. You already have that built-in growth and that is going to provide the vast majority of the growth that we see over the next couple of years. And then the longer-term upside to that next step function increase in equity replacement, retirement, and some of the new products that David talked about. So, we're going to continue to use all of the capabilities that we've built over the last 35 years to action this and we have a lot of conviction in hitting our plan.
So to wrap up, David started by talking about today's perspective, but if we zoom out a little bit further and look at that longer term perspective, assets are going to continue to move to the private markets. We're positioned to capitalize on the big macro trends. We are aligned with our investors and we're going to use all of our capabilities and again build on that history of innovation. So thank you very much. And with that, we're going to introduce our partner, Olivia Wasnar. Thank you.
Good morning. I'm Olivia Wasnar and I run what we call sustainability and infrastructure at Apollo. So you've heard from some of my colleagues about this concept of the industrial renaissance and how it creates this massive opportunity for us to invest in sectors like infrastructure, power and utilities, digital, energy transition and real estate. The reality is the world is in a state of transformation. We're thinking differently about energy sources of clean energy, reliable energy, energy security. We're thinking differently about technology, about how we provide it, about how we consume it, about how we provide robust digital infrastructure.
The reality is the energy transition is still in early stages. If you think about it, the global energy systems were created over centuries and we're trying to transform them over a matter of decades. Meanwhile, our planet continues to expand. We've got population growth. We are changing the way we live, we work, we consume technology. At Apollo, today we have over 100 billion in real assets. But we look at these opportunities and we think in aggregate these opportunities create the opportunity for over a hundred trillion dollars over the next decade. It's massive.
And what I find fascinating is the fact that there is all this press on these topics and at the same time there's still a massive gap between the capital mobilized for these assets and what's been raised. So what differentiates Apollo and our ability to really scale in this area? So first of all, we have an integrated origination team across credit and equity. I can't overemphasize how important that is in terms of working with clients and looking at interesting deals. We have relationship-driven origination. You know, these are relationships we've been culturing over decades. We focus on downside protection. Purchase price always matters even in these high-risk sectors. We've got the right products really across the risk return spectrum and we've got a differentiated ability to scale and we'll talk about a couple of our products that let us do that.
So how and where have we been investing? The reality is we've put to work about 25 billion in next generation infrastructure over the last 5 years. We've been investing that in buckets of capital that are the right fit for our partners and for corporates. We're always looking to provide an attractive risk return for both our clients and an interesting partnership for our clients. We focus a lot on working with energy transition companies who are very established in this sector. But at the same time, we're also working with large corporates who've got their own goals. We think this brown to green or gray to green transition is a perfect fit for Apollo's capital.
To give you an example of a few of the deals we've done of late, so we partnered with Wolfspeed. Wolfspeed is a manufacturer of silicon carbide that's critical in the electrical vehicle value chain. We put together an investment grade capital solution for NextEra Energy to help finance their 1.7 gigawatt portfolio of renewable power. We finance multiple hyperscale data centers. We've done that through our real estate businesses and through our infrastructure businesses. We partnered with New Fortress Energy to spin out their fleet of LNG vessels into a new business we call Energos. And then there's Intel, which needs no introduction.
As we've been investing this 25 billion, we've also been looking at what are the right pools of capital to go after this opportunity. We want to invest in infrastructure, in climate, in the energy transition in a way that's authentic to Apollo. So over the last 24 months, we've launched four products to really go after this opportunity and try and figure out the best pockets of capital and the best risk return for our clients. And we've done it in areas where we've got deep expertise. So on the private equity side, we've launched ACT equity. On the infrastructure side, we've got a value added infrastructure fund. And we also have a core core plus infrastructure fund to go after the credit opportunity. In 2023, we launched at capital our flagship climate finance credit vehicle which essentially has the ability to finance across the entire capital structure. Our view is that the transition will be financed largely through private debt and structured equity and we wanted the right scaled flexible product to go after that. We committed our own capital. We partnered with several of our strategic partners and we've been tapping into the full Apollo ecosystem for sourcing and execution and really relying on the track record we've built over the last 5 years where we've deployed over $40 billion into climate finance. The flexibility and creativity of this vehicle will continue to allow us to invest in a differentiated way in these critical sectors.
We'd now like to show you a short video on our innovation capabilities.
People come to Apollo to innovate, to disrupt, to be part of changing the industry for the better. Three great examples of the ways in which we're innovating at the firm are our work with Atlas, our work in data and AI, and our pioneering leadership in market making.
With Atlas, we saw an opportunity to build the preeminent asset back finance solution for our clients.
Atlas SP is a finance company to finance companies. The biggest difference for Atlas versus other warehouse lending businesses is its ownership structure. Atlas is the only business that is owned outside of the banking space, which allows us to provide different types of products and solutions to our clients, including longer duration solutions, including solutions that provide term funding, and we've originated more than $50 billion of new warehouses. We have also completed over a 100 different securitization transactions in the market. Today Apollo and Atlas are considered the leaders in asset back finance.
We see an opportunity at the convergence of public markets and private markets bringing additional forms of liquidity that make it easier for a client to transition some of their asset base into private markets and increase exposure for the industry more broadly.
