Welcome back to the Deep Dive. Our mission, as
always, is to take these massive, complex stacks
of financial reports, of journalism, of industry
analysis, and just distill them down. We cut
through the jargon to give you the essential
knowledge you need to be genuinely well -informed.
And today, we are peering deep. deep into the
engine room of modern finance. We are. We're
talking about the world of alternative asset
management. This is a realm where, you know,
trillions of dollars are shifting ownership of
global industry. And yet the firms themselves
are often complete unknowns to the public. Our
focus today is on one of the absolute biggest,
a true powerhouse. Apollo Global Management Inc.
Or AGM. That's right. And when we say their influence
is everywhere, we mean it literally touches your
daily life. Yeah, we're talking about the cruise
line you might book for your next vacation. The
actual physical telecom lines carrying data to
your phone. The movie studio that makes the blockbuster
you just watched or even the regional television
station that delivers your local news. It's incredible.
If Apollo hasn't owned it at some point, they've
almost certainly provided the crucial financing
that made it happen. So our sources for this
deep dive really illustrate the evolution of
a remarkable financial machine. Our mission is
to take you on a journey through Apollo's history.
We're tracing their path from a really niche.
opportunistic firm born out of a financial collapse
in the 90s. All the way to becoming this diversified,
multi -trillion dollar manager of global capital.
We want to understand the unique and sometimes,
let's be honest, aggressive strategies that fueled
this incredible growth. And critically, how their
business model has just fundamentally changed
in the last five years. There's a whole new game
for them. OK, so let's just let's unpack this
with some perspective on their scale. As of early
2025, Apollo Global Management has a staggering
$840 billion in assets under management, AUM.
It's a number that's almost hard to get your
head around, to put that in context for you.
That is larger than the entire GDP of nations
like Switzerland or Turkey. Yeah. And that near
trillion dollar figure, that's the pool of capital
they manage and deploy on behalf of their clients.
And these aren't small investors. No, these are
the giants. We're talking massive public and
private pension funds, university endowments,
sovereign wealth funds. Exactly. It places them
right at the apex of the alternative asset industry,
you know, right up there with their main competitors,
Blackstone, KKR, TPG. So that $840 billion figure
is the headline? But it kind of obscures the
more profound story, doesn't it? It does. So
here's the big question that's going to drive
our entire conversation. How did a firm founded
just 35 years ago in 1990, starting with the
first fund of only about $400 million, how did
they manage to grow their portfolio exponentially
to approach the trillion dollar mark? I mean,
the strategy couldn't have just stayed the same.
It had to pivot. and pivot dramatically with
every single major economic cycle. And that pivot,
that's the key, right? That pivot is the key
to understanding Apollo's DNA. They are, at the
end of the day, the ultimate financial chameleons.
Okay, so let's start at the beginning. The story
of Apollo Global Management, it doesn't start
in some quiet boardroom with a grand vision.
No, not at all. It starts with a spectacular
financial catastrophe. Picture this. The year
is 1990. And the Wall Street giant Dressel Burnham
Lambert has just collapsed. It sends these massive
shockwaves through the entire financial system.
And it completely wipes out the high -yield bond
market, the so -called junk bond market that
they had essentially created. That collapse didn't
just end a firm, though. It dispersed a unique
kind of talent across Wall Street. And that's
where Apollo comes from. It was founded by this
core trio, Leon Black, Josh Harris, and Mark
Rowan. We should also note Tony Ressler was among
the original members. And these weren't just
any bankers. These are the high -flying executives
who had lived and breathed the aggressive, leveraged
finance world of the 1980s, working directly
under the famed Michael Milken. So when Drexel
imploded, they didn't just pack it in. They immediately
saw opportunity in the wreckage they understood
better than anyone else on the planet. They founded
their firm, initially called Apollo Advisors,
in the immediate aftermath of that market crash.
But the playbook they knew, the traditional leverage
buyout or LBO, it was dead. You just couldn't
get easy debt financing anymore. And that necessity,
that's the mother of their most famous invention.
The strategy of distress to control. This was
their critical divergence, and it really defined
their entire approach for that first decade.
