UPDATE 2-Apollo tops profit estimates on strong fee-related earnings, inflows

Apollo Global Management beat second-quarter profit expectations on Tuesday, helped by record fee-related earnings and fresh cash inflow from investors during a turbulent period marked by President Donald Trump's tariff salvos. Shares of the investment giant rose nearly 2.3% to $145.28.

Founded in 1990 with a focus on private equity, Apollo branched out to become a major corporate credit investor and took full control of insurance company Athene in 2021, steps that have allowed it to somewhat stabilize earnings. Apollo posted adjusted net income of $1.18 billion, or $1.92 per share, for the three months ended June 30, surpassing analysts' expectation of $1.84, according to estimates compiled by LSEG.

Fee-related earnings hit $627 million, up 22% from a year ago. Management fees in credit rose 25%, dwarfing the 12% jump in fees from equity. The origination business where Apollo raises loans for companies clocked up volumes of $81 billion, boosting fees from that side of the business by 4% from a year ago.

The company generated $61 billion in net inflows, stemming from outside investors, assets added through the purchase of a smaller manager and its insurance arm Athene. Total assets under management rose 21% to $840 billion.

Against a tough backdrop for private equity's traditional model of buying and selling companies, Apollo said it earned $219 million in fees, reflecting "a few sizeable monetizations" or asset sales. However, it said activity "remains prudently delayed amid an uncertain exit environment".

PRIVATE MARKET PUSH Apollo CEO Marc Rowan expressed support to a likely move by the Trump administration to encourage more retail retirement funds to be channeled into private markets.

"I expect there to be significant proposed changes to the regulatory landscape to make this easier," he said. Rowan has said the demand for private assets will remain strong and he is more concerned about the supply.

The company is coming up with new ways to tap into that demand, including a tokenized feeder fund and a private credit exchange traded fund with State Street. However, executives took a more measured stance than peers on the prospects of exiting investments via initial public offerings.

"You will see greater monetizations as the risk appetite continues to expand," Apollo President Jim Zelter said. "But the broader solutions as an industry on how to solve the private equity overhang of monetizations is not just going to occur because of what happens in the IPO market."

The company's hares have lost nearly 14% of their value so far this year, compared with a nearly 8% gain for the benchmark S&P 500 index. "We expect stock to claw back year-to-date underperformance," TD Cowen analysts wrote in a note.

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