The liquid markets are becoming more liquid and we believe there's massive opportunity for us to lead that evolution. This white space in between illiquid and liquid credit and alternative assets is going to give us the ability to really create this marketplace, this environment. So we think investors are going to benefit in three big ways. One is access to new liquid products. Two is the ability to buy during dislocation and volatility so effectively originate new product. And three is the additional transparency around valuations.
With ChatGPT, we saw the fastest adoption of any technology in human history. We've began to look internally at our own strengths and within Apollo, we see a tremendous amount of data. Apollo has historically been known as a product innovation powerhouse. We've turned that capability to focus on our data assets and are creating some new, incredibly exciting data and analytic products. This not only creates leverage in our business but also sets us up for commercial optionality for high revenue data streams in the future.
Generative AI is unlocking the opportunity to really lean into the data assets that we've accumulated over the last 20 years. This is an incredibly exciting time at Apollo.
Innovation isn't just part of our strategy. It is our strategy. At Apollo, we're building the financial services firm of tomorrow.
What's extraordinary about working with Apollo and everybody that we've worked with at Apollo is this commitment to collaboration. Apollo like Mubadala is characterized not only by the strength of its people but also the strength of its ideals and values.
Probably the thing that has impressed me the most is the degree to which the leadership team feels cohesive. I've known people at Apollo for three decades and they're uniformly very strong, very straight, very commercial and in my experience completely honest. Apollo distinguishes itself through its agility and innovative approach to structuring deals. While many firms can provide capital, Apollo goes a step further by offering tailor-made solutions that are unique to our specific challenges. They think beyond the numbers, offering strategic insights that align with our vision and helping us navigate complexities in a way that few other firms can. Apollo distinguishes itself from its peers by consistently bringing fresh ideas and opportunities to us. Strategic alignment is also, I think, one of the key things that we value as part of our relationship. They think and act quickly. There's a proven track record of unique problem solving capabilities. At Apollo, there seems to be much more awareness of what other teams are doing and how to connect the dots, so to speak, across the platforms and bringing solutions to institutional investors.
Apollo creatively I thought said not only will we buy a significant portion of this debt but we will underwrite the whole thing through our insurance partner Athene. It was a constant collaborative effort between my management team and the Apollo team. They work intimately with my team. You know, we talked on a regular basis and I talked to them as part of the Novolex family. I said, 'Now you're in our family. We're all in this together.' Apollo is among the most important and the most strategic partner that Mubadala has and that's built on not only an entrepreneurial mindset, but a deep understanding of Mubadala. I value the relationship with Apollo. Apollo has followed me throughout my career in roles big and small and has never ceased to be, you know, available to me and collaborative and inspirational.
I just can't say enough about how much we've enjoyed working with the people at Apollo. We learn from you every day. And you make us better. And it's only because of the people at Apollo.
Please welcome Scott Kleinman.
Okay. Well, welcome back and hopefully you enjoyed that video. Actually, if we can go back one slide. That video is actually a great example of what we do and how we connect with CIOs and our investors. And it's a good segue into the next section that we're going to be talking about, which is capital formation. So for the next half hour, you'll hear from me and the department heads of each of our capital formation segments really taking you through where we've been, where we're going and where we see the big opportunities. But I thought I would start with this slide that you've now seen a couple of times today. Right? You know, you hear us say often that an asset manager should not be constrained by how much capital they raise but actually by their capacity to originate, how many good assets they can invest in. But the corollary to that is that you can't ignore capital formation in a growing asset manager. It's been critical to continue to invest in this part of our business to be able to keep up with the scale and the aspirations of where we are taking our business. And equally as important as Marc alluded to earlier, it's not just raising capital, it's raising that capital in the right form at the right cost of capital. And this is something I think Apollo has done and understood better than just about anyone.
Okay, there we go. So, I wanted to just flag a couple of metrics from our last investor day. When we spoke last at investor day, we had a couple of key targets. Wealth, we had a $50 billion cumulative target over 5 years and happy to say we are well exceeding that. We will hit that target early. On the capital solution side, it was a $500 million revenue target by year five. We hit that in year two. And we'll be showing you some new targets as well. And institutionally, while we didn't put a specific number, we are well ahead of what the forecast that we embedded in those projections would show.
Here are some of the numbers. I mean, you can see the growth is just astounding. Right? On the wealth side, less than 5 years ago, we came from a standing start to where we are today. 11 billion raised in the LTM period. I'll show you shortly where that's headed. On the institutional side, as another example, 5 years ago, we were already one of the largest institutional players in the alt space and we've tripled our annual capital formation since then.
The important thing to understand is that our clients have fundamentally evolved and stratified and gotten more complex over the years, right? It wasn't too long ago where we were serving broadly defined institutional clients who basically wanted the same thing out of their alternatives investments. Today that's much more stratified on the institutional side whether it's consultants, third-party insurance, sovereign funds, pension funds, each of them are different, they need different things out of their investments and different things out of their partners. Same thing on the wealth side. We talk about a global wealth opportunity but that's really multiple markets. That's family office, that's ultra high net worth, that's high net worth, that's mass market. All of these things are different and need to be served in different ways with different products. And we talk about the future, you know, I'll start by saying the future is now. We are touching all the things you see here whether it's 401k, mass affluent, direct to consumer through long only partnerships. This is only evolving and getting more complex.
