WEBVTT 00:00:00.000 --> 00:00:02.580 Welcome back to the Deep Dive. Our mission, as 00:00:02.580 --> 00:00:05.379 always, is to take these massive, complex stacks 00:00:05.379 --> 00:00:08.759 of financial reports, of journalism, of industry 00:00:08.759 --> 00:00:11.880 analysis, and just distill them down. We cut 00:00:11.880 --> 00:00:13.599 through the jargon to give you the essential 00:00:13.599 --> 00:00:16.500 knowledge you need to be genuinely well -informed. 00:00:16.800 --> 00:00:20.660 And today, we are peering deep. deep into the 00:00:20.660 --> 00:00:23.359 engine room of modern finance. We are. We're 00:00:23.359 --> 00:00:25.559 talking about the world of alternative asset 00:00:25.559 --> 00:00:28.399 management. This is a realm where, you know, 00:00:28.399 --> 00:00:30.899 trillions of dollars are shifting ownership of 00:00:30.899 --> 00:00:34.079 global industry. And yet the firms themselves 00:00:34.079 --> 00:00:37.240 are often complete unknowns to the public. Our 00:00:37.240 --> 00:00:39.479 focus today is on one of the absolute biggest, 00:00:39.640 --> 00:00:43.179 a true powerhouse. Apollo Global Management Inc. 00:00:43.600 --> 00:00:46.140 Or AGM. That's right. And when we say their influence 00:00:46.140 --> 00:00:48.479 is everywhere, we mean it literally touches your 00:00:48.479 --> 00:00:50.039 daily life. Yeah, we're talking about the cruise 00:00:50.039 --> 00:00:52.299 line you might book for your next vacation. The 00:00:52.299 --> 00:00:54.759 actual physical telecom lines carrying data to 00:00:54.759 --> 00:00:57.179 your phone. The movie studio that makes the blockbuster 00:00:57.179 --> 00:00:58.899 you just watched or even the regional television 00:00:58.899 --> 00:01:01.659 station that delivers your local news. It's incredible. 00:01:01.859 --> 00:01:04.760 If Apollo hasn't owned it at some point, they've 00:01:04.760 --> 00:01:07.180 almost certainly provided the crucial financing 00:01:07.180 --> 00:01:10.090 that made it happen. So our sources for this 00:01:10.090 --> 00:01:12.370 deep dive really illustrate the evolution of 00:01:12.370 --> 00:01:15.549 a remarkable financial machine. Our mission is 00:01:15.549 --> 00:01:17.989 to take you on a journey through Apollo's history. 00:01:18.069 --> 00:01:22.569 We're tracing their path from a really niche. 00:01:24.079 --> 00:01:26.739 opportunistic firm born out of a financial collapse 00:01:26.739 --> 00:01:30.299 in the 90s. All the way to becoming this diversified, 00:01:30.400 --> 00:01:33.620 multi -trillion dollar manager of global capital. 00:01:33.799 --> 00:01:36.079 We want to understand the unique and sometimes, 00:01:36.219 --> 00:01:39.200 let's be honest, aggressive strategies that fueled 00:01:39.200 --> 00:01:41.640 this incredible growth. And critically, how their 00:01:41.640 --> 00:01:43.780 business model has just fundamentally changed 00:01:43.780 --> 00:01:45.180 in the last five years. There's a whole new game 00:01:45.180 --> 00:01:47.319 for them. OK, so let's just let's unpack this 00:01:47.319 --> 00:01:49.519 with some perspective on their scale. As of early 00:01:49.519 --> 00:01:53.180 2025, Apollo Global Management has a staggering 00:01:53.180 --> 00:01:57.140 $840 billion in assets under management, AUM. 00:01:57.299 --> 00:01:59.280 It's a number that's almost hard to get your 00:01:59.280 --> 00:02:01.040 head around, to put that in context for you. 00:02:01.079 --> 00:02:03.739 That is larger than the entire GDP of nations 00:02:03.739 --> 00:02:07.010 like Switzerland or Turkey. Yeah. And that near 00:02:07.010 --> 00:02:10.009 trillion dollar figure, that's the pool of capital 00:02:10.009 --> 00:02:12.449 they manage and deploy on behalf of their clients. 00:02:12.650 --> 00:02:14.449 And these aren't small investors. No, these are 00:02:14.449 --> 00:02:17.389 the giants. We're talking massive public and 00:02:17.389 --> 00:02:19.889 private pension funds, university endowments, 00:02:20.090 --> 00:02:22.710 sovereign wealth funds. Exactly. It places them 00:02:22.710 --> 00:02:25.689 right at the apex of the alternative asset industry, 00:02:25.810 --> 00:02:27.569 you know, right up there with their main competitors, 00:02:27.889 --> 00:02:32.330 Blackstone, KKR, TPG. So that $840 billion figure 00:02:32.330 --> 00:02:36.159 is the headline? But it kind of obscures the 00:02:36.159 --> 00:02:38.659 more profound story, doesn't it? It does. So 00:02:38.659 --> 00:02:40.099 here's the big question that's going to drive 00:02:40.099 --> 00:02:43.400 our entire conversation. How did a firm founded 00:02:43.400 --> 00:02:47.020 just 35 years ago in 1990, starting with the 00:02:47.020 --> 00:02:51.139 first fund of only about $400 million, how did 00:02:51.139 --> 00:02:53.419 they manage to grow their portfolio exponentially 00:02:53.419 --> 00:02:56.099 to approach the trillion dollar mark? I mean, 00:02:56.099 --> 00:02:57.900 the strategy couldn't have just stayed the same. 00:02:57.939 --> 00:03:00.349 It had to pivot. and pivot dramatically with 00:03:00.349 --> 00:03:03.189 every single major economic cycle. And that pivot, 00:03:03.210 --> 00:03:04.849 that's the key, right? That pivot is the key 00:03:04.849 --> 00:03:07.590 to understanding Apollo's DNA. They are, at the 00:03:07.590 --> 00:03:10.009 end of the day, the ultimate financial chameleons. 00:03:10.110 --> 00:03:13.050 Okay, so let's start at the beginning. The story 00:03:13.050 --> 00:03:15.830 of Apollo Global Management, it doesn't start 00:03:15.830 --> 00:03:18.030 in some quiet boardroom with a grand vision. 00:03:18.330 --> 00:03:20.270 No, not at all. It starts with a spectacular 00:03:20.270 --> 00:03:23.770 financial catastrophe. Picture this. The year 00:03:23.770 --> 00:03:27.740 is 1990. And the Wall Street giant Dressel Burnham 00:03:27.740 --> 00:03:31.419 Lambert has just collapsed. It sends these massive 00:03:31.419 --> 00:03:34.039 shockwaves through the entire financial system. 00:03:34.139 --> 00:03:36.479 And it completely wipes out the high -yield bond 00:03:36.479 --> 00:03:38.659 market, the so -called junk bond market that 00:03:38.659 --> 00:03:40.740 they had essentially created. That collapse didn't 00:03:40.740 --> 00:03:43.379 just end a firm, though. It dispersed a unique 00:03:43.379 --> 00:03:45.759 kind of talent across Wall Street. And that's 00:03:45.759 --> 00:03:48.000 where Apollo comes from. It was founded by this 00:03:48.000 --> 00:03:51.360 core trio, Leon Black, Josh Harris, and Mark 00:03:51.360 --> 00:03:53.789 Rowan. We should also note Tony Ressler was among 00:03:53.789 --> 00:03:55.770 the original members. And these weren't just 00:03:55.770 --> 00:03:57.830 any bankers. These are the high -flying executives 00:03:57.830 --> 00:04:01.330 who had lived and breathed the aggressive, leveraged 00:04:01.330 --> 00:04:04.090 finance world of the 1980s, working directly 00:04:04.090 --> 00:04:07.789 under the famed Michael Milken. So when Drexel 00:04:07.789 --> 00:04:10.370 imploded, they didn't just pack it in. They immediately 00:04:10.370 --> 00:04:13.169 saw opportunity in the wreckage they understood 00:04:13.169 --> 00:04:15.289 better than anyone else on the planet. They founded 00:04:15.289 --> 00:04:17.970 their firm, initially called Apollo Advisors, 00:04:18.089 --> 00:04:21.209 in the immediate aftermath of that market crash. 