Right. They couldn't raise money to buy healthy
companies with new debts, so they decided to
buy the failures. Okay, let's unpack that. Distress
to control. So instead of a hostile takeover
or a typical LBO, they're targeting companies
that are already struggling. Exactly. Companies
whose high yield debt had just plummeted in value
because they were in bankruptcy or about to default.
So they'd step in and buy that debt. They'd buy
that depressed, defaulted debt, often at a huge
discount, maybe 30, 40 cents on the dollar. Then
through the restructuring process, they'd use
those debt holdings as leverage. Leverage to
demand. Equity. Precisely. They converted their
ownership of the distressed securities into a
controlling equity interest in the newly reorganized
company. It's a brilliant, if incredibly complex,
maneuver. They weren't just fixing a balance
sheet. They were acquiring ownership on the cheap
by becoming the company's biggest creditor. And
their first fund, Apollo Investment Fund LP,
launched in 1990, only raised about $400 million.
Which... You know, sounds like a lot, but it
was small compared to the LBO funds that came
before it. It was. And that capital was secured
almost entirely on the reputation of Leon Black,
given his seniority at Drexel and his experience
managing these kinds of complex restructurings.
And they put that strategy to work immediately,
right? often buying stakes in assets that their
old firm, Drexel, had helped finance in the first
place. Oh, yeah. You see this in their early
portfolio, Vail Resorts, Walter Industries, Culligan,
Samsonite. They were essentially acting as liquidators
and, you know, restorers of value for assets
that had been over leveraged during the 80s boom.
But the most famous and maybe the most controversial
use of this strategy was the deal for executive
life insurance companies bond portfolio in 1991.
The success of this one deal was just foundational
for Apollo. It was a massive win for them. Executive
life had collapsed because it was holding this
huge portfolio of those now toxic high yield
bonds that Drexel had popularized. So Apollo
swoops in, buys those bonds. And when the market
for junk debt unexpectedly recovered, they generated
enormous profits. But the deal itself was legally
fraught. This is where the details really matter.
The acquisition was facilitated by a French government
-owned bank, Credit Lyonnais. Right. And at the
time, California state law prohibited foreign
government entities from owning controlling stakes
in domestic insurance assets. So to get around
that law. They structured the deal in this incredibly
complex way that, according to later regulatory
and legal reviews, basically obscured Credit
Lyonnais' true role in the whole financing and
ownership structure. So this one deal became
the subject of long, complicated regulatory issues
with the state of California. It really set a
precedent, didn't it? It did. It showed that
Apollo was comfortable operating right on the
very edge of legal and regulatory boundaries
to get the financial results they wanted. OK,
so the foundation was laid in distressed assets.
But the firm scaled and diversified so quickly.
Let's fast forward to their IPO in 2011. Right.
Apollo isn't just a private equity firm anymore.
It becomes this publicly traded asset management
behemoth listed on the NYSE as APO. And now it's
a component of the S &P 500 index. And that public
status is so important because it means we can
actually look behind the curtain. We get clear
financial reporting. And the scale is just immense,
as we said. If you look at the 2024 financial
data, Apollo reported $26 .11 billion in revenue
and a net income of $6 .373 billion. Let's frame
that for a second. $6 .4 billion in net income
isn't just big. It places them among the most
profitable financial institutions on the entire
planet. It demonstrates that the business of
managing capital for others is a high margin,
high velocity operation when you do it at the
scale. And the real story of their current size
is in that AUM breakdown for 2025. That $840
billion isn't all in one bucket. No, it's highly
diversified. You mentioned the distinction between
the funds. When most people think of Apollo,
they think private equity, the OBOs, the ownership
stakes. But that's only $99 billion of the total.
A surprisingly small slice of the pie. The true
engine of the modern Apollo is their credit business.
Absolutely. Credit makes up the overwhelming
majority of their capital deployment, $392 billion.
Almost half a trillion dollars. It's their largest
envelopment category, and it represents a massive
industrialized version of their original distressed
debt DNA. It includes everything from non -performing
loans and syndicated bank loans to structured
products like collateralized loan obligations,
CLOs, and mezzanine capital. So they aren't just
buying companies anymore. They are a primary
provider of debt financing. to the entire global
market. Their history shows they're experts at
managing debt risk, and today they've just institutionalized
that skill, turning it into a vast revenue stream.
