Apollo Global Management Bank of America 31th Annual Financials CEO Conference

The fundamentals are actually quite positive. Everyone has a job. There is no immigration. Let's talk U.S. first. This is the largest market. Everyone has a job, no immigration. You have a massively accretive CapEx cycle, which is creating demand across lots of different sectors. You have the government policy incredibly accommodative. Capital markets are wide open. Valuation aside, I think it will be difficult to cause a U.S. recession over the near term. The companies have been shockingly resilient. Earnings are up. Generally, credit performs well if the economy is good, absent specific risks or stupidity.

I start with our industry. In our industry, 95% of the firms literally want the world to stop changing until they retire. That does not surprise me because the size of the private markets are much bigger than any of us thought it was going to be. People have created a lot more wealth than they otherwise thought they were going to create. It is very difficult to kill these firms because they bleed down over a long period of time, making very few decisions each year. In our industry, a handful of firms, fewer than 20, have decided to evolve their business model to serve the new environment. By my calculation, 10 have succeeded. We're one of those 10. Then you now get down to unique foci of each of the individual firms and what we're trying to do.

If I look at the big macro that applies to all of us, we are a source of excess return per unit of risk. If we ever lose focus on that, there's little value in wanting to be in private markets versus public markets. The second is we are being driven forward as an industry by this global industrial renaissance, which is happening everywhere in the world, and the scale of it is off the charts. The third is we are increasingly being sought out as a means of diversification versus public markets, where the S&P 10 companies or 50% of the S&P all lever to the same trend, and you're seeing the same thing happen in credit markets. Those three macros are driving our business.

I'd say on a more Apollo basis, we've always as an industry been serving one client, the alt bucket of institutions. We are fortunate we have five new clients. We have individuals, we have insurance companies, we have the debt and equity bucket of institutions, we have traditional asset managers, and we have 401(k), DC, and all forms of retirement. That first client, the alt bucket, started with a business model that was based on funds. It turns out that none of the five new customers are natural investors in funds. That doesn't mean they won't come to us in semi-liquid formats, but in size and scale, I do not believe they're going to come and fully get the benefit of integration in private markets and that we are going to have to go to them. That's a big differentiator of what we're doing versus everyone else.

What does that mean? That means daily NAV. We are now daily NAV across our IG suite of products as of 6/30. We will be daily NAV across the entirety of our credit business 9/30. It means everything has a CUSIP or an ICE ID. ICE being the owner of the New York Stock Exchange, not the immigration enforcement. Things trade. We've traded north of $30 billion so far this year. We'll be $50 billion by the end of the year. The last piece will be regular way settlement. I think we will get to regular way settlement by next year. If you think about what that means, we will need to go to those clients and become part of their operating infrastructure as opposed to asking them to come to us.

I think you're seeing the beginning of this, not just in the things I've just mentioned, but also in the product structures. I'm happy to delve into that, but don't want to take too much time on one question.

Originally, look, having started Athene from scratch 2008, 2009, we discovered pretty quickly that if we wanted to succeed, we could not rely on public IG markets. Definitionally, the public IG market is beta. It is 100% beta. There is no alpha left in it. If a big determinant of the profitability of a retirement insurance company is their ability to have asset alpha, we needed investment grade because that is what belongs in a regulated balance sheet, but we also needed alpha. We began the origination business. Origination initially started out as platforms only, and then a little bit of calling on corporates, and now it is a full-fledged servicing of this global industrial renaissance. If you think about where we are building, we are building in the places that are necessary to provide capital. The scale of capital is really hard to appreciate.

In the U.S., $4 trillion plus. Canada, for those who watched the Canada Investment Summit, they are looking for $1 trillion. The Gulf, $1 trillion. Who knows, even Europe might actually get going. It is energy, it is energy transmission, it is energy transition, it is infrastructure, it is next-gen manufacturing, it is defense, and it is AI and data. It is all happening at once, and it is happening at a scale. The places we are investing enable us to take advantage of that. We are seeing it across the globe. If I just tick off the big issuers, certainly the issuers here, BP, Shell, AB InBev, Air France, Électricité de France, RWE, AT&T, Caterpillar Inc., Nvidia, Broadcom. It is not what most people expect in the private market, the names that they expect to hear.