00:04:22.009 --> 00:04:25.149 But the playbook they knew, the traditional leverage 00:04:25.149 --> 00:04:29.689 buyout or LBO, it was dead. You just couldn't 00:04:29.689 --> 00:04:32.370 get easy debt financing anymore. And that necessity, 00:04:32.490 --> 00:04:34.610 that's the mother of their most famous invention. 00:04:35.339 --> 00:04:37.600 The strategy of distress to control. This was 00:04:37.600 --> 00:04:39.699 their critical divergence, and it really defined 00:04:39.699 --> 00:04:42.019 their entire approach for that first decade. 00:04:42.220 --> 00:04:44.920 Right. They couldn't raise money to buy healthy 00:04:44.920 --> 00:04:46.939 companies with new debts, so they decided to 00:04:46.939 --> 00:04:49.399 buy the failures. Okay, let's unpack that. Distress 00:04:49.399 --> 00:04:52.079 to control. So instead of a hostile takeover 00:04:52.079 --> 00:04:54.860 or a typical LBO, they're targeting companies 00:04:54.860 --> 00:04:57.790 that are already struggling. Exactly. Companies 00:04:57.790 --> 00:05:00.329 whose high yield debt had just plummeted in value 00:05:00.329 --> 00:05:02.670 because they were in bankruptcy or about to default. 00:05:02.790 --> 00:05:04.550 So they'd step in and buy that debt. They'd buy 00:05:04.550 --> 00:05:07.290 that depressed, defaulted debt, often at a huge 00:05:07.290 --> 00:05:10.029 discount, maybe 30, 40 cents on the dollar. Then 00:05:10.029 --> 00:05:12.290 through the restructuring process, they'd use 00:05:12.290 --> 00:05:15.009 those debt holdings as leverage. Leverage to 00:05:15.009 --> 00:05:19.199 demand. Equity. Precisely. They converted their 00:05:19.199 --> 00:05:21.439 ownership of the distressed securities into a 00:05:21.439 --> 00:05:24.220 controlling equity interest in the newly reorganized 00:05:24.220 --> 00:05:27.000 company. It's a brilliant, if incredibly complex, 00:05:27.139 --> 00:05:29.519 maneuver. They weren't just fixing a balance 00:05:29.519 --> 00:05:32.300 sheet. They were acquiring ownership on the cheap 00:05:32.300 --> 00:05:35.279 by becoming the company's biggest creditor. And 00:05:35.279 --> 00:05:37.779 their first fund, Apollo Investment Fund LP, 00:05:38.019 --> 00:05:41.379 launched in 1990, only raised about $400 million. 00:05:42.060 --> 00:05:44.800 Which... You know, sounds like a lot, but it 00:05:44.800 --> 00:05:46.660 was small compared to the LBO funds that came 00:05:46.660 --> 00:05:49.100 before it. It was. And that capital was secured 00:05:49.100 --> 00:05:51.420 almost entirely on the reputation of Leon Black, 00:05:51.680 --> 00:05:54.519 given his seniority at Drexel and his experience 00:05:54.519 --> 00:05:56.959 managing these kinds of complex restructurings. 00:05:57.000 --> 00:05:58.939 And they put that strategy to work immediately, 00:05:59.120 --> 00:06:02.860 right? often buying stakes in assets that their 00:06:02.860 --> 00:06:05.240 old firm, Drexel, had helped finance in the first 00:06:05.240 --> 00:06:06.839 place. Oh, yeah. You see this in their early 00:06:06.839 --> 00:06:10.060 portfolio, Vail Resorts, Walter Industries, Culligan, 00:06:10.240 --> 00:06:13.019 Samsonite. They were essentially acting as liquidators 00:06:13.019 --> 00:06:15.519 and, you know, restorers of value for assets 00:06:15.519 --> 00:06:17.500 that had been over leveraged during the 80s boom. 00:06:17.680 --> 00:06:20.040 But the most famous and maybe the most controversial 00:06:20.040 --> 00:06:23.379 use of this strategy was the deal for executive 00:06:23.379 --> 00:06:26.720 life insurance companies bond portfolio in 1991. 00:06:27.420 --> 00:06:31.459 The success of this one deal was just foundational 00:06:31.459 --> 00:06:34.639 for Apollo. It was a massive win for them. Executive 00:06:34.639 --> 00:06:36.839 life had collapsed because it was holding this 00:06:36.839 --> 00:06:40.560 huge portfolio of those now toxic high yield 00:06:40.560 --> 00:06:43.579 bonds that Drexel had popularized. So Apollo 00:06:43.579 --> 00:06:46.839 swoops in, buys those bonds. And when the market 00:06:46.839 --> 00:06:49.459 for junk debt unexpectedly recovered, they generated 00:06:49.459 --> 00:06:53.120 enormous profits. But the deal itself was legally 00:06:53.120 --> 00:06:56.000 fraught. This is where the details really matter. 00:06:56.139 --> 00:06:58.819 The acquisition was facilitated by a French government 00:06:58.819 --> 00:07:01.339 -owned bank, Credit Lyonnais. Right. And at the 00:07:01.339 --> 00:07:03.839 time, California state law prohibited foreign 00:07:03.839 --> 00:07:06.199 government entities from owning controlling stakes 00:07:06.199 --> 00:07:08.879 in domestic insurance assets. So to get around 00:07:08.879 --> 00:07:11.579 that law. They structured the deal in this incredibly 00:07:11.579 --> 00:07:14.220 complex way that, according to later regulatory 00:07:14.220 --> 00:07:17.199 and legal reviews, basically obscured Credit 00:07:17.199 --> 00:07:20.019 Lyonnais' true role in the whole financing and 00:07:20.019 --> 00:07:22.160 ownership structure. So this one deal became 00:07:22.160 --> 00:07:24.839 the subject of long, complicated regulatory issues 00:07:24.839 --> 00:07:26.980 with the state of California. It really set a 00:07:26.980 --> 00:07:29.339 precedent, didn't it? It did. It showed that 00:07:29.339 --> 00:07:31.300 Apollo was comfortable operating right on the 00:07:31.300 --> 00:07:33.740 very edge of legal and regulatory boundaries 00:07:33.740 --> 00:07:36.060 to get the financial results they wanted. OK, 00:07:36.139 --> 00:07:38.459 so the foundation was laid in distressed assets. 00:07:38.990 --> 00:07:41.470 But the firm scaled and diversified so quickly. 00:07:41.990 --> 00:07:44.569 Let's fast forward to their IPO in 2011. Right. 00:07:44.670 --> 00:07:46.629 Apollo isn't just a private equity firm anymore. 00:07:46.769 --> 00:07:49.089 It becomes this publicly traded asset management 00:07:49.089 --> 00:07:52.730 behemoth listed on the NYSE as APO. And now it's 00:07:52.730 --> 00:07:55.189 a component of the S &P 500 index. And that public 00:07:55.189 --> 00:07:57.230 status is so important because it means we can 00:07:57.230 --> 00:07:59.269 actually look behind the curtain. We get clear 00:07:59.269 --> 00:08:01.529 financial reporting. And the scale is just immense, 00:08:01.790 --> 00:08:04.410 as we said. If you look at the 2024 financial 00:08:04.410 --> 00:08:08.709 data, Apollo reported $26 .11 billion in revenue 00:08:08.709 --> 00:08:13.610 and a net income of $6 .373 billion. Let's frame 00:08:13.610 --> 00:08:16.529 that for a second. $6 .4 billion in net income 00:08:16.529 --> 00:08:19.069 isn't just big. It places them among the most 00:08:19.069 --> 00:08:21.250 profitable financial institutions on the entire 00:08:21.250 --> 00:08:23.370 planet. It demonstrates that the business of 00:08:23.370 --> 00:08:25.550 managing capital for others is a high margin, 00:08:25.649 --> 00:08:27.810 high velocity operation when you do it at the 00:08:27.810 --> 00:08:29.810 scale. And the real story of their current size 00:08:29.810 --> 00:08:33.649 is in that AUM breakdown for 2025. That $840 00:08:33.649 --> 00:08:36.669 billion isn't all in one bucket. No, it's highly 00:08:36.669 --> 00:08:39.049 diversified. You mentioned the distinction between 00:08:39.049 --> 00:08:41.409 the funds. When most people think of Apollo, 00:08:41.590 --> 00:08:44.250 they think private equity, the OBOs, the ownership 00:08:44.250 --> 00:08:48.330 stakes. But that's only $99 billion of the total. 