And as we think about that complexity, the way you serve these clients is also more complicated, right? Funds have always been a core part of what we do and will always be a core part of what we do. But you have to now be able to provide co-investments, co-underwrites, direct investments, strategic partnerships. You know, many of our partners and clients, they want deeper relationships, knowledge sharing, they want to co-create products with us. And only the largest folks like ourselves will be able to handle that complexity. You can see here it seems like every month we're developing a new type of partnership, a new relationship with a new client in a completely new way.
And why do we do all this? Right? It's about diversity of our capital base. Apollo has the most diverse capital base in the industry. In addition to what we've built out in wealth and institutional, obviously retirement creates such a stable and growing base of capital inflows on different cycles on different drivers than everything else you're typically used to. And nobody has the diversity that we have, right? This doesn't come for free. We've had to make massive investments to be able to achieve what I just showed you. Right? Since we talked last, we've added over 230 people in the capital formation area. We've built out a service center in Mumbai. We've built a digital marketing effort to be able to sell our products to our clients. This is a massive undertaking. Again, only going to be available to the largest firms.
So, just marching through each of these areas quickly, wealth, like I said, has been nothing short of amazing. You can see from a standing start 3 years ago, 11 billion in the LTM period. We're forecasting $30 billion average over the next 5 years. Now, that's a growing number. So, year five will be larger than the average. Today, this represents 25% of third party capital. But by year five we expect that to be 50% of third-party capital. Today we are a top three player in the global wealth market and our aspirations are even bigger. We want to be a top three player in every product that we offer if not a top two or top player.
On the retirement services side. You'll hear from Jim and Grant shortly, but again, it's well understood we are market leader in every channel we operate and we continue to push into new areas. Our Asia business is strong and growing. Defined contribution is the next frontier. But you'll hear more of that from Grant shortly.
Let's not forget our traditional alts business. Our traditional alts business to institutional clients, right? This is a big and growing market and alts continue to penetrate into overall asset allocations. We intend to get our fair share of that and then some as we continue to scale a number of the products that John, Matt, and David talked about earlier.
And lastly, of course, the replacement opportunity, the convergence of first fixed income and then equity, a $50 trillion opportunity. This is massive and no one is better suited to start penetrating this than Apollo and we are just scratching the surface of this. So this will provide additional growth over the next decade plus.
ACS a fourth multiplier. Right? You think of ACS as a revenue line item and of course it is a revenue line item. It's a really important revenue line item to us. But for me as a manager, as a leader, as a client relationship person, this is a key cog in the flywheel of being able to bring on new clients, start them off as transactional partners, and then grow into whether SMAs or fund investors, etc. So an incredibly important part of the client relationship process.
So closing out on the numbers you can see here 69 billion on average over the last 5 years of capital formation 125 billion today average over the next 5 years 150 billion scaling over time. So year five again will be higher than that number. And these are the takeaways. A billion dollars of ACS revenue by year five, $150 billion of cumulative capital raise in our global wealth business, and $150 billion per year on average from our total capital formation. So, with that, I'll turn it over to Chris. Thanks.
Good morning. My name is Chris McIntyre. This is our first time together. I joined earlier this year and I am the institutional client guy, which means it's my job to bring a little bit energy into the room. I think I have maybe the best job at Apollo in a way because I get to represent our amazing platform. And just by way of background and a little bit of a confession, I'm an asset management geek. I spent the last 20 years working in this space, working on the space. Over the last 5 years, I was the head of asset management in North America for the Boston Consulting Group, and my literal job was to go find winning business models. I think you can see where I'm going with this one. So, I think I found home. And I for one feel very privileged to get to do this.
So, let's talk with some numbers. If I have one message for you, it's the number two. The numbers on this slide. We're going to double growth in our segment of the business over the next 5 years. That's a choice. As we've talked about, we are not constrained by capital formation. We are only constrained by our origin, our ability to originate great assets. We're going to do that for, I think, three very straightforward, compelling reasons. One, we're going to be talking about doubling our addressable market. You've heard about this today where incumbents and alternatives will continue to win there. We're also going to invent a whole new space over the course of this next 5 years called replacement. We'll talk more about that. We have two big growth engines, one on the alternative side, one on the replacement side. We'll talk about that. It's a spring-loaded portfolio. We'll talk about in just a minute. And then we've already doubled down on our capabilities. We saw this moment coming. So, we've pre-built the team. Some of the stats that Scott shared a few moments ago about the team, the capabilities that we started to build to serve our clients to win these kinds of outcomes. But I have to say this capital formation is really I like to call it an earned outcome. It's not a right. It's an earned outcome. And it's an earned outcome of everything you've heard up to this moment about the uniqueness of the Apollo platform. It's proprietary origination. You heard the number 4,000 people. Go look up the headcount of most of our peers. This is just origination, right? It's product innovation, not just any products. We're not a product supermarket. We choose very carefully where to offer products to our clients because we are deeply aligned with them. We have our own balance sheet. When we win, they win. When they lose, we lose. So, our interests are highly aligned. That sets us up for great client relationships and allows us to achieve, we think, these kinds of numbers.
