Apollo Global Management (NYSE: APO) - Investor Day 2024

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, looking for new opportunities, and pushing the envelope. Apollo really is an investor's investor. One of our strengths is being able to think with a blank piece of paper about what the client really needs. Rather than solve for an individual solution, we can flip it around and ask what you need. Our integrated platform is 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. There is a global industrial renaissance and a growing home for patient, creative capital like ours. The sustainable investing platform at Apollo is unique because it is a platform approach. It touches every part of business: people, technology, infrastructure, resources, and the opportunity to invest in the future. Together, the Athene and Apollo platform are 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 serving millions of retirees and allowing individuals to invest in their future. We spent over three decades developing expertise in private markets. Today, we are delivering those capabilities to global wealth clients. We started in the US, moved to Asia, and are now building capabilities in Europe. I am extremely proud of the team we have. We are on the forefront of innovation across every asset class. Whether it's global wealth, serving retirees, or providing capital solutions that banks and markets are no longer providing, it's the ultimate modern high-performance culture at Apollo. There's an excitement and energy you feel walking around the halls. We are building something special. There's a real sense of community, 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 Mark Rowan, CEO of Apollo. I want to thank you all for your interest and your willingness to spend between three and four hours with us. Hopefully nothing will distract 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 compressed into a very short time frame. All the tough decisions are on the table: resource allocations, the level of focus. At a top level, what you're going to see in asset management is about choices. There is so much we could do that this is about focus. Listen to what we chose not to do. In retirement services, we have the opposite focus. They have been so focused on execution that it's now time to open the aperture and go after the retirement market. These two steps create a very dynamic and exciting plan. As Noah suggested, this is not our first rodeo. This is our fourth investor day. You can see the results. I know a number of you thought we were optimistic in 2021. Even some on the team thought we were optimistic. But those of us who have been here a very long time were supremely confident we would deliver. And I think we crushed it. Not everywhere, not every day, but for the most part, we feel really good about what we've achieved. A number of us have very short attention spans, particularly those on trading desks. So if you're looking for an exit, right after this page is a good time. In terms of financial targets, for FRE we're talking about 20% average growth over the next 5 years. For spread-related earnings, 10% average growth. $15 a share of ANI, $21 billion of capital. The only other number I'd focus you on is the $275 billion of annual originations. I think the word origination and tracking it will become more important to our industry and our dialogue with you. We have been incredibly lucky. Reflect on where our industry has come from. Revenue is up seven times. But let me give you a more interesting stat. In 2008, all the big firms you think of as our peer group 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. By 2023, we were $650 billion. We grew assets between 16 and 17 times. No financial services business grows like that. We outgrew Apple, Microsoft, almost every growth company you can think of. It's important to ask publicly the question 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. Those tailwinds powered our business to seven times revenue growth and 16 to 17 times AUM growth. In 2008, every existing financial institution was playing defense. We were fortunate to start a new financial institution, Athene, in 2008 and played offense for 15 years. As governments pushed rates to zero after the financial crisis and during COVID, everyone with commitments to policyholders, retirees, and contractual counterparties found themselves in search of yield, and they found us. Those two tailwinds powered our entire industry. But we also have to be clear that those tailwinds are now gone. This is something we're working on at Apollo. Our industry and our company have been so successful. How do we get the organization to play to win and not just play not to lose? That probably consumes most of our management time. We've woken the team up at 4:30 AM for meetings to prove we need to do something different. We've had outside speakers come in to scare people. We've had cautionary tales. We're here to play to win. Change is coming. The tailwinds that got us here are not here anymore. New ones will come. If we think we'll succeed by doing more of the same, that's a fallacy. We have to adapt and change. This is true for everyone in our industry. How have we evolved? We've focused on capabilities to keep us in front of powerful tailwinds. Our founding was in private equity. We were a small business with massive opportunity. Post-GFC, credit and Athene were the big drivers of our growth. Over the past few years, many of you asked why merge with Athene. 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 have put us in the platform business and the capital solutions business. AIP and wealth allow us to be the most aligned firm in our industry. What are the new tailwinds? Let's start with a dose of reality. We are a small asset manager with around $700 billion plus in AUM. All the big four are in the $10 trillion plus range. 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 big asset management. In some ways, this is the most exciting and comforting part of the strategy. We have four amazing opportunities, tailwinds in front of us that will push our business forward. Any one of them done well would double our business. Our job now is focus and execution. Global industrial renaissance: the capital needed today, in addition to the trillions the US government borrows annually, is for infrastructure, energy transition, and next-generation data and power. These are long-dated, complex, and require creativity. In many instances, we're financing consortiums backed by big companies who don't want assets on their balance sheet. These long-term solutions are not appropriate for bank balance sheets or the plain vanilla investment grade marketplace. We and institutional investors are the long-dated capital necessary to do this. In every society, debt capital comes from either the banking system or the investment marketplace. There is no third choice. Everywhere, banks are being asked to do less, and investors are being asked to do more. When we did the first investment grade financing for AIG a number of years ago, many said that $4 billion was the last we would 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 secular trend. 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 vast majority of Americans have not made adequate provisions. 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? Daily liquid index funds, mostly the S&P 500, for 50 years. Why? We don't know. The retirement savings of America are in 10 stocks that make up 39% of the S&P. Four stocks have determined 100% of returns for the last few years. I jokingly say we've levered the entire retirement of America to Nvidia's performance. It doesn't seem smart. We're going to fix this. Every day we see new products and approaches. The most successful country in the Western world from a retirement perspective is Australia. Australia adopted superannuation 40 years ago, allowing investors to include private assets in their portfolio. The outcome over 40 years of compounding is spectacular. I believe we are on the cusp of revisiting this opportunity. More directly, you and we have thought about retirement from the point of view of what Athene does. Athene is just getting started. We took an existing product set and made it better. That's been great, but we have yet to show what this can be. You'll see some of this in Grant's presentation and over the next few years. As our competitors think about the business we started and now dominate 15 years ago, we're moving to other places: stable value, tax-advantaged products, going after 401k, or guaranteed lifetime income. There is no shortage of opportunities in retirement. We need to imagine this business not as an annuity or pension buyout business, but as a retirement solutions business. Retirement is driven by fixed income, particularly high-grade fixed income with yield. Most of our conversations on quarterly calls revolve around individual investors. For 40 years, our industry has been built out of the smallest bucket of institutional investors called alternatives. We now have a market in front of us with individuals 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 delivery work. I already know we're going to be successful. This is a large firm opportunity, not for every firm. The reason I know we'll be successful is I can look at the most sophisticated individual investors: family offices. Family offices are now more than 50% private. They are guided by common sense and risk-reward, not consultants or benchmarks. When I say 50% private, I mean 50% private, not 50% alternatives. They understand that private is not just alternatives; it's a way to get further diversification and enhance yield. We don't often talk about family offices because they're not numerous, but this is a massive market. They are showing institutions the future. At the bottom of the pyramid, the mass affluent: we do not believe Apollo or our peers will directly serve them. They are difficult to reach, have entrenched relationships, and are generally well served. They are not typically advised by an individual adviser. In very few circumstances do we believe they will participate directly in private markets. That does not mean they won't have private assets. Whether it's us with State Street or Lord Abbett, or our peers with Capital Group, the mass affluent market will be served by their existing asset managers and advisory relationships. The product set will change. Our industry and Apollo specifically will be a part supplier to this portion of the high net worth marketplace. In high net worth, which is what we talk about on calls, this group is advised by wealth systems and RIAs. Their adoption of private markets is limited only by education. It's about 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 a 24-hour period. Talking to high net worth investors is highly rewarding because you leave knowing exactly where you stand. Sometimes you leave with a ticket, which is quite rewarding. This is a massive opportunity. Retirement: massive opportunity, lots of demand for fixed income. Individual investors: lots of demand for alternatives plus fixed income. This business alone could double our industry and our firm. The one that gets me most excited because it's the most near-term and tangible is rethinking public and private. For those of us who have been in the business 40 years, we have it beaten into our heads that private is risky and public is safe. That was probably true 40 years ago. Private was three products: private equity, venture capital, and hedge funds. Public was 8,000 public companies, a diversified portfolio of stocks and bonds. But what if we're wrong? 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, but the slightest deviation in private markets, we lose our minds. I think the world we live in today is that private is both safe and risky, and public is safe and risky. If that's right, everything we know about portfolio construction makes no sense. When something is risky, you put it in a small bucket called alternatives, demand high returns, and watch it closely. That's the world we've lived in. But the world is changing. 