00:08:48.529 --> 00:08:51.909 A surprisingly small slice of the pie. The true 00:08:51.909 --> 00:08:54.049 engine of the modern Apollo is their credit business. 00:08:54.529 --> 00:08:57.159 Absolutely. Credit makes up the overwhelming 00:08:57.159 --> 00:09:01.399 majority of their capital deployment, $392 billion. 00:09:02.100 --> 00:09:04.559 Almost half a trillion dollars. It's their largest 00:09:04.559 --> 00:09:07.500 envelopment category, and it represents a massive 00:09:07.500 --> 00:09:10.240 industrialized version of their original distressed 00:09:10.240 --> 00:09:13.559 debt DNA. It includes everything from non -performing 00:09:13.559 --> 00:09:16.240 loans and syndicated bank loans to structured 00:09:16.240 --> 00:09:18.259 products like collateralized loan obligations, 00:09:18.620 --> 00:09:21.500 CLOs, and mezzanine capital. So they aren't just 00:09:21.500 --> 00:09:23.460 buying companies anymore. They are a primary 00:09:23.460 --> 00:09:26.470 provider of debt financing. to the entire global 00:09:26.470 --> 00:09:28.690 market. Their history shows they're experts at 00:09:28.690 --> 00:09:31.289 managing debt risk, and today they've just institutionalized 00:09:31.289 --> 00:09:33.830 that skill, turning it into a vast revenue stream. 00:09:33.929 --> 00:09:37.669 And then you have this growing category of real 00:09:37.669 --> 00:09:39.350 assets, real estate, critical infrastructure, 00:09:39.570 --> 00:09:43.669 which accounts for $46 .2 billion. That signals 00:09:43.669 --> 00:09:47.070 a really aggressive push into physical long -term 00:09:47.070 --> 00:09:49.450 holdings. They're a true multi -asset manager. 00:09:49.690 --> 00:09:52.250 They offer clients exposure to everything from 00:09:52.250 --> 00:09:55.309 equity ownership to secured loans and hard assets. 00:09:55.629 --> 00:09:58.649 We should also make a quick distinction for the 00:09:58.649 --> 00:10:00.470 listener about the Apollo Investment Corporation, 00:10:00.830 --> 00:10:03.490 or AIC. This gets a little technical, but it's 00:10:03.490 --> 00:10:05.029 important for understanding the market. Right. 00:10:05.230 --> 00:10:08.070 AIC is a separate publicly traded company called 00:10:08.070 --> 00:10:11.009 a business development company or BDC. A BDC 00:10:11.009 --> 00:10:13.730 acts almost like a closed end fund that invests 00:10:13.730 --> 00:10:16.610 in smaller private companies. So AIC specifically 00:10:16.610 --> 00:10:18.970 provides that mezzanine debt, the senior secured 00:10:18.970 --> 00:10:22.090 loans and equity to middle market company. Exactly. 00:10:22.210 --> 00:10:24.250 It offers public investors a way to get a piece 00:10:24.250 --> 00:10:26.750 of the private credit world that Apollo so thoroughly 00:10:26.750 --> 00:10:28.970 dominates. And before we move into the LBO era, 00:10:29.070 --> 00:10:31.149 we have to talk about the talent that spun out 00:10:31.149 --> 00:10:34.419 of Apollo. The other major player, Ares Management, 00:10:34.740 --> 00:10:38.200 has its roots right here. It does. Ares was founded 00:10:38.200 --> 00:10:42.000 in 1997 by Antony Ressler, John Kissick and Bennett 00:10:42.000 --> 00:10:44.480 Rosenthal, the latter two being Apollo partners. 00:10:44.759 --> 00:10:47.659 Initially, Ares was basically Apollo's West Coast 00:10:47.659 --> 00:10:50.360 affiliate. It was created specifically to manage 00:10:50.360 --> 00:10:53.259 those sophisticated debt vehicles like collateralized 00:10:53.259 --> 00:10:55.779 debt obligations. They kept that close relationship 00:10:55.779 --> 00:10:59.759 for a while. But in 2002, Ares did a full corporate 00:10:59.759 --> 00:11:02.259 spinoff. And it's telling that the separation 00:11:02.259 --> 00:11:04.879 happened around the same time Apollo was having 00:11:04.879 --> 00:11:07.620 all those legal. difficulties over the executive 00:11:07.620 --> 00:11:10.399 life deal in California. It suggests maybe a 00:11:10.399 --> 00:11:12.440 strategic separation or at least a divergence 00:11:12.440 --> 00:11:15.279 in how they wanted to operate. Regardless, it 00:11:15.279 --> 00:11:18.000 just underscores that the Drexel diaspora didn't 00:11:18.000 --> 00:11:21.159 just create Apollo. It seeded the entire alternative 00:11:21.159 --> 00:11:23.759 asset industry with these new aggressive firms. 00:11:23.960 --> 00:11:26.460 OK, so let's transition into the mid 2000s. Yeah. 00:11:26.539 --> 00:11:28.899 The entire financial environment shifts. Dramatically. 00:11:29.360 --> 00:11:31.480 Credit markets open back up, interest rates are 00:11:31.480 --> 00:11:35.080 low, and the global LBO boom is on. Apollo, having 00:11:35.080 --> 00:11:37.340 mastered the art of managing troubled debt, was 00:11:37.340 --> 00:11:39.659 perfectly positioned to just swallow corporate 00:11:39.659 --> 00:11:42.519 giants with new debt. And you can track this 00:11:42.519 --> 00:11:45.019 confidence in market access just by looking at 00:11:45.019 --> 00:11:47.840 their fundraising. Their flagship fund six, raised 00:11:47.840 --> 00:11:52.600 in 2005, hits $10 .2 billion. And then here's 00:11:52.600 --> 00:11:55.039 where the audacity really comes in. Despite the 00:11:55.039 --> 00:11:57.299 storm clouds gathering for the 2008 financial 00:11:57.299 --> 00:12:00.179 crisis, they go out and close their fund SEFT 00:12:00.179 --> 00:12:04.419 for a massive $14 .7 billion. In late 2008. In 00:12:04.419 --> 00:12:06.659 late 2008, when global finance was completely 00:12:06.659 --> 00:12:09.059 seizing up. That tells you everything you need 00:12:09.059 --> 00:12:11.080 to know about their reputation and their investors' 00:12:11.200 --> 00:12:13.360 belief in their crisis management model. They 00:12:13.360 --> 00:12:15.600 had the capital ready to go just as... Assets 00:12:15.600 --> 00:12:17.799 were crashing. Masters of timing. Absolutely. 00:12:17.879 --> 00:12:20.440 And they deployed that capital aggressively in 00:12:20.440 --> 00:12:22.659 these mega deals, often partnering with rivals. 00:12:22.840 --> 00:12:26.179 The most famous was probably the leveraged buyout 00:12:26.179 --> 00:12:28.639 of Haraz Entertainment. Which owns the Caesars 00:12:28.639 --> 00:12:31.500 Palace Casino Empire. They bought it with TPG 00:12:31.500 --> 00:12:36.200 Capital in January 2008 for $27 .4 billion. And 00:12:36.200 --> 00:12:39.159 critically, that price included assuming all 00:12:39.159 --> 00:12:41.240 the existing debt. The leverage used in that 00:12:41.240 --> 00:12:43.740 Harrah's deal became a major case study in financial 00:12:43.740 --> 00:12:46.919 engineering. Another huge acquisition that proved, 00:12:47.019 --> 00:12:49.340 let's say, highly susceptible to the market crash 00:12:49.340 --> 00:12:52.379 was Reology. Right. They bought Reology in 2007 00:12:52.379 --> 00:12:56.379 for $8 .5 billion. And Reology is the franchisor 00:12:56.379 --> 00:12:58.600 behind all those real estate brands you see everywhere. 