So I mentioned I'm an asset management wonk. I think it's important to tell the story of why we are all in this room today at this moment in time actually and it goes back a hundred years. So this is the history in illustrative terms of the institutional segment. Started off in the early days. The foundations basically you could achieve your goal the 8% by honing fixed income. It's all you needed to do, right? That was the era of return at no risk. It's a good time. Didn't last very long. Then we go through the 80s. Rates go up, rates start to come down, the need for equity exposure emerges. Public equity markets develop. All of a sudden, the 60/40, which we've all come to know and love, emerges, right? That was the era of return with some risk, mostly equity risk, as it turns out. What we've just lived through and most of what we've talked about today is a very unique period which I like to call return at any risk.
Almost by structure, all of our institutional clients who have basically that same 8% goal had to stretch. Why do they have to stretch? Because of the picture on the bottom, the risk-free rate, which I like to say risk-free is destiny in institutional investing, hit the floor mechanically, not by choice. Mechanically they had to go up and to the right. Alternatives 0 to 20 in 20 years. It was a necessity. What also happened? We printed money passive. Why did that do so well? The period between last year and the 10 years prior was one of the best 10-year periods in public market recorded history. You had to do nothing. It was great. I mean, it was great for savers. It's tough on the industry.
So, as we've talked about extensively, we're no longer in that world. That world ended a couple years ago when rates went back up, back up to normal ranges, ranges we've seen in our lifetime. We think that is going to mark the beginning of what we call a fourth evolution or revolution in the institutional marketplace. I like to call it the fourth replacement. As you can see, each of these has been a replacement of an existing technology with new technology. Here we think we're going to start to think about not return at any risk, but importantly, as you've heard today, return per unit of risk. That's the new mantra, right? Every single CIO we speak to is re-examining fundamentally where they want to earn their return and where best to take that risk. The bar for the whole industry has gone up big time. We think we're well positioned to take advantage of that. That's point one. Point two, the idea of liquidity is being fundamentally reexamined. Marc talked about it. Investment grade bonds, we can already see it. You already see it a little bit in private equity. There's a thing called the secondary market. Where did that come from? Right? We're also going to start to fundamentally revisit this idea of public being safe and private being risky. We think this is basically the definition and the future of the asset management industry for the next 20 years. Obviously, we're excited about it and we'll talk more about why.
So, let's talk numbers. We've got a lot of analytical folks in the room. What does this mean for our industry? If you look at the institutional only asset management industry and alternatives, it's about 20 trillion as of last year, plus or minus. If you add up all of the active management in public and fixed income, it's almost exactly 20. Coincidence? So, our TAM from our perspective is doubling. To achieve our number, as I just showed you on this page, all we really have to do is keep our market share plus or minus a little bit in the bottom 20. The rest is upside. We're going to go get it in this period, but it's all upside. So we're exceptionally excited about both of those opportunities. You're going to hear us talk a lot about that over our subsequent conversations together.
So let's talk about us. We have two big growth engines. Engine one which you've come to know alternatives where we are going to differentiate and in replacement where we're going to innovate. On alternatives you can see we have credit and equity. The team has talked extensively about that including real assets. These businesses are 15, 20 years in the making. 8 billion of investment, 4,000 people, 150 billion, $200 billion of origination. You can't just show up and replace that. That's as good as it gets in competitive advantage and asset management. And our equity business, 35 years of private equity excellence. And by the way, DPI, who knew that'd be the new IRR, the guy showed the numbers. It's 2x the industry. We're actually doing what we said we're going to do. When we come back to market, you're going to hear us say that loud and clear. We think we're going to win on the replacement side. Some coded language in there. Private investment grade. How's that going to happen? You heard it. Market making, fixed income, investment grade, private origination coming together in packages for solutions where we can show up to a CIO or head of fixed income and say would you like 200 basis points for a little give up in liquidity very compelling. And the good news is this is already happening. This is not just talk. $10 billion of assets into fixed income replacement related strategies already. Nine consultant approvals as we've talked about. The reasons are mechanical. People have been in the red, they're moving to the green. That explains basically the movement of private credit and we're going to move them up to replacement. Higher return per unit of risk. That's the equation.
Finally, as I mentioned before, we saw this moment coming. We've been preparing for many, many years. These are all numbers that we've already invested in the business. You can see the date of 2020. So, we're preparing for this growth for the next several years, and we think we're ready to go. Thank you for your time.
Good morning. I'm Eric Needleman. I recently joined Apollo to lead our capital solutions team. While I'm new to Apollo, I'm certainly not new to the industry. I've held various capital markets roles over the last 30 years, and I can tell you firsthand the opportunity here is massive. I truly believe Apollo is changing the landscape of the financial services industry. In the center of that evolution is Apollo Capital Solutions. ACS is the connective tissue of the firm. We have 40 investment professionals across the firm and across the world embedded in and alongside our deal teams.
So what does this look like? We're coordinating with origination. We're assisting in structuring and we're leading the efforts on execution, financing, syndication, and co-investment. In tandem, we're managing our relationships with the banks, advisers, LPs, and strategic partners. Because we're deeply integrated in all aspects of the business, we can act with speed, certainty, and scale. The outcome, we're not just creating assets for Apollo and Athene, but for our syndication partners as well. This results in the stronger returns for both us and our partners, creating a multiplier that accelerates our growth.