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 50% larger than the alternatives bucket and is 100% public IG. We are watching replacement take place in real time. This replacement is aided by rating agencies. They are telling investors that something in the private market and something in the public market are of the same credit quality. So investors can make decisions about liquidity and make explicit tradeoffs of risk and reward. I will say something we will come back to: 18 months from now, you and most investors will not know the difference between public and private IG. There will be no difference in the size of the company, the size of the issue, the rating, the provision of financial information, or the liquidity. Everything that exists in the public market for IG will 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 replacement stops in the fixed income bucket. I think eventually it goes to the equity bucket. The world we live in has completely changed. After 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 $8 trillion and everything went up and to the right. It's only in the last 18 months that we've started to experience the world as it is. Why is replacement taking place in fixed income first? Because of rating agencies, and because there is no liquidity in public IG. It takes five days to sell an investment grade corporate bond. One outcome of the financial crisis was a massive reduction in dealer capital to support fixed income trading, which has not been picked up by market makers. We will begin market making. Once we do, I believe others will follow. The 8,000 public companies that used to form diversified portfolios are now 4,000. Fewer than 100 companies go public every year, and more than 100 go private. We take for granted that companies like OpenAI or Spotify can stay private a long time and raise equity. Why doesn't that apply more generally? Today we'll talk about fixed income replacement, but I think the future will be about equity replacement. What is equity replacement? Think about what's happened to our equity markets. So much is passive today. Active management is a small percentage, and it has actually failed. When 90% plus of active managers have failed to beat the index for 20 years, you have to ask whether they've gotten stupider or the market structure has changed. I assure you they haven't gotten stupider. The structure has changed. It's much harder to make money in active management, particularly with daily liquid funds. To those who do it, hats off. In the future, investors will own equity that is private. Think of that as private equity without the leverage. Active management may be both the buying and selling of stocks and the active running of companies. We have a business today of $60-70 billion of something we call hybrid, which will be multiples of its size. These four trends are not only available to Apollo but to our entire industry. I expect our entire industry to benefit. However, I believe we have done a better job positioning ourselves to benefit from where the market is going. What do we think as investors? We continue to judge our business by things like AUM and capital raising. I believe over the next few years, we'll transition to thinking about what really constrains our business. If we're right, we'll have demand for private assets from retirement, individuals, and institutional clients from their fixed income bucket and eventually their equity bucket. All that demand will produce an industry twice or three times its current size. That doesn't mean capital raising and partnerships aren't important. But I believe the trend will be short ideas rather than short capital. Origination is what will allow you to create value and will be the limiter of growth. It's not just origination in private equity; it's 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, we are all beneficiaries of culture. We have attracted an amazing group of people, most of whom are escaping larger institutions. We should be very careful not to become that. We won't spend enough time on culture today, but it's half my job. Managing the careers of 200 people representing the leadership of Apollo is all about culture. The single best decision I've made in the past 12 months was to personally buy a frozen yogurt machine. We open it when we have a team win. It turns out people prefer frozen yogurt to money. It's recognition. I say this as a joke, but it gives insight. We have to be very careful about what we do culturally. We want to be the single best place to be a partner in financial services. If we do that, if you spend your whole career at Apollo, we will have your judgment throughout your career. Our business is built on judgment. If our partnership is stable, the next generation will look ahead and say it's all worth it. Young people coming into our business will have two amazing generations of mentors. If the partnership is stable, it all works. If not, none of it works. Culture, top home for talent. We do that by how we do it and the environment. But we also do it in a way that aligns with our investors. No one is more invested in their company, funds, or compensation than we are. This is a hallmark of how we come to market. If only one thing sticks for the whole day, this should stick. I believe the ability to originate assets that offer alpha and excess return is the key driver of our business. Chris Edson has been promoted to head of origination. Of the roughly 9,000 people in our ecosystem, 4,500 report to him. Try to sit next to him at lunch. I check on his health every morning to make sure he gets to the office. This is an incredibly important part of what we do. I also believe the dynamics of origination allow you to keep your fees stable or increasing. We have incredible demand for private assets from people who haven't historically been in them. I believe we will have a shortage of private assets. The liquidity or illiquidity premium will disappear for a big part of our marketplace. What will give you excess return? The capacity to originate, structure, and control a deal. We judge ourselves by our financial metrics, but ultimately it's about the capacity to originate. Building and owning origination is essential. You'll hear a lot about that today. 4,000 employees wake up every day and do not carry an Apollo business card. They work in 16 platforms. We've spent more than $8 billion building this over the last 15 years. This is the largest concentration of employees at Apollo. The entirety of our asset management business is 3,000 people. Our retirement services business is less than 1,500. This is platforms. This is high-grade solutions: the kinds of things we've done for Intel, AB InBev, Air France, and AT&T. It is also partnerships with people like Citi. Our industry is really dynamic right now. We are not at war with the banking system. We have never been better partners with it. Look at announcements this week with Citi and BNP. The banking system has figured out that we don't want what they want. We don't want their clients. We can't sell them advice, M&A, foreign exchange, derivatives, payments, or credit cards. If a bank loses a client to another bank, they lose it all. If a bank loses an asset, which they generally don't want under the new capital regime, they retain the client and fee revenue. This is just beginning to be accepted. What we've done with Citi is large and dynamic, and you'll see more of this. We are not the enemy of the banking system; we are amazing partners. Let's pivot to the structure of our business. At our last investor day, we took grief for our dog and its tail. We were trying to explain the benefit of being a principal versus just a fee provider. Think about the market we've described. We believe assets will 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 we originate. How do we do that? For some assets, we get a fee plus 100% of the profit. Think of that as Athene's balance sheet. The amount we can do there is limited by capital, diversification, and our desire to grow other parts of the business. For some, we have a full fee plus a third of the profitability. We call that ADIP. It's an insurance partnership where outside investors own two-thirds and we own one-third. Finally, we have a business where we earn a full fee and have no retained interest other than a promote or some form of upside. We like all three businesses, but to date, we and the industry have focused on capital light. Some competitors hold assets on their balance sheets. We have the most efficient way to hold assets: in partnership with retirees through Athene. This partnership is built on fundamental need. Athene's business relies on excess return in investment grade fixed income. We start with the 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. 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 a fundamental activity, and very few competitors understand this business. How do you win? You need all five of these things. Most people entering the business and most traditional companies don't have any of them. What do they do? They take assets and liabilities to Cayman, put up 50 cents on the dollar of capital, avoid rules. 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 these things. These five things are necessary to succeed. In our competitive set, only one competitor has taken the time to build something of substance. Asset outperformance: back to the notion that private is risky and public is safe. Look at the pie charts comparing Athene to the industry. 97% is in the most highly rated categories, approximately 5% alternatives, 1% stocks. If you cannot generate investment grade private, you do more alts and more stocks. That's what our industry has done. They also own real estate equity, of which we own none, and high yield. What we have built is proprietary origination of investment grade fixed income, earning 150 basis points plus of spread. This allows us to de-risk the portfolio rather than risk it. In every cycle, we have performed better. Our credit losses are fewer, credit upgrades are more, and our attraction of third-party capital is the greatest. This is an amazing story, and kudos to Jim and Grant and the leadership team at Athene. But this is a symbiotic relationship with Apollo. Distribution: the chart moves up and to the right. The team has built a service culture, but how did we win? We took a little bit of the asset outperformance and gave it to customers. Customers prefer more to less. Over the past 15 years, we've built the number one market share in retail. I won't steal Grant's thunder, but if you don't have ratings, service, and this, you're buying secondary blocks of business with degraded surrender charges and protection, paying more 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 has raised $28 billion of capital over the past decade. We've raised $20 billion. We are now the second most capitalized business in our industry and have the luxury of retaining vast amounts of capital. Capital gives us ratings flexibility, lowers our cost of funds, and 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 and economics are best. Cost structure: other insurance companies have six or seven product lines. We have one. We've driven costs to an incredibly low level while retaining a service culture. The WI in this case is Grant and the team in Des Moines, where more than 12,200 people work. It is not the WI at 9 West 57th Street. None of this is possible without management. If you approach this as an asset gathering business, you will lose. Anyone in insurance to gather assets is on a fool's errand. Sometimes the market lets you grow, sometimes it doesn't. We are principals in this business. We run it as a principal, taking our foot off the gas sometimes and stepping on it other times. We attract third-party capital, do ADIP, grow when no one else can, and earn wide spreads. This results in stair steps. You should expect us to be in the stair step business going forward. We will not grow this business unless it makes sense. The other thing you need to do is manage interest rate risk. The business itself is not susceptible to rates. We've had amazing years when rates are low and amazing years when rates are high. We prefer higher rates because that's better for consumers, but it doesn't matter because the cost of funds and the rate available track each other. The only messy part is in transition. Management has done an amazing job. When rates were very low, we had a massive floater position. We gave up income for years to position the business to benefit from or protect against rates going up. We paid the tuition. In 2022 and 2023, we got the payoff. After that, we massively de-risked the book because with rates high, it made no sense to hold anything other than a modest floater position. The willingness to give up current income and position the business is management's job, in addition to growing in stair steps. This means we sometimes consciously take down profitability. 2024 was awesome, but we did a poor job explaining that the $3.1 billion we booked in 2023 was consciously reduced by $300 million to remove interest rate risk through hedges and portfolio rotation. You can see organic business optimization of the portfolio and an interest rate benefit because we follow SOFR, not market-based SOFR, for many of our floaters. On a year-on-year basis, it was up 14%. That doesn't make it any less satisfying that we rang the bell in 2023. The growth from 2023 to 2024 reported more anemic. What do we think going forward? More of the same. We told you at our last investor day we would reach $3 billion in 2026. I assure you we will be well above that. That line will continue to be above our projection from the last investor day. Will it be a straight line? No. It will have stair steps and reflect us risking and de-risking the portfolio as principals. The ecosystem in which we participate is growing much faster than our spread-related earnings. This is a choice. If we want to grow faster, we can retain more business. If we want to grow slower, we can give more business to ADIP. Given the choice and how much capital Athene will produce, we have a lot of levers to figure out where on that 10% growth line we want to be. But it all begins and ends with a growing market for retirees. 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 is incredibly confident we will deliver the goods: on average 20% growth in fee-related business, on average 10% growth in spread-related business, and nearly $21 billion of capital generation. The drivers are everything we've built over the past three years. They will continue to grow. The accelerated growth: think replacement, third-party credit, equity, global wealth. We're not done there. I believe private will win over public. That doesn't mean replace public; it just grows faster. Private will win over banks. Again, not replace, just grow faster. We are a small asset manager with vast opportunities. The limitations are not the business to do. Particularly in asset management, 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 step back and think about where this is going. The financials were $2.3 trillion in 2014. They're $3.4 trillion today. Our group has gone from 4% to 12% of the total capitalization, and the capitalization of our indices has grown five times. I believe this trend will continue. Massive market. I think we're best positioned 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 is we get to do this. We really do have a good time doing what we do. If you come in too many days in a row and don't feel this way, it's time for you to do something else at Apollo. Thank you.