00:12:58.840 --> 00:13:02.379 Coldwell Banker, Century 21, Sotheby's International 00:13:02.379 --> 00:13:05.080 Realty. So they're buying a massive real estate 00:13:05.080 --> 00:13:07.440 holding company right before the housing bubble 00:13:07.440 --> 00:13:09.840 pops. Which means they inherited it. an immediate 00:13:09.840 --> 00:13:13.460 crushing debt load. I mean, many other LBOs from 00:13:13.460 --> 00:13:16.080 07 and 08 just ended in total ruin. But what's 00:13:16.080 --> 00:13:18.240 fascinating is that Apollo managed to survive 00:13:18.240 --> 00:13:20.820 the rheology deal. They eventually exited the 00:13:20.820 --> 00:13:24.659 investment in 2013, making an astounding $1 .3 00:13:24.659 --> 00:13:27.419 billion profit. This wasn't a quick flip. This 00:13:27.419 --> 00:13:30.299 required serious operational discipline and an 00:13:30.299 --> 00:13:32.860 extremely shrewd long -term vision to navigate 00:13:32.860 --> 00:13:35.000 the worst housing market since the Great Depression. 00:13:35.220 --> 00:13:37.419 But not every deal showed that kind of resilience. 00:13:37.720 --> 00:13:39.960 The Hexen Huntsman's Saga is a textbook example 00:13:39.960 --> 00:13:42.559 of the high stakes legal and financial risks 00:13:42.559 --> 00:13:44.460 they were willing to take. Oh, this is a mess. 00:13:44.659 --> 00:13:47.299 So Hexen Specialty Chemicals was a company Apollo 00:13:47.299 --> 00:13:51.039 created in 2005. In 2007, Hexen tried to acquire 00:13:51.039 --> 00:13:54.179 its rival, Huntsman Corporation, for $6 .5 billion. 00:13:54.559 --> 00:13:56.779 And then the financial markets collapsed right 00:13:56.779 --> 00:13:59.259 after they agreed to the deal. Right. The credit 00:13:59.259 --> 00:14:01.279 crunch meant Heckschen's debt burden would be 00:14:01.279 --> 00:14:03.539 completely untenable, so they tried to back out. 00:14:03.620 --> 00:14:06.200 They just refused to close the acquisition. And 00:14:06.200 --> 00:14:10.100 Huntsman, unsurprisingly, sued. The legal firestorm 00:14:10.100 --> 00:14:13.019 was front -page news. Ultimately, Heckschen settled 00:14:13.019 --> 00:14:15.490 with Huntsman in 2008. And the settlement required 00:14:15.490 --> 00:14:19.129 Heckschen to pay Huntsman a staggering $1 billion. 00:14:19.730 --> 00:14:22.669 A billion dollars just to drop the fraud and 00:14:22.669 --> 00:14:25.029 breach of contract charges. A billion dollars. 00:14:25.110 --> 00:14:27.330 That's not a rounding error, even for a firm 00:14:27.330 --> 00:14:30.309 deploying $14 billion in capital. It just highlights 00:14:30.309 --> 00:14:33.230 the aggressive, litigious environment they were 00:14:33.230 --> 00:14:35.529 operating in. Meanwhile, they just kept diversifying, 00:14:35.590 --> 00:14:37.769 right? Yeah. Buying up essential industrial assets. 00:14:38.009 --> 00:14:41.840 Yeah. Rexnerd for $1 .825 billion. Berry Plastics 00:14:41.840 --> 00:14:45.539 for $2 .25 billion. Jacuzzi Brands for almost 00:14:45.539 --> 00:14:48.000 a billion. And they also made a highly strategic 00:14:48.000 --> 00:14:50.279 counter -cyclical investment. Your cruise line. 00:14:50.360 --> 00:14:52.279 Norwegian Cruise Line. They stepped in with a 00:14:52.279 --> 00:14:55.200 $1 billion investment in 2008 to recapitalize 00:14:55.200 --> 00:14:56.580 the company, which is what helped it survive 00:14:56.580 --> 00:14:59.120 the economic contraction. That cruise line deal 00:14:59.120 --> 00:15:01.360 proved to be really strategic. But that period, 00:15:01.500 --> 00:15:04.559 07 to 09, was just characterized by navigating 00:15:04.559 --> 00:15:07.639 genuine financial peril. They had some painful 00:15:07.639 --> 00:15:11.080 losses alongside the wins. Absolutely. One highly 00:15:11.080 --> 00:15:13.460 scrutinized deal involved commercial real estate 00:15:13.460 --> 00:15:17.639 loans. In April 2008, Apollo partnered with TPG 00:15:17.639 --> 00:15:21.580 and Blackstone to buy a $12 .5 billion portaholio 00:15:21.580 --> 00:15:24.220 of senior secured bank loans from Citigroup. 00:15:24.360 --> 00:15:26.940 These were loans Citi had made to finance LBOs 00:15:26.940 --> 00:15:29.080 at the peak of the market, and now they couldn't 00:15:29.080 --> 00:15:31.419 offload them. Citi was desperate to clear its 00:15:31.419 --> 00:15:33.820 books, so the loans were reportedly sold at around 00:15:33.820 --> 00:15:36.769 mid -80 cents on the dollar. Apollo and its partners 00:15:36.769 --> 00:15:39.009 thought they were getting a great deal. But the 00:15:39.009 --> 00:15:42.029 market kept sinking. And by late 2008, the value 00:15:42.029 --> 00:15:44.409 of those assets had plummeted even further. And 00:15:44.409 --> 00:15:46.769 Apollo was facing significant margin calls on 00:15:46.769 --> 00:15:48.549 the financing they had used to buy the portfolio. 00:15:49.009 --> 00:15:51.529 The crisis didn't spare even the opportunistic 00:15:51.529 --> 00:15:53.710 buyers. And then there was the total write off. 00:15:54.220 --> 00:15:56.639 The brutal reminder of failure. Linens and things. 00:15:56.919 --> 00:15:58.580 They'd invested heavily in the U .S. retailer 00:15:58.580 --> 00:16:02.120 back in 2005. But the combination of its massive 00:16:02.120 --> 00:16:04.259 debt load and the rapid collapse in consumer 00:16:04.259 --> 00:16:06.460 spending. Meant the company filed for bankruptcy 00:16:06.460 --> 00:16:10.059 in May 2008. And that bankruptcy cost Apollo 00:16:10.059 --> 00:16:13.980 its entire $365 million investment. It was just 00:16:13.980 --> 00:16:16.870 wiped out. It's critical to remember those losses 00:16:16.870 --> 00:16:20.389 that shaped their risk profile. That $365 million 00:16:20.389 --> 00:16:23.269 was gone, and it taught them a painful lesson 00:16:23.269 --> 00:16:25.629 about retail exposure during a severe recession. 00:16:26.110 --> 00:16:28.669 So in situations where companies were struggling 00:16:28.669 --> 00:16:31.370 but maybe salvageable, Apollo used some clever 00:16:31.370 --> 00:16:33.769 financial engineering to keep them afloat. They 00:16:33.769 --> 00:16:36.470 deployed this highly scrutinized strategy called 00:16:36.470 --> 00:16:39.389 the PK toggle. Let's define PIK for the listener. 00:16:39.509 --> 00:16:42.529 It stands for payment in kind. This tactic was 00:16:42.529 --> 00:16:45.169 used when a portfolio company, like the retailer 00:16:45.169 --> 00:16:47.570 Claire Stores, was under intense pressure and 00:16:47.570 --> 00:16:49.549 couldn't make its cash interest payments on its 00:16:49.549 --> 00:16:51.690 debt. So wait, Aqualo, as the owner of the debt, 00:16:51.809 --> 00:16:54.250 could exercise this P -high -K toggle option. 