Our philosophy is simple. You've heard Marc say it many times. We want to own 25% of everything and 100% of nothing. We achieve that through a broad-reaching, highly curated distribution network. But what really sets us apart is we're there with our clients investing alongside with our own funds and on behalf of Athene. This alignment deepens our relationship and creates trust between our team and our strategic partners.
The more services we provide, the more stability we add to our growth. As we grow ACS, we're de-risking by building recurring repeatable business lines. And as AUM grows, there are embedded capital markets activities that will grow as well. Our syndication services are scaling rapidly. We're consistently active in the market, placing more products year after year. To put that in perspective, in the first half of this year, we've syndicated volumes on par with the largest of our bank partners. And we're not just interested in large-scale transactions. Our focus is on a diversified transaction base across all asset classes and throughout the Apollo ecosystem. We're supporting more deals across more business lines, nearly 300 fee generating deals in the last 12 months alone.
You may have heard last week we announced the $25 billion private credit program with Citibank. This is the largest private credit partnership ever. This collaboration enables Citi to enhance their client offering with more private solutions while allowing Apollo to boost its origination flow and tap into Citi's extensive client relationships by combining Citi's broad banking client reach and capital markets expertise with Apollo's scaled capital base. This partnership is a win-win.
Looking ahead, there are significant drivers to continuing scaling our business. Managing nearly 700 billion in assets means significant embedded capital markets activity. As our capital formation partners succeed, we'll continue to grow. Our diverse pools of capital make us well positioned to provide the flexible, creative solutions that the market demands. Strategic partnerships continue to expand our deal flow and reach, and our team serves as an incubator for new services and revenue streams that contribute consistent scalable growth.
At our last investor day, we set an ambitious 5-year goal to reach $500 million in revenue. Just three years later, and we've already achieved that. Now, we're raising the bar, and our new 5-year goal is a billion dollars in revenue. What my team has accomplished in the last 3 years is nothing short of incredible. But what really excites me most is the potential ahead. Thank you for your time this morning. Please welcome Stephanie Treasure.
Hello everyone. Wow, that's loud. Good to see you. As many of you may remember, when I started back at the firm in 2004, I led the buildout of the institutional side of the business. And today as I look at global wealth, what's striking is that the assets held by individuals are at least as large if not greater than what's held by the institutions. Yet importantly, the allocations to private markets are just a small fraction grossly underallocated to the opportunity in private markets today. So our goal as we build out global wealth is to ensure that the individual families can in fact plan for their retirement can build wealth with the help of private investments in their portfolio. We believe in this market. We're committed to it for the long term. And in fact, when we look over the next decade, we recognize that with the increase in allocations, there should be 10 trillion dollars of money in motion on behalf of this segment.
Private markets are no longer a nice to have in a portfolio. Advisors and their clients now recognize that public markets alone will not allow them to achieve their long-term financial goals. Private markets are a critical replacement to a portion of their public fixed income and equity allocation. We just have to look at the public equity markets and how the number of companies have been reduced by half or when you look at the global number of companies today 90% of them are in fact private not public. So the private market investments can help global wealth clients increase diversification, lower volatility, and deliver the excess return per unit of risk that we've all been speaking about. So this seismic shift in private market allocation is underway and we're seeing it in our results.
So from a white sheet of paper just three years ago to a world-class global wealth business today we are exceeding our targets that we laid out to you in the 2021 investor day across the board. First the team is now 140 people strong. We had fewer than 10 when I saw you last. We have delivered 11 billion in capital raise over the last 12 months. We are well on track to exceed the 50 billion cumulative 5-year capital raise and this year we expect to be 25% of third-party capital flows. There is a lot to be excited about here. There is tremendous momentum. But the best part is that we are just getting started.
We are playing to win. I think you've heard that today. We've spent the last three years building an incredibly strong foundation off of which we can now scale and build step function growth. As you'll see here, our goal is to grow the business by five times over the next five years. And we are positioned as the partner of choice to our clients. Only a few can do this successfully. It's a big lift. It takes a commitment that starts at the top and permeates throughout the entirety of the organization. And we have that. We also have spent a billion dollars of our balance sheet in support of the global wealth business. We now have a global footprint of hundreds of firms that trust to partner with us as they build out their private markets exposure.
We've also built a full suite of wealth-focused solutions. We have greater than 10 fintech companies that we partner with to deliver best-in-class client service. The experience for our clients is critical. And finally, we've built apolloacademy.com. It's publicly available. If you had not yet visited, please do. We now have greater than 60,000 active users that are engaging with our content as they learn more and more about the role of private markets in their portfolios.
So the client is at the core of what we do. In less than three years, we have built out deep and meaningful relationships with every channel. Wires, private banks, registered investment advisors, the independent broker dealer, global family offices here in the US and around the world. This provides an incredibly strong foundation for us to deepen those existing relationships and add new ones. There's so much room to run.
