logo-loader

Apollo's profit soars on higher carry

Published: 14:43 09 Aug 2011 BST

no_picture_pai

Buyout firm Apollo Global Management (NYSE:APO) said Tuesday that its second quarter profit skyrocketed on account of higher performance fees, or "carry", from its private equity business.

As asset prices have appreciated in the first half of the year, private equity firms have been able to report positive results. Apollo was founded by Leon Black, and recently listed on the New York Stock Exchange in March.

For the three months ending June 30, total economic net income, which includes unrealized gains and direct compensation impacts related to the gains, was $139.6 million, an increase of $116.7 million, or 510% compared to a year earlier. On a per share basis, economic net income for the latest quarter was 31 cents.

Using Generally Accepted Accounting Principles (GAAP), net loss for the company was $51.0 million, versus a loss of $75.1 million in the prior year period.

Total revenue jumped a whopping 290% to $308.9 million during the latest quarter, as carried interest income, the fee it earns on profits made from the portfolio of companies it manages, rose to $164.1 million, making the biggest contribution to its top line. This compares to a loss of $54.7 million a year ago.

Management fee revenue climbed 14% to $121.2 million, while transaction and advisory fee revenue decreased 12% to $23.6 million.

Total assets under management came in at $71.7 billion, an increase of 32% versus a year ago, driven by appreciation in the underlying value of investments managed. Fee-generating assets under management rose 13% to $48.9 billion.

In its private equity segment, carried interest income totaled $139.0 million for the latest quarter, which includes gains from the sale of portfolio company Hughes Communication's, an investment in Fund IV.

As of June 30, Fund VII, which launched in 2008, generated an annual net internal rate of return (IRR) of 29%, while Fund VI, which began investing in 2006 during the peak of the credit and housing market boom, generated an annual net IRR of 11%.

Uncalled private equity commitments, or "dry powder", totalled $9.9 billion at the end of the quarter.

In the real estate unit, total revenues increased by $8.1 million to $9.7 million, driven by higher management fees following Apollo's acquisition of Citi Property Investors in November last year.

During the second quarter, Apollo's AGRE U.S. Real Estate Fund held a second closing, raising $384.9 million.

In the capital markets segment, Apollo has continued to build scale, particularly in senior loans. It raised $461 million for its third new collateralized loan obligation (CLO) since last year, and has agreed to acquire Gulf Stream Asset Management, which currently manages 10 CLOs with more than $3 billion in assets under management.

At quarter-end, Apollo had $837.0 million of cash and equivalents, and $738.8 million of debt.

Caledonia Mining tackles 2023 challenges with optimism for 2024 as it...

Caledonia Mining Corporation PLC (AIM:CMCL, NYSE-A:CMCL) chief executive Mark Learmonth tells Proactive's Stephen Gunnion the company faced a challenging 2023, primarily due to poor production in the first half of the year at its core asset, the Blanket Mine in Zimbabwe, and an underperformance...

1 hour, 51 minutes ago