00:16:54.570 --> 00:16:56.450 Instead of the company paying cash interest, 00:16:56.669 --> 00:16:59.409 which it didn't have... It issued more debt to 00:16:59.409 --> 00:17:01.350 cover the interest it owed. So you're paying 00:17:01.350 --> 00:17:04.210 debt... With more debt. Precisely. It's a deferral 00:17:04.210 --> 00:17:06.369 mechanism. It allowed the company to preserve 00:17:06.369 --> 00:17:08.849 cash flow right then, providing immediate temporary 00:17:08.849 --> 00:17:11.450 flexibility. But you're right. It came at a terrible 00:17:11.450 --> 00:17:13.630 cost. You're not solving the problem. You're 00:17:13.630 --> 00:17:15.470 just kicking the can down the road and making 00:17:15.470 --> 00:17:17.569 the can bigger. You are compounding it. You're 00:17:17.569 --> 00:17:19.609 adding the interest payments back onto the principal, 00:17:19.869 --> 00:17:22.589 guaranteeing a much larger, more difficult debt 00:17:22.589 --> 00:17:25.869 crisis later on. It was pure financial triage 00:17:25.869 --> 00:17:28.470 to keep the company solvent until the market 00:17:28.470 --> 00:17:30.250 hopefully recovered. And that must have been 00:17:30.250 --> 00:17:33.130 heavily criticized. it was, restructuring analysts 00:17:33.130 --> 00:17:35.910 saw it as maximizing the immediate return for 00:17:35.910 --> 00:17:38.609 the debt owner Apollo at the expense of the company's 00:17:38.609 --> 00:17:41.130 long term health. But since they own both the 00:17:41.130 --> 00:17:43.589 equity and the debt, they were just moving pieces 00:17:43.589 --> 00:17:45.950 on their own chessboard, buying time for the 00:17:45.950 --> 00:17:49.609 equity value to recover. So successfully navigating 00:17:49.609 --> 00:17:52.730 the crisis, their reputation for distressed investing 00:17:52.730 --> 00:17:56.529 is cemented and Apollo completes its IPO on March 00:17:56.529 --> 00:18:00.490 29, 2011. And now with access to public markets, 00:18:00.569 --> 00:18:03.230 the whole calculus changes. They're no longer 00:18:03.230 --> 00:18:05.529 just answerable to their limited partners. They're 00:18:05.529 --> 00:18:08.349 answerable to every public market investor who 00:18:08.349 --> 00:18:10.750 demands consistent growth and diversification. 00:18:11.049 --> 00:18:13.730 And that post -IPO era is defined by this aggressive 00:18:13.730 --> 00:18:15.769 expansion away from their traditional focus. 00:18:16.029 --> 00:18:18.130 Yeah, away from distressed manufacturing and 00:18:18.130 --> 00:18:21.150 chemicals. We see a huge shift into consumer 00:18:21.150 --> 00:18:24.049 services and intangible assets. They just dove 00:18:24.049 --> 00:18:26.349 headfirst into education. Which is a surprising 00:18:26.349 --> 00:18:29.130 choice. In 2012, they buy McGraw -Hill Education 00:18:29.130 --> 00:18:33.029 for $2 .5 billion. And then, five years later, 00:18:33.069 --> 00:18:35.170 they acquire the entire Apollo Education Group, 00:18:35.349 --> 00:18:37.390 the parent of the University of Phoenix, for 00:18:37.390 --> 00:18:40.849 $1 .14 billion. It suggests a really strategic 00:18:40.849 --> 00:18:44.029 bet on the financialization of educational content 00:18:44.029 --> 00:18:47.029 and services. At the same time, they became highly 00:18:47.029 --> 00:18:49.170 active in entertainment and leisure. And they 00:18:49.170 --> 00:18:51.190 proved they were adept at the rapid flip. They 00:18:51.190 --> 00:18:53.650 were. They acquired Great Wolf Resorts in 2012 00:18:53.650 --> 00:18:56.960 for $703 million and sold it. just three years 00:18:56.960 --> 00:19:00.660 later for $1 .35 billion, a near doubling of 00:19:00.660 --> 00:19:02.440 their capital in a pretty short time. And then, 00:19:02.480 --> 00:19:03.960 of course, the acquisition that everyone can 00:19:03.960 --> 00:19:05.859 relate to. They literally saved the American 00:19:05.859 --> 00:19:08.619 snack aisle. The Twinkie deal. In 2013, they 00:19:08.619 --> 00:19:10.460 secured the winning bid for the snacks business 00:19:10.460 --> 00:19:13.480 of the bankrupt Hostess Brands for $410 million. 00:19:14.180 --> 00:19:16.640 It's a great example of applying that distressed 00:19:16.640 --> 00:19:19.019 asset expertise to a high -visibility consumer 00:19:19.019 --> 00:19:21.980 brand. But while they were saving Twinkies, they 00:19:21.980 --> 00:19:24.599 were also moving into much more serious infrastructure 00:19:24.599 --> 00:19:27.339 and security assets. Right. They acquired the 00:19:27.339 --> 00:19:30.599 ADT Corporation, the massive residential security 00:19:30.599 --> 00:19:35.259 provider, in 2016 for $6 .9 billion and the cloud 00:19:35.259 --> 00:19:37.579 computing company Rackspace in the same year. 00:19:37.720 --> 00:19:40.680 That move into technology and security, it signals 00:19:40.680 --> 00:19:43.099 their growing interest in services with strong 00:19:43.099 --> 00:19:46.079 recurring revenue streams. And this period also 00:19:46.079 --> 00:19:48.400 features an acquisition that thrusts them directly 00:19:48.400 --> 00:19:51.670 into the geopolitical spotlight. The 2016 purchase 00:19:51.670 --> 00:19:54.970 of Constellas for $1 billion. Constellas is a 00:19:54.970 --> 00:19:58.650 major private military contractor and its structure 00:19:58.650 --> 00:20:01.089 included academia. Which listeners will know 00:20:01.089 --> 00:20:04.089 better by its former name. Blackwater USA. This 00:20:04.089 --> 00:20:06.710 is a critical detail. It meant that Apollo, a 00:20:06.710 --> 00:20:09.269 financial firm managing pension money, now owned 00:20:09.269 --> 00:20:11.230 a company directly involved in national security 00:20:11.230 --> 00:20:13.529 and foreign military operations around the globe. 00:20:13.769 --> 00:20:16.369 Given the very serious historical context of 00:20:16.369 --> 00:20:18.670 the Nisar Square massacre involving Blackwater 00:20:18.670 --> 00:20:21.529 guards, acquiring a private military contractor 00:20:21.529 --> 00:20:24.190 just demonstrates the full depth of Apollo's 00:20:24.190 --> 00:20:26.410 mandate. They're operating in sectors traditionally 00:20:26.410 --> 00:20:29.049 reserved for governments or highly specialized 00:20:29.049 --> 00:20:32.240 defense companies. It's this direct link. between 00:20:32.240 --> 00:20:35.480 finance, geopolitics and military operations. 00:20:35.839 --> 00:20:38.140 Let's shift to their media strategy, which really 00:20:38.140 --> 00:20:41.039 shows how they can consolidate vast market sectors 00:20:41.039 --> 00:20:44.039 very, very quickly. Look at the complex deal 00:20:44.039 --> 00:20:47.619 for Cox Media Group in 2019. This was a multifaceted 00:20:47.619 --> 00:20:50.920 $3 .1 billion deal. Apollo structured it through 00:20:50.920 --> 00:20:53.579 a new entity called Terrier Media, which later 00:20:53.579 --> 00:21:03.359 just took the Cox Media Group name. And it didn't 00:21:03.359 --> 00:21:05.759 stop there. They concurrently acquired Northwest 00:21:05.759 --> 00:21:07.900 Broadcasting, bringing their total TV station 00:21:07.900 --> 00:21:10.819 count to 25. It shows this deep appetite for 00:21:10.819 --> 00:21:13.380 mass media consolidation. The complexity of these 00:21:13.380 --> 00:21:16.359 deals often triggers regulatory action. For instance, 00:21:16.460 --> 00:21:19.089 the FCC actually required Apollo to sell the 00:21:19.089 --> 00:21:21.529 Ohio newspapers they had acquired back to Cox 00:21:21.529 --> 00:21:23.970 Enterprises in 2020. So sometimes regulatory 00:21:23.970 --> 00:21:26.609 cleanup is just part of the process. It is. They 00:21:26.609 --> 00:21:29.210 also achieved a really clean consolidation in 00:21:29.210 --> 00:21:32.390 the retail photo space. In 2019, they acquired 00:21:32.390 --> 00:21:36.089 Shutterfly for $2 .7 billion and almost at the 00:21:36.089 --> 00:21:38.710 same time bought its direct competitor, Snapfish, 00:21:38.890 --> 00:21:42.029 for around $300 million. You basically owned 00:21:42.029 --> 00:21:44.869 the entire consumer photo printing market overnight. 