We are a solutions provider across asset classes. We are delivering the best of the investment capabilities that we have honed now for greater than 30 years and delivering it in a tailored way that meet the needs of the individual. When we met last in 2021, we did not yet have a semi-liquid offering. Our first was Apollo debt solution that launched soon thereafter and we are now $12 billion strong. Across the suite of solutions we now have 11 semi-liquid strategies in addition to the flagship drawdown offerings that we hold and offer. We offer the advisor community financial professionals solutions for the entirety of their client base. So we look across a range of suitability, qualified purchaser, accredited, sub-accredited and importantly we are meeting clients and their advisors where they are. We have over 30 access points today for these strategies designed to match their regulatory, tax, currency and other needs.
Innovation is in our DNA. I'll admit it excites us. We like to focus on where the puck is going. And since we last met, we've had a lot of firsts. I've chosen a few to highlight today. You heard earlier about Apollo aligned alternatives. A first in delivering this type of diversified private market exposure highly aligned with our own capital as a replacement to a portion of the public equity portfolio. ABC, that's our and the market's first pure play asset-backed semi-liquid strategy. It builds on the strength of the origination engine that you've heard throughout the day. Altitude, it provides a tax advantage solution and access point that helps individuals build for their retirement, build wealth. And as mentioned, we've launched a collective investment trust, which is an access point to deliver private markets to defined contribution plans to 401k plans. And finally, we've had a number of partnerships with long only traditional asset managers that allow us to bring private markets to the mass affluent.
We are seen by our partners not only as helpful to co-create for where their businesses are today but importantly for where the opportunities lie ahead. We see many new frontiers, each representing trillions of dollars of market opportunity, largely untouched by private market exposure and in need of a solution. We believe we are uniquely positioned to deliver. Nearly every client conversation I have these days touches on one or more of these very deep opportunities. The ability to integrate private markets into retirement accounts, managed accounts, lending facilities, etc. These new frontiers will help to fuel the growth of our global wealth business for many years to come.
So in conclusion, hopefully you realize we are extremely well positioned to turbocharge this business. Over the next five years, we
Plan to more than double our talented resources on the team, increase our AUM by 5x to 150 billion, bring our average capital raise to approximately 30 billion a year, and by 2029, we anticipate that the global wealth business could represent 50% of our third-party capital raise. So, the best is yet to come. Thank you. And I'd now like to welcome my partners Jim Belardi and Grant Kvalheim.
Good morning everybody. It's great to see the big turnout both in person and remotely. Grant and I have the best job today, which is talking about Athene. We love talking about Athene. Athene and Apollo have built the premier retirement services company. We put in 15 years of hard work, consistent excellent execution, and discipline to build the machine. We've grown from a startup to the industry leader by leveraging our competitive advantages. We have an efficient model with a superior asset management strategy. This creates better outcomes for policyholders and shareholders. We're incredibly proud of our franchise and our positioning. Our track record is very hard to replicate. Nobody else in the industry can show a chart like this. We always think and act like owners. And this is demonstrated through our consistent profitable growth over time with periods of stairstep increases as we lean in and out of attractive opportunities. Recently, organic growth has been the most attractive. There's a deep moat around our business with five key competitive advantages bolstered by very strong ratings which are a significant barrier to entry for others. Our advantages are very difficult to replicate, starting with our ability to generate yield. We have an incredibly efficient and scalable operating platform, product and channel diversification that is expanding, financial flexibility from a fortress balance sheet and sidecars with a strong and improving ratings profile. And finally, we have the best management team in the business. We have an intense drive to compete and to win. And our culture is a meritocracy. We target higher sustainable risk-adjusted returns by taking some structure and liquidity risk, not incremental credit risk. Our access to Apollo's proprietary investment-grade origination provides differentiated value-add asset opportunities. No one else has that. Our portfolio construction on the asset side is focused on high-grade, almost all fixed income assets and investment grade. We've consistently produced attractive growth and returns. We have a higher allocation to assets which provide excess return per unit of risk. This results in the team taking less risk relative to others. We are underallocated to high-yield assets and we have zero real estate equity unlike others. We outperform on both asset yields and impairments which is a very powerful combination. From 2019 to 2023, we generated 40 basis points of asset outperformance with only 11 basis points of credit losses. So scale is one of our competitive advantages and it's very important to our platform. Athene was built to have high efficiency and productivity. We benefit from not being burdened by legacy business that we don't want. And this final point I'm going to make on this slide is pretty impressive. We have five times the earnings per employee than the industry. Each and every person in our company is highly valuable. These competitive advantages drive positive outcomes for the customer, better pricing, and for the shareholder, better returns. Our number one priority is maintaining a fortress balance sheet. This means we are steadfast in ensuring that there is excess capital and excess liquidity at all times. We have a variety of liquidity sources from our cash on hand, our liquid public investment-grade portfolio, our committed repo lines, our operating company credit facilities, and our traditional holding company capital facility. On the capital side, in the last 12 months, we've created over $3 billion of spread-related earnings, 70 billion of organic inflows, and 17% growth in gross invested assets. These resources provide the flexibility needed to execute on the significant opportunity in the retirement services market. We always run the business as owners, which allows us to consistently achieve very strong returns. And because of those returns, we're able to raise third-party capital to support our growth. Others can't do that. We've successfully raised over $9 billion in third-party assets, including the largest sidecar in the industry. The amount of business we can support with just third-party capital is now greater than the entire asset bases of many firms. Since 2010, Apollo and Athene are the largest contributors of capital to the retirement services industry at about 20 billion. We've raised 40% of all the private capital and 50% of all the public capital in the industry since 2010. Meanwhile, at the same time, the broader industry has returned to investors 80% of their total market cap because they haven't had the same ability to grow profitably because they don't have the returns that investors want. The last I checked, companies can't grow without capital. Our superior financial strength is recognized by the rating agencies. We have a clear upper ratings trend and we believe we're on a path to double A across the board. Noteworthy is the fact that today we hold billions of dollars of excess capital above greater than the S&P AAA level. Our track record of execution has led to increasing recognition including an A.M. Best upgrade to A+ which under their hierarchy puts us into the double A category and we think there's more of that to come. Athene is the largest retirement services company rated A+ with 33 billion of regulatory capital. For years, we've been running the company to greater than AAA standards. And with that, I'll turn it over to Grant.