And then you have this growing category of real
assets, real estate, critical infrastructure,
which accounts for $46 .2 billion. That signals
a really aggressive push into physical long -term
holdings. They're a true multi -asset manager.
They offer clients exposure to everything from
equity ownership to secured loans and hard assets.
We should also make a quick distinction for the
listener about the Apollo Investment Corporation,
or AIC. This gets a little technical, but it's
important for understanding the market. Right.
AIC is a separate publicly traded company called
a business development company or BDC. A BDC
acts almost like a closed end fund that invests
in smaller private companies. So AIC specifically
provides that mezzanine debt, the senior secured
loans and equity to middle market company. Exactly.
It offers public investors a way to get a piece
of the private credit world that Apollo so thoroughly
dominates. And before we move into the LBO era,
we have to talk about the talent that spun out
of Apollo. The other major player, Ares Management,
has its roots right here. It does. Ares was founded
in 1997 by Antony Ressler, John Kissick and Bennett
Rosenthal, the latter two being Apollo partners.
Initially, Ares was basically Apollo's West Coast
affiliate. It was created specifically to manage
those sophisticated debt vehicles like collateralized
debt obligations. They kept that close relationship
for a while. But in 2002, Ares did a full corporate
spinoff. And it's telling that the separation
happened around the same time Apollo was having
all those legal. difficulties over the executive
life deal in California. It suggests maybe a
strategic separation or at least a divergence
in how they wanted to operate. Regardless, it
just underscores that the Drexel diaspora didn't
just create Apollo. It seeded the entire alternative
asset industry with these new aggressive firms.
OK, so let's transition into the mid 2000s. Yeah.
The entire financial environment shifts. Dramatically.
Credit markets open back up, interest rates are
low, and the global LBO boom is on. Apollo, having
mastered the art of managing troubled debt, was
perfectly positioned to just swallow corporate
giants with new debt. And you can track this
confidence in market access just by looking at
their fundraising. Their flagship fund six, raised
in 2005, hits $10 .2 billion. And then here's
where the audacity really comes in. Despite the
storm clouds gathering for the 2008 financial
crisis, they go out and close their fund SEFT
for a massive $14 .7 billion. In late 2008. In
late 2008, when global finance was completely
seizing up. That tells you everything you need
to know about their reputation and their investors'
belief in their crisis management model. They
had the capital ready to go just as... Assets
were crashing. Masters of timing. Absolutely.
And they deployed that capital aggressively in
these mega deals, often partnering with rivals.
The most famous was probably the leveraged buyout
of Haraz Entertainment. Which owns the Caesars
Palace Casino Empire. They bought it with TPG
Capital in January 2008 for $27 .4 billion. And
critically, that price included assuming all
the existing debt. The leverage used in that
Harrah's deal became a major case study in financial
engineering. Another huge acquisition that proved,
let's say, highly susceptible to the market crash
was Reology. Right. They bought Reology in 2007
for $8 .5 billion. And Reology is the franchisor
behind all those real estate brands you see everywhere.
Coldwell Banker, Century 21, Sotheby's International
Realty. So they're buying a massive real estate
holding company right before the housing bubble
pops. Which means they inherited it. an immediate
crushing debt load. I mean, many other LBOs from
07 and 08 just ended in total ruin. But what's
fascinating is that Apollo managed to survive
the rheology deal. They eventually exited the
investment in 2013, making an astounding $1 .3
billion profit. This wasn't a quick flip. This
required serious operational discipline and an
extremely shrewd long -term vision to navigate
the worst housing market since the Great Depression.
But not every deal showed that kind of resilience.
The Hexen Huntsman's Saga is a textbook example
of the high stakes legal and financial risks
they were willing to take. Oh, this is a mess.
So Hexen Specialty Chemicals was a company Apollo
created in 2005. In 2007, Hexen tried to acquire
its rival, Huntsman Corporation, for $6 .5 billion.
And then the financial markets collapsed right
after they agreed to the deal. Right. The credit
crunch meant Heckschen's debt burden would be
completely untenable, so they tried to back out.