00:21:45.170 --> 00:21:47.109 And the financial services sector, of course, 00:21:47.150 --> 00:21:49.440 that remained the constant. They bought Aspen 00:21:49.440 --> 00:21:52.759 Insurance for $2 .6 billion in 2019, further 00:21:52.759 --> 00:21:55.640 building out their insurance assets. And crucially, 00:21:55.759 --> 00:21:58.140 they were also acting as a primary debt facilitator 00:21:58.140 --> 00:22:00.759 for other firms' deals. Like providing $1 .8 00:22:00.759 --> 00:22:03.859 billion in debt financing for New Media Investment 00:22:03.859 --> 00:22:06.599 Group's massive acquisition of Gannett. It just 00:22:06.599 --> 00:22:08.880 shows their continued importance as a market 00:22:08.880 --> 00:22:10.799 maker. And we have to touch on one deal that 00:22:10.799 --> 00:22:13.160 underscores how deeply interwoven these firms 00:22:13.160 --> 00:22:15.319 are with the highest levels of influence. Our 00:22:15.319 --> 00:22:18.079 sources highlight a politically. noteworthy real 00:22:18.079 --> 00:22:21.339 estate transaction in 2017. That's the $184 million 00:22:21.339 --> 00:22:23.980 loan provided by Apollo to Kushner Companies 00:22:23.980 --> 00:22:26.700 to refinance a mortgage on a Chicago skyscraper. 00:22:26.990 --> 00:22:29.950 And the timing is what's important. The loan 00:22:29.950 --> 00:22:32.490 followed meetings at the White House with company 00:22:32.490 --> 00:22:35.529 executives. Now, the source simply presents the 00:22:35.529 --> 00:22:38.349 facts of the loan and the meetings, but it illustrates 00:22:38.349 --> 00:22:41.130 the critical role firms like Apollo play not 00:22:41.130 --> 00:22:43.990 just in finance, but in the political and real 00:22:43.990 --> 00:22:46.410 estate capitals of the world. Their capital flows 00:22:46.410 --> 00:22:50.329 are often tied to major political actors and 00:22:50.329 --> 00:22:54.170 decisions. So the era from 2020 to the present, 00:22:54.230 --> 00:22:57.980 it's defined by one. single strategic objective 00:22:57.980 --> 00:23:01.140 for Apollo. Achieving financial immortality. 00:23:01.240 --> 00:23:03.619 That's a good way to put it. Securing a dedicated 00:23:03.619 --> 00:23:06.720 source of capital that never expires. And this 00:23:06.720 --> 00:23:09.039 led to their most critical strategic move ever, 00:23:09.160 --> 00:23:12.500 the Athene merger. This is the culmination of 00:23:12.500 --> 00:23:14.119 everything they learned in the previous three 00:23:14.119 --> 00:23:16.400 decades. They mastered distressed debt. They 00:23:16.400 --> 00:23:19.200 mastered the LBO boom. But they were still constrained 00:23:19.200 --> 00:23:21.680 by the cycle of fundraising. Right. That traditional 00:23:21.680 --> 00:23:23.900 model where you raise a fund, you invest for 00:23:23.900 --> 00:23:26.019 five years, try to exit over the next five, and 00:23:26.019 --> 00:23:27.299 then you have to go back to your pension funds 00:23:27.299 --> 00:23:29.660 and, you know, ask for more money. That fundraising 00:23:29.660 --> 00:23:33.400 cycle introduces risk and uncertainty. The Athene 00:23:33.400 --> 00:23:36.480 merger, which was completed in January 2022 and 00:23:36.480 --> 00:23:39.299 valued at $11 billion, it solved that problem. 00:23:39.690 --> 00:23:41.569 It provided them with permanent capital. And 00:23:41.569 --> 00:23:43.670 let's unpack the significance of permanent capital 00:23:43.670 --> 00:23:46.250 because it is the holy grail of modern private 00:23:46.250 --> 00:23:49.609 equity. Athene is a retirement services and insurance 00:23:49.609 --> 00:23:52.769 business. So when customers pay premiums to Athene 00:23:52.769 --> 00:23:55.750 for annuities and life insurance, Athene assumes 00:23:55.750 --> 00:23:58.390 a long -term liability. It has to pay that money 00:23:58.390 --> 00:24:01.509 back plus interest years or even decades down 00:24:01.509 --> 00:24:03.579 the line. But in the meantime, Athena is sitting 00:24:03.579 --> 00:24:06.079 on this massive, continuous and highly stable 00:24:06.079 --> 00:24:09.660 pool of cash flow. This float, this capital, 00:24:09.819 --> 00:24:12.500 is managed by Apollo. And since the liabilities 00:24:12.500 --> 00:24:15.019 are decades away, Apollo can invest that money 00:24:15.019 --> 00:24:17.180 in long duration, less liquid, high yielding 00:24:17.180 --> 00:24:20.180 assets, exactly the kind of complex credit and 00:24:20.180 --> 00:24:22.380 infrastructure deals they love. The merger with 00:24:22.380 --> 00:24:24.539 Athene completely transformed their balance sheet. 00:24:24.779 --> 00:24:27.680 Apollo now had a dedicated, continuous, vast 00:24:27.680 --> 00:24:30.019 pool of money that isn't locked into a traditional 00:24:30.019 --> 00:24:32.740 10 -year fund lifespan. It gives them unrivaled 00:24:32.740 --> 00:24:35.460 stability and flexibility. It insulates them 00:24:35.460 --> 00:24:37.940 from short -term market fluctuations and the 00:24:37.940 --> 00:24:39.819 constant need to be fundraising. And the market 00:24:39.819 --> 00:24:42.440 has clearly rewarded this strategic shift. The 00:24:42.440 --> 00:24:44.900 scale of their fundraising continues unabated. 00:24:45.019 --> 00:24:48.259 I mean, Fund IX in 2017 raised a then record 00:24:48.259 --> 00:24:52.859 $24 .6 billion. their latest Fund X closed in 00:24:52.859 --> 00:24:56.779 2023 with another whopping $19 .877 billion. 00:24:57.279 --> 00:25:00.559 And this expansion is also global. We see a clear 00:25:00.559 --> 00:25:03.140 push into the Asia -Pacific region. Yeah, evidenced 00:25:03.140 --> 00:25:05.480 by their strategic partnership with Shinhan Life 00:25:05.480 --> 00:25:08.640 in Korea and the opening of a new office in Seoul, 00:25:08.759 --> 00:25:11.880 both in late 2024. They are deploying this permanent 00:25:11.880 --> 00:25:14.480 capital model globally. And with this massive, 00:25:14.519 --> 00:25:17.400 stable capital base, their acquisition strategy 00:25:17.400 --> 00:25:19.539 has become almost overwhelming in its scope. 00:25:19.930 --> 00:25:21.490 Looking at the recent deals, it's a corporate 00:25:21.490 --> 00:25:23.730 shopping spree targeting the foundational elements 00:25:23.730 --> 00:25:25.940 of the global economy. Let's start with media 00:25:25.940 --> 00:25:28.539 and telecom infrastructure. In September 2021, 00:25:28.940 --> 00:25:31.299 Apollo Funds acquired a 90 % stake in Yahoo. 00:25:31.539 --> 00:25:34.059 They now own a huge foundational piece of the 00:25:34.059 --> 00:25:36.279 original internet landscape, betting on its media 00:25:36.279 --> 00:25:38.900 and ad revenue streams. And speaking of physical 00:25:38.900 --> 00:25:41.759 infrastructure, in 2021, they acquired the local 00:25:41.759 --> 00:25:44.480 exchange carrier operations across 20 states 00:25:44.480 --> 00:25:48.220 from Lumen Technologies for $7 .5 billion. They 00:25:48.220 --> 00:25:51.299 are quite literally buying the copper, the fiber, 00:25:51.440 --> 00:25:53.819 the switching centers, the physical backbone. 00:25:54.380 --> 00:25:57.160 of U .S. regional telecommunications. They're 00:25:57.160 --> 00:25:59.119 also consolidating the retail and consumer space. 00:25:59.400 --> 00:26:01.759 They acquired the Michaels Companies, the Kraft 00:26:01.759 --> 00:26:05.440 retailer, for $5 billion in 2021 and provided 00:26:05.440 --> 00:26:09.319 a $1 .75 billion investment in Albertsons. And 00:26:09.319 --> 00:26:11.539 they even moved into local food retail, buying 00:26:11.539 --> 00:26:13.500 up regional grocery chains like Tony's Fresh 00:26:13.500 --> 00:26:16.140 Market in Chicago and Cardina's Markets in California 00:26:16.140 --> 00:26:19.200 in 2022. It just shows the capillary -like reach 00:26:19.200 --> 00:26:20.960 of their investments. And then there's heavy 00:26:20.960 --> 00:26:22.960 industry. They're investing heavily in manufacturing. 