Disclosure
Kleinman: Apollo held zero real estate equity on insurance balance sheet before 2022
“On our insurance balance sheet, we had zero real estate equity at the time, which is atypical for a big IG balance sheet like that.”
Insight
Kleinman: Private equity outgrew its historical culture of extreme secrecy by 2020
“Private equity is a secret of business. Information was power. Information was kept very close to the vest. The less the outside world knew about what we did, the better. We had grown up in a very non-communicative way, both externally and internally. When pri…”
Insight
Kleinman: Apollo penalized hiding bad deals early, not making mistakes
“At Apollo, you historically didn't get in trouble for doing a bad deal. You got in trouble for not talking about it, 1218, 24 months before you hit the wall.”
Opinion
Kleinman: Human capital businesses are the hardest type to buy in private equity
“I used to say in private equity, those are the hardest types of businesses to go buy. I'd much rather buy business where your physical plan, your fixed assets are just there. Businesses where your people walk out every night, and your assets are your people. T…”
Insight
Kleinman: Financial incentives fail without perceived multidirectional reciprocity across teams
“If all the benefit went from this direction to that direction, I don't care what the financial incentives are, people would throw their hands up and say, I'm not doing that. But because the system is a flywheel, and our people see the benefit flowing in all di…”
Insight
Kleinman: Large-scale M&A in asset management is fraught due to cultural mismatch
“The asset management industry is fraught with bad M&A. It's hard to merge two completely disparate cultures. Tuck-ins are fine, but bringing in big stock mergers are tricky in the asset management industry where your people are your asset.”
Assertion Not checkable as stated
Kleinman: Most alternative asset managers scaled enough to go public already are
“There's only a handful of alternative asset managers that have the scale To go public, and the vast majority of them are public already.”
Insight
Kleinman: Underwriting Quality Determines Credit Performance, Not Public vs Private Structure
“The ultimate performance through the next cycle is going to be more determined based on the quality of the underwriting than was this a private credit fund or a public credit fund?”
Disclosure
Kleinman: Apollo constantly trades upside for downside protection across asset classes
“We are constantly trading the last percent of upside for downside protection across every asset class that we invest in.”
Assertion Supported
Kleinman: Private equity faces fourth or fifth year of depressed realizations
“We're going on to year four, year five of meaningfully depressed realizations for the market in general.”
Assertion Supported
Kleinman: 401(k) Market Is $13 Trillion with Essentially Zero Private Assets
“And for one K is going to open up to private assets. That's a 13 trillion dollar market that has essentially zero private assets in it.”
Assertion Supported
Kleinman: Private equity grew from under 0.5% of GDP in 1994 to 10–14% today
“Private equity probably represented less than a half a percent of GDP versus the 10, 12, 14% that it is today.”
Assertion Supported
Kleinman: Apollo Bought Compass Minerals Under 6x EBITDA, Made 5x Return
“We bought it at under six times enterprise value to EBITDA, but because of the nature of that business, much of its business went into highway salt. You were able to scale the business. It was a surprisingly more stable business than you would have thought, an…”
Disclosure
Kleinman: Apollo bought tens of billions in discounted bank debt during GFC
“We were able to approach banks and buy tens of billions of bank debt at a time at deeply discounted prices. We started accumulating enormous amounts of corporate debt.”
Disclosure
Apollo allocates 5% to sub-IG credit and 5% to alternatives in insurance
“Rough round numbers, about five percent would be sub IG credit, and about five percent would be traditional alternatives, private equity, infrastructure, those sorts of equity of other vehicles and structured equity, hybrid equity, things like that.”
Disclosure
Kleinman: Apollo PE held 'near miss reviews' for close-call wins
“When I was leading private equity, we would have what I call near miss review. Not just the deals that went wrong, But the deals that went well, but for the skin of our teeth could have gone the other way.”
Disclosure
Kleinman: Every Apollo employee receives stock comp and citizenship-based bonuses
“Well, for one, it goes back to everybody's bonus to some extent is based on a qualitative, were they good Apollo citizen? Two, every employee at Apollo gets a portion of their comp in Apollo stock, and the stock only goes up if all the ships are rising, not if…”
Disclosure
Kleinman: Apollo rarely used public stock for M&A as originally anticipated
“The one thing that I would have thought we would have done more, having a currency for acquisitions, was one of the reasons we went public. It hasn't materialized in the way we would have thought at the time. We tend to do a better job building our own busines…”
Disclosure
Apollo is expanding into 401(k)s, mutual funds, and ETFs
“In the coming years, we've been vocal Figuring out how we're going to be accessing the four one K market, the traditional asset manager. So the mutual fund market, the ETF market, those are some of the places we're going now.”
Insight
Kleinman: Hybrid equity targets low-to-mid-teens net returns with debt-like downside protection
“Hybrid is forms of equity that are more downside protected, so not swinging for the 20% rate of return per year, but low to mid-teens, net rates of return that give you more downside protection, things that look and smell like debt, but have enough equity leve…”
Disclosure
Kleinman: Worked first year at Apollo in 1996 without knowing his compensation
“I worked the whole year without really knowing what my compensation was going to be. I came and Figured I'd get a bonus at the end of the year, and the rest was history.”
Disclosure
Kleinman: Apollo deployed early 2009 distressed assets into its undrawn PE fund
“We started with deeply distressed assets, which fit squarely into our private equity fund. We had a large private equity fund at the time. It had just been raised, so basically undrawn.”