Thanks, Jim. And good morning, everyone. We serve a societal need, which is helping people save for retirement and then turning that savings into guaranteed income in retirement. And this business has a substantial tailwind behind it of an aging population that is unprepared for retirement. More than 11,000 Americans reach retirement age every day. And today you can see on this chart roughly 58 million Americans aged 65 and older. And by 2050 that becomes 82 million. Our average customer is in their late 50s to mid-60s. And you see that this aging demographic is moving people into the sweet spot where we can help them. This tailwind to our business will exist for several decades. And that aging population is woefully unprepared. 75% of retirees have income below 75,000. Almost half of Americans don't participate in a retirement plan and 33% of pre-retirees say they are concerned about running out of assets in retirement. We estimate that the savings gap is about $4 trillion in the US. And it's not just a US problem. This is a global challenge, this retirement crisis. And we estimate the total target market globally is 45 trillion. And you think about where Athene sits as the industry leader in retirement services, we're less than 1% of the global opportunity. We are really just scratching the surface of what we think our business can be. So where are we going? You know, we presented at investor day in October of '21, shared with you a 5-year plan, and we met our S-sur goal at the end of 2023. So, we're here today to say again, we think we have a big opportunity in front of us and we think that we can double the business in the next 5 years, earning 10% on average S-sur, but do it in a capital-lighter way by utilizing third-party capital and creating capital-light and capital-lighter products. Marc talked about widening the funnel and opening the aperture. By widening the funnel, we're thinking about continued distribution expansion, new products in our existing channels, and entering adjacent markets. And when we talk about opening the aperture, we're thinking about new products in new markets. And overlaying all of this, we retain an inorganic option when we see attractive opportunities. Marc and Jim have both mentioned that we act like owner-operators. What does that mean? It means that growth is a choice and we don't have to do anything and we only do things that meet our unlevered mid-teens return criteria. That said, we've consistently found opportunities to meet that hurdle. And in generating 23x organic growth in the last decade, we are a market leader in each of the channels that we operate in. Now, nobody in our industry can show you a chart that looks like this that has delivered consistent, growing, diversified, profitable growth. But even if we chose not to grow, if we flatlined our origination at 70 billion, our AUM and S-sur would grow for years and throw off significant amounts of capital. And that capital could be used to retain more of the business that we're originating or used as an increased dividend to Apollo. We've talked for years about our four channels, but these channels have really developed 13 sub-channels that are scaled and deliver a much broader array of products. A decade ago, 2014, two channels, a small handful of products. Today, 13 scaled sub-channels delivering more than 50 unique products. It gives us tremendous flexibility. A lifetime example, we gave guidance earlier this year that we thought we could originate 70 billion organically this calendar year. That was before any of the PRT lawsuits. We were anticipating that PRT would be 14, if not 15 billion of that 70. It's a fraction of that, a small fraction of that. And yet, we are going to meet that 70 billion goal. We're going to deliver on what we said. That's the flexibility of our footprint that none of our competitors have that allows us to pivot either driven by market opportunity or necessity. When we say that in our plan we're anticipating entering adjacent and new markets and developing new products, we have a successful track record of doing that. And here's a few examples. We launched pension group annuities, what the rest of the world calls pension risk transfer, in 2017 and in the last four years we've had the number one market share and grown to 42 billion in reserves. We introduced Ascent Pro into our retail annuities channel in 2016 and it's now grown to over 18 billion in reserves and this year alone it's already sold more than 4 billion. And we started our international diversification in Asia back in 2020 and we've already originated 12 billion. We have eight active flow treaties across Japan and Singapore covering both annuity and life insurance products. There's many more examples. You cannot get 23x growth without coming up with new products, entering new markets, and continually expanding your distribution footprint. Retail annuities is our largest channel and it continues to be our largest opportunity. There's still room to grow in institutional distribution, activating agents within distribution, getting more shelf space at distributors, introducing new products. We have a differentiated footprint that no one can match with strength across the independent channel, banks, independent broker-dealers, and warehouses. And what that leads to is the results you see in the top right-hand side of this slide where we sell more annuities than anyone. We certainly sell the most of the products that we're focused on in fixed and fixed-indexed annuities. We are the largest distributor in banks and banks is the biggest distribution channel now for annuities and we maintain strength in the independent channel. The lower right-hand side shows that five of our six largest distributors we've all added in the last 5 years. We are the largest seller by far on every one of those platforms. When we get an opportunity in a new channel, we shine and we dominate. And on the left-hand side, you see that from a startup in 2011, startup in the retail annuity business, we've grown our market share to 12%. No reason to stop here. Why not 15? Why not 18? Why not more? Our expansion in retail annuities was a strategic plan that we developed in 2011 and we're still executing on that plan. It takes consistent sustained commitment year after year after year. It takes capital. It takes ratings. It takes investment in technology. It takes new products. It takes scaling your sales force and