00:26:23.599 --> 00:26:27.619 for $7 .1 billion, Arconic in 2023, and the recent 00:26:27.619 --> 00:26:29.839 acquisition of Barnes Group in January 2025. 00:26:30.299 --> 00:26:32.960 These are global suppliers of automotive parts 00:26:32.960 --> 00:26:35.059 specialized manufacturing. But the single most 00:26:35.059 --> 00:26:37.000 significant recent deal, the one that demonstrates 00:26:37.000 --> 00:26:39.160 the ultimate application of their permanent capital 00:26:39.160 --> 00:26:42.339 strategy, has to be the mega infrastructure joint 00:26:42.339 --> 00:26:44.960 venture with Intel. This deal is on a governmental 00:26:44.960 --> 00:26:48.799 scale. In June 2024, Apollo announced it was 00:26:48.799 --> 00:26:52.279 acquiring a 49 % equity interest in a joint venture 00:26:52.279 --> 00:26:55.779 related to Intel Ireland's Fab 34. The deal was 00:26:55.779 --> 00:26:59.640 valued at $11 billion. And Fab 34 is not a distressed 00:26:59.640 --> 00:27:02.339 retailer. It's a critical advanced semiconductor 00:27:02.339 --> 00:27:05.259 fabrication plant. It's high -tech, strategic 00:27:05.259 --> 00:27:08.019 infrastructure vital to the global supply chain 00:27:08.019 --> 00:27:10.839 and national industrial policy. Securing nearly 00:27:10.839 --> 00:27:13.259 half ownership in a cutting -edge chip facility 00:27:13.259 --> 00:27:16.660 is not a quick LBO. It's a strategic, long -term 00:27:16.660 --> 00:27:19.019 bet on the stability of global supply chain assets, 00:27:19.359 --> 00:27:21.779 exactly the type of asset their Athene -backed 00:27:21.779 --> 00:27:24.019 permanent capital is designed to hold. So just 00:27:24.019 --> 00:27:26.059 when you think you've mapped their entire strategy 00:27:26.059 --> 00:27:28.420 from chemicals to telecom to semiconductors, 00:27:28.519 --> 00:27:31.079 they dive headfirst into the high -profile, high 00:27:31.079 --> 00:27:33.299 -emotion world of professional sports. The last 00:27:33.299 --> 00:27:35.859 few months of 2025 reveal this rapid, aggressive 00:27:35.859 --> 00:27:38.460 move into global sports ownership. And the strategic 00:27:38.460 --> 00:27:40.400 interest here is less about team profitability 00:27:40.400 --> 00:27:43.359 and more about the guaranteed accelerating revenue 00:27:43.359 --> 00:27:46.109 from broadcast. rights, sponsorship, and streaming. 00:27:46.329 --> 00:27:49.150 The specific examples are huge. In November 2025, 00:27:49.690 --> 00:27:52.509 they acquired 55 % of the shares of Atletico 00:27:52.509 --> 00:27:54.869 Madrid, making them the majority shareholder 00:27:54.869 --> 00:27:57.069 of one of Europe's most visible football clubs. 00:27:57.680 --> 00:28:00.359 And maybe more surprisingly, in December 2025, 00:28:00.720 --> 00:28:03.160 they acquired a minority stake in Wrexham AFC, 00:28:03.359 --> 00:28:05.759 the Welsh club that's gotten so much global media 00:28:05.759 --> 00:28:08.380 attention. This confirms a really serious commitment, 00:28:08.559 --> 00:28:10.599 one that was solidified earlier in September 00:28:10.599 --> 00:28:14.519 2025, with plans to launch a separate $3 .75 00:28:14.519 --> 00:28:17.359 billion Addie and investment vehicle focused 00:28:17.359 --> 00:28:19.990 entirely on the sports sector. That's a dedicated 00:28:19.990 --> 00:28:22.509 fund just for global sports. They are clearly 00:28:22.509 --> 00:28:25.450 looking to own large, stable pieces of the global 00:28:25.450 --> 00:28:27.890 sports media ecosystem, viewing them as long 00:28:27.890 --> 00:28:30.089 duration assets, just like infrastructure or 00:28:30.089 --> 00:28:31.930 insurance companies. They're also active in the 00:28:31.930 --> 00:28:34.289 broader entertainment landscape. While they sold 00:28:34.289 --> 00:28:36.349 their stake in Endemol Shine Group, they later 00:28:36.349 --> 00:28:38.450 acquired a minority stake in Legendary Entertainment. 00:28:38.920 --> 00:28:41.720 the studio behind massive film franchises, for 00:28:41.720 --> 00:28:45.259 $760 million in 2022. It demonstrates an effort 00:28:45.259 --> 00:28:47.579 to control the content creation as well as the 00:28:47.579 --> 00:28:49.900 infrastructure that distributes it. So the incredible 00:28:49.900 --> 00:28:52.140 scale and relentless growth we just detailed, 00:28:52.259 --> 00:28:55.619 it came at a price. And that relentless pursuit 00:28:55.619 --> 00:28:58.319 of capital led to a massive internal upheaval 00:28:58.319 --> 00:29:00.660 at the very top of the organization. This is 00:29:00.660 --> 00:29:02.940 the biggest inflection point in Apollo's corporate 00:29:02.940 --> 00:29:05.859 history, the effective removal of its charismatic 00:29:05.859 --> 00:29:09.819 founder. Leon Black resigned as CEO and chairman 00:29:09.819 --> 00:29:13.339 in March 2021. His resignation followed sexual 00:29:13.339 --> 00:29:15.960 misconduct allegations and the highly public 00:29:15.960 --> 00:29:18.059 revelation that he had paid the convicted sex 00:29:18.059 --> 00:29:22.940 offender Jeffrey Epstein $158 million for personal 00:29:22.940 --> 00:29:26.519 tax advice between 2012 and 2017. The firm responded 00:29:26.519 --> 00:29:28.960 very quickly amid significant investor pressure 00:29:28.960 --> 00:29:31.359 and reputational risk. Co -founder Mark Rowan 00:29:31.359 --> 00:29:33.759 immediately stepped into the CEO role. And that 00:29:33.759 --> 00:29:36.059 leadership change signaled a necessary shift 00:29:36.059 --> 00:29:38.299 toward... institutionalizing the firm, moving 00:29:38.299 --> 00:29:40.539 away from the dominance of its founder's personality. 00:29:40.859 --> 00:29:43.380 The transition completely reshaped the top management. 00:29:43.599 --> 00:29:46.039 Co -founder Josh Harris also departed in January 00:29:46.039 --> 00:29:49.160 2022 to focus on other ventures, meaning Mark 00:29:49.160 --> 00:29:51.299 Rowan is now the sole remaining founder actively 00:29:51.299 --> 00:29:53.619 steering the company. Ushering in what many see 00:29:53.619 --> 00:29:56.059 as the new, more institutional era of Apollo. 00:29:56.339 --> 00:29:58.579 And if we connect this back to the bigger picture, 00:29:58.819 --> 00:30:02.720 Apollo's founding DNA. That aggressive, high 00:30:02.720 --> 00:30:05.839 risk, distress to control strategy, it doesn't 00:30:05.839 --> 00:30:08.500 just disappear even as they transition to permanent 00:30:08.500 --> 00:30:11.059 capital. The firm's relentless drive for efficiency 00:30:11.059 --> 00:30:13.460 sometimes comes with a considerable human or 00:30:13.460 --> 00:30:16.619 financial cost that our sources. really can't 00:30:16.619 --> 00:30:18.819 ignore. We've already discussed the painful financial 00:30:18.819 --> 00:30:23.000 failures like the total $365 million loss on 00:30:23.000 --> 00:30:26.700 linens and things and the staggering $1 billion 00:30:26.700 --> 00:30:29.440 legal penalty in the hex enhancement fraud case. 00:30:29.700 --> 00:30:31.640 That level of financial exposure and penalty 00:30:31.640 --> 00:30:34.259 speaks volumes about the aggressive win -at -all 00:30:34.259 --> 00:30:36.680 -costs philosophy that underpinned their operations 00:30:36.680 --> 00:30:39.220 for decades. But the concern goes beyond financial 00:30:39.220 --> 00:30:41.500 damage. It extends to the operational practices 00:30:41.500 --> 00:30:43.900 of the companies they control, particularly concerning 00:30:43.900 --> 00:30:46.619 labor and safety. For instance, in July 2021, 00:30:47.039 --> 00:30:49.079 Apollo Funds acquired EmployBridge, which is 00:30:49.079 --> 00:30:51.099 one of the largest industrial staffing companies 00:30:51.099 --> 00:30:52.839 in the U .S. Right. So EmployBridge provides 00:30:52.839 --> 00:30:54.960 temporary workers to a huge range of industries. 