Good morning. I'm Jim Zelter. Welcome again for those we've not met. Following Mark, we travel a lot at Apollo and go to many meetings. Everyone asks, 'What is your crystal ball? You see so much. What's going on day-to-day?' We can talk about the macro, but what really happens is we end up talking about market structure and origination. It was clear a few years ago where we were going with origination. Today, I'm going to take you on a journey of where the crystal ball tells us origination and the world of alternatives is going. We are contrarian investors. We think about the world differently. So it's not a surprise that while the world focuses on capital formation and AUM, we turn that upside down. We have a different north star. In our view, origination is the lifeblood of the business. The capacity to originate is our north star day in and day out. We are purposely built to create and lead the industry in that regard. Let me take you on a tour. We sit here today with capital needs that are unprecedented. We talked about energy, power, and digital infrastructure. Dramatic IG needs across the world. Power alone will keep us busy for a decade. On the right, you see a variety of things happening in the non-IG market. But the scale on the left is what really drives us. The scale is more important than any one detail. We've seen this movie before. Almost a hundred years ago, with railroads and utilities, the capital needs were long-dated. Insurance companies like Equitable and New York Life were the primary providers of capital. They played a critical role in the growth of America. The next stage, 1990 to 2020, was a period of great globalization, massive deregulation, and lower rates. Capital markets and banks played a critical role. The end of Glass-Steagall in 1998 converged origination and advice. That set the stage for one-stop shopping. As we sit here today, confronting the needs of the global industrial renaissance, the open question is who will finance it. It's a huge question. You don't have to ask us; ask the investment grade companies themselves. At the same time, there are big powerful trends: the evolution of market structure, the changing banking environment, and the transition of human capital from sell side to buy side. The bottom line is these trends are great for investors, liquidity, and transparency in a very narrow portion of the market. But there was an unintended consequence: you can borrow as much as you want in very short duration. Mars just borrowed $34 billion in a 364-day facility. This migration to short-term capital floods the market and leaves a massive unintended consequence for capital formation. With this paradigm shift, it's obvious to us that private capital will play a critical role. It's all about having long-term, unlevered capital and deep client relationships. Apollo and Athene are the partner of choice. We have flexibility on term and structure, the ability to interact as a solution provider, and the combination of breadth of capital and a principal mindset. That drives our business and is the differentiating factor. Let me talk about where I've been. I've been at Apollo almost 20 years. When I got here, it was about the primary or secondary call. We built a special machine that is irreplaceable. First, our 16 origination platforms. Every day, 4,000 people generate senior secured risk at spreads 200, 300, 400 over comparable treasuries or investment grade. They do it every day. They have great insight into fleet leasing, aviation, and more. We spent a decade building this, $8 billion of capital. For many of our peers, this is where origination starts and stops. Many have tried to follow. But for Apollo, it's just the beginning. Over the last several years, we've brought an integrated solutions approach to create great private investment grade returns of plus 200 to 300 over comparables. This is in the early stage, and we've taken an open architecture view. We've done the same in the sponsor universe, bringing open architecture to sponsors of all our products. Not every transaction starts where it ends. Management teams of our investment grade companies had a need and didn't know how to solve it. Through our process and people, they ended up with a creative, thoughtful, scaled solution. This is a stark contrast to others with bespoke platforms and products. The final piece is open architecture with banks and our clients. This is very important. It mirrors what was going on with Glass-Steagall years ago. The open architecture with BNP in asset-based business and Citi in direct origination are landmark transactions that will be replicated. We are out first. At the same time, what we've done with clients like Mubadala, AIA, AMCO, and BCI means they are now partners with us in critical parts of our business to originate, scale, and build our third-party business. This is a decade of work and massive tuition. But what is clear is that Apollo is now the must-have partner for large-scale, complex capital solutions.