your marketing along with your opportunities and of course delivering great service. And then on top of that, there's the moat that Jim and Marc have talked about in terms of our competitive advantages and it gives two outcomes to our business. We can offer great consumer value proposition while still generating superior returns for our shareholders. What we've done is very difficult to replicate and we're an incredibly tough competitor. We're also playing in the right space in the annuity market. When we set out in 2011 to enter this space, the market was about 225 billion and we wanted to play in about a third of it. So we said, 'Hey, we're going to have a 70 billion target market and if we're really good at executing, maybe we can get 7 to 10% market share over a period of years.' So we were thinking this was a 5 to 7, 12 billion market opportunity for us. We originated more than 35 billion last year. So obviously a few things happened that you can see on this chart. First of all, the space that we chose to compete in, fixed-indexed annuities, it's a superior product to variable annuities. And that battle is largely won in the marketplace. And the market, which hadn't been growing for years when we entered it, has gone from being a 225 billion a year market to this year it will be north of 400 billion. We also entered the RILA space. So now we're competing in 85% of a much larger market versus competing in a third of a much smaller market. Very exciting development. Sometimes it's good to be lucky as well as good. In thinking like owners, we pounce on opportunities. And in addition to what's on the slide here, I think what we did in the retail annuities last year is a great example. The market grew over 30% last year and we had the capital, we had the products, we had the distribution footprint and we had the asset yield to be able to jump on that opportunity. We sold more annuities last year than anyone has ever sold in a single calendar year. Inorganically, we look at everything and we transact when it makes sense. And there's very little about the current market that makes sense to us. Deals clear at returns that are well below what's available organically and for liability types that are highly challenged and often have very degraded surrender charges. So the market's paying a higher price for riskier liabilities and that leads the winners to engage in capital arbitrage by reinsuring offshore. I think the only way that you can make sense of what we see currently in the inorganic space is that the people doing these deals don't have scaled organic options. We have a number of growth opportunities that offer upside potential internationally. I've already discussed that a bit. We see there's a lot more there available for us in RILA and Athene Altitude, the tax-advantaged product that Stephanie mentioned. It's really about expanding distribution because our products are pretty great. In structured settlements and stable value, it's about entering adjacent markets and being a disruptor as we think we can be in defined contribution. You've heard a number of people mention that it's a 15 trillion market. It's early days for people trying to crack the code of how to deliver both alternatives and guaranteed income into that space. But we want to participate both as a manufacturer and a parts supplier. We're still working on ideas on how to create incremental and possibly standalone guaranteed income solutions. There's certainly strong interest in both the RILA channel and we think it could be part of the solution in the DC space as well. All of these things have relatively modest numbers in our five-year plan. So success here would be significant upside. Regardless, many of these have long lead times and they will be significant contributors to Athene in the future, even if it's beyond the scope of the 5-year plan. Just want to share a little bit about what we see as a potential future state for target-date funds. We think Athene and Apollo are pretty uniquely positioned working together with a target-date fund manager to create a future-state TDF. Adding alts will drive greater accumulation. Adding guaranteed income assumes you won't outlive your assets. We think the combination could produce 60% or more retirement income compared to a traditional target-date fund with a 4% annual withdrawal rate. Zero chance that the retiree will outlive their assets. And these products as we're constructing them will provide the flexibility and the liquidity that you need in a target-date fund. And with that, I'll turn it back to Jim.
Look, our future growth will be guided by the same winning approach we've historically used. As Grant said, S-sur growth is a choice. As owners of the business, we know there will be stair steps as we move in and out of attractive cycles. We manage Athene's business for the long term, targeting consistent mid-teens returns over time. When we consider how this capital management philosophy manifests throughout the business, three concepts are at work. One, holding excess capital and liquidity allows us to capture widespread and maintain a fortress balance sheet. Two, active portfolio management. We strategically reduced our net floating rate asset exposure by 50% and reallocated to treasuries ahead of rate declines, which provides built-in gains to redeploy as two examples. And three, we are very disciplined operators. We went six quarters recently without issuing public funding agreements when targeted returns weren't sufficient. We've also deemphasized MIGA sales when pricing became irrational. Athene does not seek to maximize profits or ROE in the short term. We've always operated this way and will continue to do so. Look, in summary, Grant told me this morning that, and I didn't know this, there are now 28 private equity-backed, so to speak, insurance companies trying to copy us. Based on what you've heard this morning in our presentation, we expect to widen our lead, not shrink it, against all the other copycats, because no one can replicate our business model. The combination of state-of-the-art value-add asset origination coupled with the biggest and best manufacturer and distributor of retirement savings products. Nobody else has that. So, you can see the takeaways. We're the leader. We're disciplined operators and we have a substantial long-term upside that we expect to capitalize on. Really appreciate your attention. Thanks for coming. Thank you.