00:30:55.180 --> 00:30:57.140 And the source material notes that this company 00:30:57.140 --> 00:30:59.440 has been cited for dozens of safety violations 00:30:59.440 --> 00:31:01.779 and wage infractions over the past two decades. 00:31:02.019 --> 00:31:04.240 This raises a really important question for you, 00:31:04.299 --> 00:31:07.019 the listener. What level of responsibility do 00:31:07.019 --> 00:31:09.519 these private equity owners assume for the operational 00:31:09.519 --> 00:31:11.440 practices and labor records of the companies 00:31:11.440 --> 00:31:14.140 they control, especially when maximizing financial 00:31:14.140 --> 00:31:17.519 efficiency and minimizing cost is paramount? 00:31:17.579 --> 00:31:19.900 It creates this fundamental tension, doesn't 00:31:19.900 --> 00:31:23.210 it? Apollo's success is built on acquiring complex 00:31:23.210 --> 00:31:26.250 or struggling assets and injecting massive leverage 00:31:26.250 --> 00:31:28.789 or intense operational discipline to maximize 00:31:28.789 --> 00:31:31.130 returns. But that relentless pursuit of returns 00:31:31.130 --> 00:31:33.269 for pension funds can sometimes conflict directly 00:31:33.269 --> 00:31:35.930 with basic priorities like job stability, wage 00:31:35.930 --> 00:31:38.730 compliance or workplace safety. It is the hidden 00:31:38.730 --> 00:31:41.410 calculus of private capital ownership. Nonetheless, 00:31:41.750 --> 00:31:45.049 Apollo is a true giant, both in scale and influence. 00:31:45.329 --> 00:31:47.690 They rank highly on industry lists, standing 00:31:47.690 --> 00:31:51.599 29th in the PEI 300. ranking for 2024, competing 00:31:51.599 --> 00:31:54.680 directly with firms like Blackstone, KKR, TPG, 00:31:54.759 --> 00:31:57.069 and Carlyle Group. The synthesis of their journey 00:31:57.069 --> 00:31:59.529 is clear. They have successfully navigated a 00:31:59.529 --> 00:32:01.769 massive institutional transition. They started 00:32:01.769 --> 00:32:04.349 as this specialized opportunistic recovery fund 00:32:04.349 --> 00:32:06.690 after the Drexel collapse, where they basically 00:32:06.690 --> 00:32:09.170 weaponized financial crisis. Today, they're a 00:32:09.170 --> 00:32:11.690 hyper diversified, multibillion dollar asset 00:32:11.690 --> 00:32:15.069 manager that strategically uses not only traditional 00:32:15.069 --> 00:32:17.650 private equity and distressed debt, but also 00:32:17.650 --> 00:32:20.390 massive continuous credit funds. And crucially, 00:32:20.470 --> 00:32:22.670 they have secured that permanent capital structure 00:32:22.670 --> 00:32:25.279 provided by the Athene merger, which is. their 00:32:25.279 --> 00:32:27.720 ticket to long -term stability and that structure 00:32:27.720 --> 00:32:30.710 allows them to finance Everything from complex 00:32:30.710 --> 00:32:33.430 consumer acquisitions like Twinkies and Michaels 00:32:33.430 --> 00:32:37.069 to industrial giants like Tenneco to global media 00:32:37.069 --> 00:32:39.890 assets like Yahoo. All the way to critical national 00:32:39.890 --> 00:32:42.410 infrastructure like the physical telecom lines 00:32:42.410 --> 00:32:45.549 of Lumen and now even major European football 00:32:45.549 --> 00:32:48.309 clubs like Atletico Madrid. Their ability to 00:32:48.309 --> 00:32:51.130 shift focus from early distressed asset acquisition 00:32:51.130 --> 00:32:54.849 to LBO boom participation to securing that permanent 00:32:54.849 --> 00:32:57.190 capital base needed for acquiring vast critical 00:32:57.190 --> 00:33:00.410 infrastructure. like Intel's Fab 34. That's the 00:33:00.410 --> 00:33:02.130 ultimate reason they've gone from $400 million 00:33:02.130 --> 00:33:05.509 to nearly a trillion dollars in AUM. They evolved 00:33:05.509 --> 00:33:07.930 from being dependent on financial cycles to essentially 00:33:07.930 --> 00:33:10.230 building a machine that smooths them out. What 00:33:10.230 --> 00:33:12.349 an extraordinary journey. I mean, we started 00:33:12.349 --> 00:33:15.210 with the distressed securities of 1990, and we've 00:33:15.210 --> 00:33:17.509 concluded with a firm that manages nearly a trillion 00:33:17.509 --> 00:33:20.289 dollars, dictating ownership of everything from 00:33:20.289 --> 00:33:23.410 global telecommunications lines to major league 00:33:23.410 --> 00:33:26.210 sports teams. It's a masterclass in strategic 00:33:26.210 --> 00:33:29.029 evolution. The transformation is truly extraordinary. 00:33:29.490 --> 00:33:32.269 Apollo successfully transitioned from being a 00:33:32.269 --> 00:33:34.690 purely reactive firm, an opportunistic recovery 00:33:34.690 --> 00:33:38.250 fund for the 90s debt collapse, to a global financial 00:33:38.250 --> 00:33:41.089 behemoth that proactively designs its... own 00:33:41.089 --> 00:33:43.650 financial future through strategic mergers and 00:33:43.650 --> 00:33:45.930 securing that long duration capital. And the 00:33:45.930 --> 00:33:47.990 ultimate connection to you, the learner, is just 00:33:47.990 --> 00:33:50.549 how profoundly pervasive this capital is. The 00:33:50.549 --> 00:33:52.609 investment choices made by Apollo impact the 00:33:52.609 --> 00:33:54.710 prices you pay at grocery stores like Tony's 00:33:54.710 --> 00:33:56.869 or Cardina's, the security system protecting 00:33:56.869 --> 00:33:59.809 your home, ADT, and the news you consume through 00:33:59.809 --> 00:34:02.670 Cox Media Group. Private capital has truly seeped 00:34:02.670 --> 00:34:05.190 into every critical corner of daily consumer 00:34:05.190 --> 00:34:07.970 and civic life. And this leads us to our final 00:34:07.970 --> 00:34:11.099 provocative thought for you to mull over. Apollo's 00:34:11.099 --> 00:34:13.860 modern strategy relies so heavily on accumulating 00:34:13.860 --> 00:34:17.760 massive, long -term, and physical assets, real 00:34:17.760 --> 00:34:21.139 estate, infrastructure, telecom operations, and 00:34:21.139 --> 00:34:24.639 critical facilities like Intel's Fab 34. So given 00:34:24.639 --> 00:34:26.679 that their funding relies increasingly on credit 00:34:26.679 --> 00:34:28.780 funds and that permanent capital from Athene, 00:34:28.860 --> 00:34:32.039 how might Apollo's strategy of accumulating these 00:34:32.039 --> 00:34:34.619 strategic long -duration assets insulate them 00:34:34.619 --> 00:34:37.119 during the next major global economic shift? 00:34:37.500 --> 00:34:39.980 And maybe more importantly, what does it imply 00:34:39.980 --> 00:34:42.579 for national economic resilience when vital infrastructure 00:34:42.579 --> 00:34:44.760 is increasingly owned and optimized by firms 00:34:44.760 --> 00:34:47.139 managing international pension capital? The future 00:34:47.139 --> 00:34:49.320 of infrastructure and security often lies in 00:34:49.320 --> 00:34:51.420 the balance sheets of these massive asset managers. 00:34:51.860 --> 00:34:54.340 Something to mull over until our next deep dive. 00:34:54.539 --> 00:34:56.119 Thanks for joining us. Until next time.