23 million people played tennis last year. How many do you think you play? How many people do you think played pickle ball? A sport I hadn't even heard of 5 years ago. 36 million people played pickle ball last year. And I attended the Central Park Major League Pickle Ball 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 INMBBEV. 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 imm 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 owns, 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 managed 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. What 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 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, just as 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 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 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, 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 who 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 have a non-traded BDC. 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, it's pretty much like pickle ball. 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 nine portfolio company, is the largest operator of pickle ball 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 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 focus 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 401k 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 fundraise.

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 in 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 Mark 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 Wasar. 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, 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, 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 wet energy to help finance their 1.7 gigawatt portfolio of renewable power. We financed 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 chat GPT, 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.

Paulo 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 Athen. 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 Novlex 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 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 Mark 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.

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 of 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. Mark 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 Athen, but for our syndication partners as well. This results in stronger returns for both us and our partners, creating a multiplier that accelerates our growth. Our philosophy is simple. You've heard Mark 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 Athen. 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, 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 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 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 have 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 meets 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 Calhoun.

Good morning everybody. It's great to see the big turnout both in person and remotely. Grant and I have the best job of all the presenters today, which is talking about Athen. We love talking about Athen. Athen 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 stair-step 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 firm taking less risk relative to others. We are underallocated to high yield assets and we have no 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. Athen 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 Athen 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 upward 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 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. Athen 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 Athen 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. Mark 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. Mark 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 23 times 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, what we call pension group annuities. 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 23 times 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 Mark 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 to $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 index 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 RIA 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 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 RIA and Athen Altitude, the tax advantage 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 RIA 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 Athen in the future, even if it's beyond the scope of the 5-year plan. I just want to share a little bit about what we see as a potential future state for target date fund. We think Athen 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 ensures 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, SR 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 Athen'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 opportunities 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. The firm 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.

