Apollo Global Management, Inc. Barclays 24th Annual Global Financial Services Conference

My pleasure. Good to see you.

Sure. I'll start obviously with the caveat that nobody has a crystal ball. We've been saying for a couple of years now that this higher for longer, and I think it's certainly playing out that way. Everything we looked at, whether it's the strength of the economy, the persistent low-level inflation, really pointed towards rates staying up. On top of that, just the AI CapEx build-out and the amount of IG issuance that is, quite frankly, crowding out Treasuries, is continuing to hold rates higher. Everything points in that direction. I was chatting with Torsten, our Chief Economist, at the end of last week and asked the question, what is his estimate of recession in the next 12 months? He put it south of 20%, somewhere between 10% and 20%. Just all indicators are pointing to continuing to chug along.

As long as the U.S. consumer keeps spending and the AI build-out keeps happening, things continue to motor along. While the tail risks keep growing, geopolitical instability, domestic political questions, the trade war, inflation, energy prices, the market doesn't seem to care. As long as those two things of consumer spending and AI build-out continue forward, the underlying economy and therefore the markets keep powering forward.

Yeah. I'll start just by pointing out, I spent the last couple of hours here at the conference meeting with a variety of shareholders and the like, and 95% of the questions were AI related. I've come to the conclusion that these meetings were more about helping folks figure out little factoids that might affect their AI portfolio rather than their alt portfolio. To answer your questions more specifically, look, there are lots of ways to play this AI cycle. There are lots of perspectives on the AI cycle. Our belief for sure is that the volume of AI goods and services is only going up and to the right at a pretty aggressive pace. How that gets valued, where the value resides in the value chain, I don't know. There are people who are making bets figuring that out.

Our perspective is, how do we sell the pickaxes to the gold miners as opposed to being the gold miners ourselves? How are we finding ways to finance this massive opportunity, or structurally invest in it without necessarily having to be the marginal equity dollar on what is the ROI on a data center or a TPU or something like that? We have really picked our spots. One of Apollo's real strengths is the ability to muster large amounts of capital in very creative fashions, and that's what we've been doing here. Finding interesting ways to partner with large IG counterparties.

The biggest players, as we've been saying for some time, it's become very clear now, the amount of capital needed for I mean, we're talking about the AI build-out, but you can go from the digital infrastructure to energy infrastructure, to industrial infrastructure, defense infrastructure. I mean, the amount of capital needed over the next 3, 5, 7, 10 years is truly extraordinary. Like, once in a generation type scale. Companies are figuring out that they can't just tap the equity markets. They can't just tap the public bond markets. They need an all of the above strategy, that includes various forms and shapes of private capital. That's the approach we're taking, working with and creating very bespoke solutions for some of the largest players in the AI space.

Yeah. Look, they are highly structured. They are structured in a way to be investment grade. As you would imagine from any Apollo transaction, very protected when it comes to what type of risk we're taking and not taking, and then therefore, as a result, what type of returns we can expect to achieve versus not expect to achieve. While we haven't gone into all the details of these things publicly for a reason, these are, like I said, highly structured and, dare I use the term trade secrets, but to some extent, some proprietary structuring. It follows the mantra and the ethos of what I was just describing. Where they benefit, they benefit Apollo in terms of interesting assets that we can put on our own balance sheets, interesting assets for our client balance sheets, interesting assets for our syndication partners.

Really, as we've said for years and years now, the lifeblood of our business is origination, is being able to access interesting transactions, and these are certainly the interesting transactions of the day.

That is true, subject to the scale of some of these things are getting to the point where we obviously have single issuer limits and sub-sector concentration, things like that. We're obviously super thoughtful balance sheet by balance sheet where this stuff goes. You should assume a meaningful piece of everything we do ends up on our own balance sheet.