Invest Talks: A Conversation With Marc Rowan
A virtual series, Bloomberg Invest Talks helps investors navigate this dynamic period by tapping into the perspectives of top global investors, financial executives, regulators and policy makers in conversation with Bloomberg’s top journalists and analysts.
In this latest installment, Apollo Global Management co-founder and newly minted CEO Marc Rowan sits down with Bloomberg’s Jason Kelly for a wide-ranging interview about his vision for the investing powerhouse, pushing the firm into new markets and Apollo’s increasingly influential role in shaping the alternative and mainstream investment landscape across private and public markets.
- Marc Rowan, Co-Founder and CEO, Apollo Global Management
- Jason Kelly, Chief Correspondent, Bloomberg QuickTake
Below are some highlights from the event.
Click here to view the full event.
On Coming Back to Work:
“So it’s pretty amazing, I have to be honest. So we are not mandatory back in the office until September, but we’ve now hit 65 percent voluntary, and the experience is actually pretty interesting. People left for the pandemic, and it just so happens that in between then and now we might have renovated the entirety of the firm. So, they’re coming back to a new workspace. It doesn’t look like anything they’ve seen before and everyone is actually having a pretty good experience. The vibe is just incredibly positive.”
On Noise vs. Reality:
“It was definitely a noisy year. But it was interesting. I did a little bit of a year in review for our largest investors and I said, ‘All right, let me characterize the last year the way I would.’ Assets under management up $146 billion. Record profits. $92 billion of deployment. We also hired 300 people remotely, from 1,300 people to 1,700 people, and turnover went down. So, if I had told you that you would have said, ‘Oh my god, really?’ Because the noise sometimes just exceeds the reality of what’s happening. And so imagine how well we would do without noise.”
On the Next Phase:
“The industry that we are in, the alternatives industry, everyone kind of came up the same way. You have a group of firms that started life as private equity firms. If they were really good at that, they were trusted with more capital. They got to diversify. And if they were really good at that, they got to go public. But that whole generation of firms started as private partnerships with a group of founders, of which [Apollo co-founder] Leon [Black] was one, and the others are very well known. We are in the process of a generational shift.
“So, we’ve now done the entirety of a generational shift at Apollo. And that means governance. That means one share, one vote. And that also means Leon stepping down from the firm at the beginning of the year and [Apollo co-founder] Josh [Harris] stepping back upon the closing of the Athene deal. Now, I think every firm in our industry is going to go through this same generational shift, they likely will do it less noisily than we have, but nonetheless we’ve accomplished it. So for me this is my 36th year, 31 years at Apollo, and I’ve never had more fun.”
On Market Differentiation:
“As I shorthand our business plan, I tell our clients that when you look at us today and then you look at us in five years, we will be twice as large in yield. We will double the size of our yield business and our hybrid business, and our opportunistic business, I believe, will be 50 percent larger, coupled with a thriving capital markets business that connects all three of those businesses.
“Blackstone has gone on another path. Blackstone is also in the spread business. And this is kind of an interesting thing — they derive spread through the management of public and private REITs and they receive fees for doing that. We derive spread through the management of an insurance company balance sheet. We can debate which is better and which is worse. At the moment, they’re afforded a higher valuation on the spread associated with those assets versus the assets that we are. But I like where we are.”
On High-Net-Worth and Retail:
“The institutional business is the bread and butter of alternative asset management, broadly defined. But what you’ve seen in the past decade is this unbelievable creation of wealth, whether it’s been entrepreneurs coming out of technology or it’s been entrepreneurs coming out of the public market or it’s just been the generational transfer of wealth. So before you get to 401K and true retail, you’re watching high-net-worth become really high-net-worth and the product development, the product sophistication, is now moving to a par with institutional.
“A lot of the most interesting product development is actually taking place in that channel. I think that’s where you’re going to see the democratization first take place and I think you will see it move to mass affluent. Whether it eventually gets to retail or not will be a function of the regulatory environment, politics and a variety of other circumstances. But institutional business is going to grow. But this high-net-worth channel…and the mass affluent channel is just too big to ignore.”
On Financial Innovation:
“All manner of fintech companies are gearing up to provide the kind of services that historically have been provided by traditional investment firms on the one hand and banks on the other hand. Some of those firms will have balance sheets. Some of those firms will not have balance sheets and they will partner with people like Apollo who will be their balance sheet. So how this whole realignment takes place, I can’t tell you. As I’ve said, when I say democratization of finance, I don’t just mean on the retail side, the high-net-worth side. I also mean on the origination side.
“You know, the financial crisis in 2008 pushed a lot of activities out of the banking sector and into the non-bank-lending sector, some of it for good, some of it for bad…it’s a wide-ranging debate but it’s happened, and those activities I believe are going to continue to take place outside the banking sector as credit formation increasingly is done with investors who have matched capital to provide this.
“So, we’re in a really interesting period of time. It makes it incredibly exciting to come to the office each day. It also means the culture needs to accept this. Yeah, and part of my job is to prepare the culture to accept it to make sure the speed of decision making accepts this.”
On the Future:
“The business has changed massively, it will continue to change massively. Change is a constant, but it starts with one thing: ultimately, the best team, the best culture, wins. So focusing on culture, really important to what I’m doing. Very focused on it. Team. The articulation I’ve given internally is we are striving to be the best place to be a partner in the financial services industry. Bar none. At the end of the day, we offer our clients one product: judgment. That’s it. We only offer judgment, and judgment comes, in my opinion, over a very long period of time, seeing what we do and what we don’t do, Because we want you to bring Apollo judgment informed by everything that we do and know.
“So once you’re with us, we want you to stay for your entire career. That means it has to be satisfying financially, you have to like the people you work with, you have to like the environment, you have to like how decisions are made and the absence of stupidity. That’s it.”
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