Good morning. So, as you've heard throughout the day, you've heard a lot about the power of our culture and our people. And Bill and I are excited to talk to you about how we build our great culture. As Mark says, we get to do this. We've seen this slide a few times throughout the day, and the point we're trying to emphasize is we are uniquely built for this market opportunity. And our culture and our judgment is what sets us apart. Our approach to human capital is a big part of the secret sauce of Apollo. And we take the art and science of culture as seriously as we do the art and science of investing. They are totally intertwined. And we never stop striving to get better and better. Our philosophy is to drive a modern high performance culture. We do this across three dimensions. First, our purpose and values. These are the timeless principles that have been core to our success for 35 years and they are our north star. Second, our unique value proposition. So this is how we attract and retain the best talent in the industry with the ultimate learning environment, a compelling comp design and a deep sense of purpose and engagement. This is how we fuel great teams and where the best people want to spend their entire careers. It all comes together as a human capital flywheel that helps us achieve outperformance over and over again over the long term. And the heart of our culture is the apprenticeship model. And the magic of the apprenticeship model, as Mark talked about earlier, it's all about having incredible partners who are the best in the world at what they do. We attract high potential talent. We give them a clear path to the aspiration of becoming a partner and we work hard to develop them on mastering the craft. The foundation of it all is striving to build the best partnership in financial services. And the vast majority of our top leaders, they all grew up here. They're mentors to the next generation. And speaking of mentors, it's a real privilege to co-chair our partner committee with Bill Lewis to benefit from his experience and from his wisdom. So I'd love to turn it to Bill for his thoughts.

Thank you, Matt. And good morning everyone. I've been on Wall Street for a long time since the late 1970s. I spent 24 years at Morgan Stanley and among other things I either led or co-led the global M&A department, the global corporate finance department and the global real estate investment and merchant banking department. In addition, I was intimately involved in developing the best investment bankers in the world and in the creation of the managing director promotion process. I then spent 17 years at Lazard, a 175 year old global firm where I was chairman of investment banking and where I created and led the global management director promotion committee. So for more than 40 years, I've been intimately involved in recruiting the very best talent on Wall Street with a view toward developing the best possible leadership in financial services. I've also advised some of the most successful companies in accomplishing their strategic objectives. These companies have been led by the most accomplished business executives in the world. So I have experienced talent from that dimension as well. In a nutshell, I've been a part of the best of the best for almost 50 years. I've seen it all. And let me tell you, Apollo is special. When I decided to leave investment banking, I was presented with a myriad of options. But after talking with senior leaders at Apollo for almost two years, I concluded that Apollo presented by far the most exciting opportunity in financial services. By the way, the stock price has doubled since I joined in 2021. So, my calculation was proven correct. My partner Matt just outlined the theory of how we are building a great culture at Apollo, but I can tell you based on my experience that the theory is reality. Apollo's culture is truly special. We've been able to create a systematic approach to cultural innovation. We have truly assembled at Apollo the best and the brightest from the most junior to the most seasoned. What the research analyst community knows is that the lifeblood of long-term success is enterprise talent. We invest a lot of energy and resources in recruiting, developing, and ultimately promoting individuals to partners. Individuals who don't think in silos, but who have the potential to add value across the entire enterprise. What you have seen this morning is extremely vast. Matt and I lead this effort to build a strong talent pipeline. And I can say based on my tenure in financial services that we've created a system that will support and sustain the goals that you've heard from our leaders today. We are putting real muscle into building a strong talent system. Let's talk about how we deliver on our best place to be a partner goal. We are constantly raising the bar for our colleagues to practice their craft. We're ensuring the right comp design and we're keeping our small village entrepreneurial and vibrant as we grow the firm. So, let's hear directly from some of our partners about their experiences at Apollo.

Okay, so you've just heard from some of our partners and as partners we work hard to engage our people in the moments that matter to them to bring out their best and to build trust, camaraderie and teamwork across the firm. This is all about having a flat culture where our partners co-create the future of the firm with our people at all levels and our amazing HR team. So let me give you a few examples. Mark did talk about the magic of fro yo recognition which people absolutely love. I'll give you a few others. So as you can see here, earlier this year we brought all 200 of our partners together in Abu Dhabi to talk as you would expect about our business strategy but we also spent a lot of time on our cultural priorities. Every partner in the firm feels a deep responsibility to be part of this and to see that as part of their job. The hackathon. So the hackathon is about bringing the brain power of everyone who works at Apollo in a competitive way to unleash the power of generative AI. Alt Finance, our innovative initiative to attract amazing talent from HBCUs into the alternatives industry. We are very competitive people. You heard from David that we're investing in pickleball. Our employees are playing pickleball with the PE team. We are competing in the now legendary Credit Olympics. We are fostering a small village with a personal touch where every voice matters. Whether that's in West Des Moines, Iowa volunteering with the United Way. Whether that's in London at Take Your Kids to Work Day or in Mumbai with one of our newest innovations, Take Your Parents to Work Day, which we're threatening to bring to New York. As partners, we roll up our sleeves to build the culture, including the guy on the right, our CEO, stepping in as guest chef at our Greenwich office barbecue a couple weeks ago. This is a partner-led strategy and it is resulting in higher and higher employee engagement. We have a 96% response rate on our annual survey and our people trust that we will always be open to great new ideas. A big part of this story and a big part of our culture is the work we're doing on citizenship in our communities. Our goal is simple. We want every one of our people across every corner of Apollo to participate in citizenship in their own authentic ways that matter to them, including through the Apollo Opportunity Foundation, where we are working with extraordinary nonprofits around the world, as you can see, to make a difference. And our model creates both social impact and employee development. We use a concept of foundation deal teams which are modeled on how our investment deal teams work. We leverage our expertise, our creativity, and our...

Take a look at the asset manager in more detail. With FRE growing at twice the pace of SRE, we do expect our income to shift from a majority in spread related earnings today to over 50% coming from asset management in FRE and PII. And within FRE, growth is expected to be driven by third-party management fees from less than 60% three years ago to a target of more than 70% in five years as we serve a growing set of clients across the risk-reward spectrum. As shown today, we are growing from a strong foundation with a large and growing franchise in Athen, leading origination capabilities, a strong capital solutions business, and an established track record in flagship PE and other core institutional products. In total, these scaled businesses represent about three-quarters of our revenue today and are expected to grow by one and a half to two times over the next five years. They also provide the core capabilities and reinvestment capacity to lean into growth drivers for the next five years: continuing to grow third-party credit, diversifying our equity franchise into climate infrastructure, AAA, and hybrid solutions, scaling our global wealth business as we serve the large and underpenetrated market for individual investors, and further penetrating fixed income as we redefine the market for public versus private credit. These businesses are only about a quarter of our revenue today, but growing quickly and should well more than double over the next five years. And finally, we expect equity replacement in new retirement markets to begin to contribute to revenue over the next five years, although they are much earlier stages today. As we invest in the business, we expect revenue growth to move into the high teens range on average, including outsized growth in those years where we have a flagship PE capital raise.

As we execute on this growth plan, we are focused on a few key metrics. As you've heard earlier, increasing our total originations to $275 billion or more, stemming from our proprietary origination platforms — credit and high-grade capital equity origination and equity originations — scaling our annual inflows from $125 billion today to over $150 billion on average with growth across global wealth, institutional capital, and Athen inflows, and growing ACS fees to roughly a billion dollars driven by diverse activity and increasing flows across our franchise. But the primary metric we'll use to measure success is our ability to accelerate FRE growth to roughly 20% on average for a $5 billion FRE business in five years. Similar to revenues, our fee-related earnings will vary year by year with stronger growth in years where we have a flagship capital raise. But on average, we expect earnings growth to accelerate as our initiatives mature.

We also expect a significant contribution from principal investing income over the next five years as the realization environment improves and we continue to grow our carry-eligible assets. As a reminder, principal investing is comprised of realized performance fees or gross carry and realized investment income, which we expect to be modest, offset by performance-related comp, financing costs, and other corporate expenses. Realized performance fees are an important driver of employee compensation and principal investing income is a significant source of capital generation for the firm. In aggregate, we expect to earn roughly $4.5 billion of PII in total over the next five years, with variability year by year depending on the environment.

This PII outlook is supported by strong fund performance which not only generates carry on existing funds but also helps to attract new capital. We expect to generate $10 billion or more of gross realized performance fees over the next five years, with the majority coming from our established flagship PE funds. Fund 9 is our 2018 vintage flagship fund and is fully invested. As you heard from Matt earlier, Fund 9 continues to outperform the industry with gross and net IRR of 29% and 20% respectively and among the strongest DPI metrics versus our peers. Fund 10 is our recent 2023 vintage fund. Fund 10 is already roughly 50% committed with performance off to a strong start as well. At this investment pace, as you heard earlier, we would expect to be in the market with Fund 11 by late next year. And with that, I'll turn it back to Martin to cover SRE.

Mostly on time. Thank you all for the attention and for sticking through this. This has been a tremendous amount of work and as I started the day, this is literally the best time to be CEO of this business. We are getting to make years' worth of changes over a very short period of time. I'll bring back the message that I started with. In the asset management business, we have nothing but opportunity. This has been about focus. There are lots of things in the asset manager that we've elected not to do. We just have to do a couple of things well. They're all up on the screen or have been talked about today. We have lots of other choices. In the retirement services business, the team has been relentlessly focused on execution. It's now time to broaden what they do and think about retirement in a whole new context. But when I think about how daunting it is to go from where we are to the projection, I come back to this relatively simple slide. We are a small asset manager in the context of the world.

We don't have to do all that much. I said to one of you in the hallway that if you look at our fixed income business, our credit business, it's roughly $550 billion today. Not all of that is alpha. There's mostly alpha, but there's a chunk of beta in there. For us to double that business, it's finding $300 billion of assets or $350 billion of assets over the next five years. I like our odds against this TAM and against what we've invested in. Any one of these four big planets here could double our business. We're lucky we have all four. We have spent the better part of a decade, 15 years for some of the businesses, positioning ourselves for this moment. I wish I could say with clarity that we saw this coming. We did not. Changes in capital markets, changes in regulation, changes in competitive dynamics, changes in markets have afforded us this opportunity. And we find ourselves not just as a small asset manager surrounded by massive TAMs, but truly uniquely built to achieve what we need to achieve. And for us, we just have to make sure the culture is right.

The goal is not to be the fastest growing. The goal is not to be the largest. The goal is simply to execute the plan and, as I often say, to like ourselves at the end of the five-year period. We are really fortunate to get to do this. We have a tremendous amount of fun doing what we do. It is a small village. People know each other. We care about each other in the moments that matter. If you're going to be my partner, our partners for your entire career, the number of good things and bad things that are going to happen to you over that period of time is going to be quite substantial. How we deal with you in those moments as an individual is massively important to maintaining the best partnership. So we're very modest. We understand the work that we have in front of us. We understand that many companies who have been successful are content playing not to lose. We're here to play to win, and winning for us is achieving the plan, but also liking who we are at the end of the five years. So thank you very much.

Great. So, we're going to move into some Q&A. We have Mark and Martin on stage and we have mics also for the other presenters as they may participate. If you could just please state your name and your firm, that would be great. And the mic runners will come around. First question to Craig right here.

Craig Sigenthaler, Bank of America. Thank you for hosting a great event and actually thank you for being on time, too. That's not always the case. My question was on the non-US retirement business. I know you've had some success in the Japanese reinsurance market. I also saw you sold down Challenger and maybe Europe is a little tougher these days, but I wanted an update on that business because you have several businesses there. And will we see growth from inside of Athen or from the other retirement businesses that you own?

So the question is on international retirement services. I'll take a shot at that, and you feel free to add, and Jim obviously feel free to add. So, Athen's mandate includes some international markets, in particular Asia. As Grant mentioned, there are now numerous treaties, and the large, well-capitalized, well-rated Asian companies like to deal with the mothership. That is their preference. They like to deal with the ratings. They like to deal with the continuity of the management team. So I would expect most of the growth and what is in our five-year plan is pretty much focused on Athen and international markets. Challenger was, as I said on the earnings call, our chance to think about how to enter the Australian superannuation market. Australia has done an awesome job accumulating assets. They have done a less awesome job on decumulation. We actually think we can be really helpful in the decumulation business. We've developed really good partnerships with Challenger. It was not and is not our intention to own Challenger, and it turns out we don't actually need to own the stake. The stake was — we made money on the stake and we've since disposed of it. At least from Athen's point of view, Apollo retains a residual stake in Challenger. Same is true by the way for FWD. FWD is very aligned with Apollo from an asset management point of view. We are doing reinsurance. We're looking at portfolios together. But from Athen's point of view, that stake is now gone or will be gone.

And it's now where it should be, which is with Apollo. In terms of the European business, the European business is quite a large business today. But I would say that Europe is just a much more difficult place to grow a business. We've basically pivoted the management team at AORA to focus on reigniting organic growth because a series of opportunities or inorganic transactions have proved to be politically very difficult in Europe. Not just for us, but for everyone. Organic: There is a massive falloff in the availability of guaranteed income and retirement savings in the European market. And right now, the primary place we're growing organically is in the Netherlands with a little bit in Italy. We actually need to return the entire business to organic growth. We find ourselves in an interesting situation of a large profitable business with massive amounts of excess capital because we did a very large capital raise which is still not deployed, and Europe itself is wrestling with interesting issues. The US — just to start — the US is the envy of the world. We raise 50% of the world's capital. Everywhere in the world, as I suggested, regulators have two choices as to where debt capital comes from: the banking system or the investor marketplace. Everywhere they've told the banks to do less. It's just in Europe they forgot to tell investors to do more. They're just starting to do that. The conversations around liberalization of securitization, liberalization of other private assets are just starting. And to Jim Belardi's point, we only want to grow where we can earn excess spread. If there's no excess spread in public markets, you have to go to private markets. If the regimes are hostile to private markets, it's very hard to earn excess spread. And that's why the European guarantee market has virtually shut down. Not for us, for everyone.

Okay, Patrick.

Patrick Davitt, Autonomous Research. Another question on retirement, particularly US retail annuity demand through the lens of lower rates. There are early signs that demand is shifting to RIA from FIA, and Athen has pretty low market share in that product. How should we think about your right to win in RIA versus some already very established players? And in that vein, do you think you can replicate the share gains you've made in FIAs with that product?

First of all, I disagree that RIA sales are coming at the expense of FIAs. They're coming at the expense of variable annuities, and both fixed index annuities and RIAs continue to grow. There were a few questions in there. Our right to win in RIAs: I think we have to prove it. RIA is the first registered product that Athen has engaged in. And so it goes through registered distribution, which we're still in the process of building out. As I said, I think we have a great product. Our RIA sales are growing more than 25% this year, but our market share is still modest, as you pointed out, it's 2%. On the platforms that we're on, we have 10 to 15% market share. So I think in RIA, it's about getting more at-bats, getting more exposure for the product, and we're busily working on that. I think the last piece was around interest rates. I've been asked this a couple times before: We don't know. I mean, we haven't lived through an environment where rates have shot up this much and now we're trending down. But I do believe there's reason to believe that annuity sales will stay elevated. We talked about the tailwinds of an aging population. No one is forecasting rates going back down where they were. I think the consensus is 3% floor on Fed funds. I think our internal forecast is higher than that. And you also have the phenomenon of this money has come into the insurance ecosystem. They are now experiencing the benefit of tax deferral. And when the products mature, they will be offered a new opportunity to continue that deferral. So the short answer is I don't know. But I have optimism that the sales will continue to be elevated. Maybe MYGAs will come down. FIAs and RIAs have grown regardless of the interest rate environment. So I'm far more sanguine about the opportunity for retail annuities than some who've sort of implied that falling rates mean our market's going to shrink a great deal. I don't think so.

Glenn.

Thank you. Glenn Shore at Evercore. So I'm fascinated with the thought process that origination is your lifeblood. Origination is what fuels your ability to win in all these huge TAMs. Yet at the same time, if you look historically, large originators trade at low multiples. They were either cyclical because of rates and the economic cycle or they were really bad underwriters. So as you build out and especially as you build these partnerships, A: can you avoid any of the cyclicality by diversification and B: how do you avoid adverse selection with all these partnerships in terms of what you do take on?

So let's start with the asset management business because I don't think origination is our lifeblood. I think it's everyone's lifeblood. I think if I'm right and we're right that public and private are going to converge to some extent, illiquidity premium, structuring premium, they're going to disappear. Where you're going to get excess return is from originating product. Most people who have gotten into — if you originate bad product, you will have a bad business. If you are an asset manager who picks bad stocks and picks bad bonds, you will have a bad business. So it presupposes we can do what we do well. Why do people like doing business with us? Because we have skin in the game. We are 25% of everything and 100% of nothing. Everyone is making a journey. Endowments and institutional investors have been invested in alternatives for a really long time and they've developed a comfort level. But when you talk to family offices, to individuals, to insurance companies, when you start talking to the fixed income market — in the room here, we just take this for granted — but everyone is on a journey of education. The fact that we own the product and that we are not a promoter of product, a salesperson of product, a bank who has no skin in the game, an asset manager who just gets a fee, is a massive part of our selling point. We go to market: purchase price matters, excess return per unit of risk, and the most aligned investor out there. I think that's to our betterment. And the final point really gets to quality control. When you consume the asset yourself, you are very concerned about what happens. Each of the platforms that we run, they are not captive only to Apollo. Every one of the 16 platforms that Chris gets up to care for each day now with a massive team reporting to him. We want to retain third-party market access because it's a good discipline for ratings. We don't want to own 100% even of the platforms. We have invited seeming competitors of ours — Mass Mutual, others, Metropolitan Life — into ownership of these platforms. We never want a platform to be so big that we have to do business. Just like Jim and Grant talked about running Athen as a principle, we run these origination platforms as a principle. If we don't like the flow, we want to shrink it. If we think spreads are wide, we'll accelerate it. We compensate people not for what they produce, but for ROE, net of losses over a really long period of time. There is no perfect outcome. There's no perfect alignment, but relative to a banking institution, relative to a pure asset manager, relative to a specialty finance company whose only business is specialty finance and therefore has to love their asset class every single day, we are the best we can be in the context of nothing is perfect.

Alex.

Thanks. Alex Bloss, Goldman Sachs. I was hoping we could spend a minute on your capital return framework and just double-clicking into the $21 billion you highlighted a number of times today. I think at a high level, it feels like there's a lot of discussion around growth of third-party capital, which obviously comes with higher ROE, more capital generation. So as you think about the buyback and the toggle between some of the M&A opportunity versus doing more buyback over the next several years, what does that look like? What are the key considerations? What are some inorganic things you still might need to add to? And just a clarification point: I think I heard you say you're using about 600 million shares throughout your targets for '29 as well. I think previously you kind of talked about 600 by '26. So is that the case and therefore '29 will be lower than 600?

I'll add just the overview of this. Look, we're forecasting a plan that's out in the future where a portion of the capital generation comes from the good work of Matt and David and realizations in the portfolio, which have been delayed for an industry over a long period of time. We're more mature than most and doing a better job than most, but still it's uncertain. What we've done in constructing the plan is we've left, what I'll call, two levers in the plan. One is Athen's growth is up, but on a percentage basis it's not up as much in terms of new business. Think of how fast Athen has grown from a new business point of view, and we're talking about going from ~70 billion to $85 billion on average. The result will be significant capital accumulation at Athen because we've only assumed that there's a $750 million annual dividend, which is becoming a lower and lower percentage of Athen's earnings. And the reason I mention this is we have a choice. The ecosystem is growing faster. Anytime we decide to retain more business, we don't have to actually do more business. We just keep more of the business we're already doing and deploy some of that capital. So we've left that as a buffer because we will get a rainy day, we will get a cycle, we will get spread tightening, we will get things we don't like, and we want the flexibility to meet our commitments to you as we have over the four planning periods. The other is we have not assumed a return on roughly $7 billion of capital. We have a pretty rough framework. Given how much stock employees own, we're very focused on stock and share count and on other things. And so we will, I assure you, get a return on $7 billion of capital. And that return can come from just buying back the stock with all or some of that. But I agree with everything that Martin said. I don't see significant game-changing M&A for us. That does not mean we will not do M&A. I could think about distribution, I could think about additional skills that we don't have, particularly as they relate to the high-net-worth marketplace. I can think of niche tuck-in acquisitions, but I don't see significant M&A on the horizon.

Mike.

Great. Thank you. Mike Cypress at Morgan Stanley. Just a question on guaranteed income solutions that came up throughout today's presentation. Just curious how you see that developing, particularly in the DC channel. What might be successful, do you think, in terms of products? What might that look like, and what do you see as perhaps the winning strategies and approach from a distribution standpoint? I think there was some reference to target date earlier. Maybe you can update us on how you're thinking about that as well.

It's good because you'll actually get debate amongst the team. So, why don't you start and I'll voice over.

For the second time in Q&A, let me start by saying I don't know. I think it's pretty early days and we and others are trying to figure out solutions. It was SECURE Act 2.0 that actually allowed annuities to go into DC plans. It is a very difficult ecosystem to navigate between plan sponsors, recordkeepers, product providers, target date fund managers, the required legal requirements for liquidity and all the rest — very difficult to navigate. All I can tell you is we're spending real time thinking about it, coming up with different ideas, thinking about pieces of the puzzle. A product like a SPIA, single premium immediate annuity that we just introduced, could be a piece of the puzzle. The future target date fund that I outlined could be a piece of the puzzle. We're in the market now as a parts provider to a solution being offered by ARS which has a target date fund that qualifies as a QDIA, and where the target date fund rather than migrating from equities to fixed income migrates from equities to a fixed indexed annuity and where that guaranteed income can be taken by the participant when they leave the plan. We think that's a superior solution. The market hasn't decided yet. Other plans that you've seen announced provide for income, but the individual has to select. And I think, as most of us in this room know, most people don't select. They set it and forget it. Over 70% of people in DC plans never make a decision to change anything after setting it up. So I think there's a lot of elements of it that are yet to be played out in the marketplace. All we're saying is we're throwing our hat in the ring and we're devoting serious assets of people and capital to try to figure it out.

So in the plan is just what Grant said: serious assets and people to get to guaranteed income. It is one of the things in the future. If you think about the public policy issue here, we have $12 to $13 trillion in 401(k) and we're forcing these really long-term investors to own daily liquid index funds for a period of time, 50 years. Why? I can't tell you, but it relates to a vague notion that public is safe and private is risky. It's my belief that if we have a change in administration, we will have, in a very short period of time, illiquidity introduced into 401(k). That will not just benefit Apollo, that will be another source of demand for the industry of a magnitude that will be quite substantial. The other is we have to reimagine what a guaranteed income solution is. One of the questions I ask — and I think the team is responding to — why is an annuity more than one page? Why shouldn't it just say that Mike, you get guaranteed income for life and it has a QIP so when you tire of it you can sell it? It's not clear to me that that product should not exist. It's just not what exists. The second point I would make — one point I'll make is product evolution. We cannot think of the existing product in the existing form solving the problem you're talking about. It's going to be a new product that will be much simpler to administer. The other is right now annuities are so complicated that they are sold through advisor channels or third-party channels and distribution costs can be substantial. When you deal directly with a fiduciary like a target date fund, you are able to either increase — you're not paying a distribution cost — you can either increase the economics and make it more attractive or you can retain a portion of that to hedge the longevity risk. And so I think, to Grant's point, the outcome that we can offer with access to private markets and guaranteed income is not 5% better or 10% better. It's 60% better. We're going to get there. We just can't tell you exactly how, but baked into the plan is very little of it.

Brandon.

Brandon Hawen, UBS. Two questions on retirement services. So you spoke to ADIP growing, but is it going to grow proportionally as a percentage of the capital supporting Athen? And then you made some changes to the alts portfolio that you spoke to, Martin. Is it now just Venerable in there? And so like Catalina and the other investments were gone? And maybe could you speak to the lessons learned from that change?

You want to take the first one? I'll do lessons learned. In international markets, particularly in Hong Kong and Australia, we started with a premise that these were really attractive markets. We didn't know if they were attractive as principal or as agent. We actually figured out that they were more attractive as agent than as principal, and yet we left the stake in there. So we had early appreciation and then we kind of left it there. And as I said on the last call, the asset and the investment should follow where it benefits. And since it is an agency relationship, it left Athen and moved to Apollo, and in some cases was downsized and sold. I don't think there's any overall lesson learned because when you think of other relationships like Venerable, Venerable has been massively successful. On average, all the insurance stakes have been really successful. It's just a lot of that success played out and in the quarter that we had, we had a negative mark on Catalina and we had no appreciation on Challenger and FWD, and that created a challenging situation and forced us to just get after it.

In terms of the mark, when we started 15 years ago, we had a choice. Recall that Athen's portfolio is roughly 95% fixed income, of which 95% is investment grade and 5% of it is equity. Most people, including our regulators, assume that as a firm that had its heritage in private equity, we would have put private equity into that 5% bucket. That in fact is what most of the competitors have done. And in addition to real estate equity, we decided that we wanted to have less volatility and more stability of return. And so we started doing hybrid transactions as David and Matt described. And over the years, we're now circa 200 different hybrid transactions, fully diversified by vintage and by type. And AAA has performed really well. We like it because it also works well with interest rates and the interest rate risk we carry. Typically, we've seen tighter spreads when rates are declining. Typically, we've seen equity markups when rates are declining. It's not a perfect hedge, but it is a hedge, but without the volatility. So I think we're happy with it. I think you're going to see us continue to allocate 5-ish% to equity. I think if you have a complete repricing and debacle, we'll actually go up in percentage because it will be more attractive.

I know there's more questions in the room. But in the spirit of keeping on time, I think that's a good place to end. We'll finish where we started, which is we very much appreciate all the time that you've taken with us this morning to hear our story. And if you have any questions that went unanswered, please feel free to follow up with us directly. Thanks again.