They just refused to close the acquisition. And
Huntsman, unsurprisingly, sued. The legal firestorm
was front -page news. Ultimately, Heckschen settled
with Huntsman in 2008. And the settlement required
Heckschen to pay Huntsman a staggering $1 billion.
A billion dollars just to drop the fraud and
breach of contract charges. A billion dollars.
That's not a rounding error, even for a firm
deploying $14 billion in capital. It just highlights
the aggressive, litigious environment they were
operating in. Meanwhile, they just kept diversifying,
right? Yeah. Buying up essential industrial assets.
Yeah. Rexnerd for $1 .825 billion. Berry Plastics
for $2 .25 billion. Jacuzzi Brands for almost
a billion. And they also made a highly strategic
counter -cyclical investment. Your cruise line.
Norwegian Cruise Line. They stepped in with a
$1 billion investment in 2008 to recapitalize
the company, which is what helped it survive
the economic contraction. That cruise line deal
proved to be really strategic. But that period,
07 to 09, was just characterized by navigating
genuine financial peril. They had some painful
losses alongside the wins. Absolutely. One highly
scrutinized deal involved commercial real estate
loans. In April 2008, Apollo partnered with TPG
and Blackstone to buy a $12 .5 billion portaholio
of senior secured bank loans from Citigroup.
These were loans Citi had made to finance LBOs
at the peak of the market, and now they couldn't
offload them. Citi was desperate to clear its
books, so the loans were reportedly sold at around
mid -80 cents on the dollar. Apollo and its partners
thought they were getting a great deal. But the
market kept sinking. And by late 2008, the value
of those assets had plummeted even further. And
Apollo was facing significant margin calls on
the financing they had used to buy the portfolio.
The crisis didn't spare even the opportunistic
buyers. And then there was the total write off.
The brutal reminder of failure. Linens and things.
They'd invested heavily in the U .S. retailer
back in 2005. But the combination of its massive
debt load and the rapid collapse in consumer
spending. Meant the company filed for bankruptcy
in May 2008. And that bankruptcy cost Apollo
its entire $365 million investment. It was just
wiped out. It's critical to remember those losses
that shaped their risk profile. That $365 million
was gone, and it taught them a painful lesson
about retail exposure during a severe recession.
So in situations where companies were struggling
but maybe salvageable, Apollo used some clever
financial engineering to keep them afloat. They
deployed this highly scrutinized strategy called
the PK toggle. Let's define PIK for the listener.
It stands for payment in kind. This tactic was
used when a portfolio company, like the retailer
Claire Stores, was under intense pressure and
couldn't make its cash interest payments on its
debt. So wait, Aqualo, as the owner of the debt,
could exercise this P -high -K toggle option.
Instead of the company paying cash interest,
which it didn't have... It issued more debt to
cover the interest it owed. So you're paying
debt... With more debt. Precisely. It's a deferral
mechanism. It allowed the company to preserve
cash flow right then, providing immediate temporary
flexibility. But you're right. It came at a terrible
cost. You're not solving the problem. You're
just kicking the can down the road and making
the can bigger. You are compounding it. You're
adding the interest payments back onto the principal,
guaranteeing a much larger, more difficult debt
crisis later on. It was pure financial triage
to keep the company solvent until the market
hopefully recovered. And that must have been
heavily criticized. it was, restructuring analysts
saw it as maximizing the immediate return for
the debt owner Apollo at the expense of the company's
long term health. But since they own both the
equity and the debt, they were just moving pieces
on their own chessboard, buying time for the
equity value to recover. So successfully navigating
the crisis, their reputation for distressed investing
is cemented and Apollo completes its IPO on March
29, 2011. And now with access to public markets,
the whole calculus changes. They're no longer
just answerable to their limited partners. They're
answerable to every public market investor who
demands consistent growth and diversification.
And that post -IPO era is defined by this aggressive
expansion away from their traditional focus.
Yeah, away from distressed manufacturing and
chemicals. We see a huge shift into consumer
services and intangible assets. They just dove
headfirst into education. Which is a surprising
choice. In 2012, they buy McGraw -Hill Education
for $2 .5 billion. And then, five years later,
they acquire the entire Apollo Education Group,
the parent of the University of Phoenix, for
$1 .14 billion. It suggests a really strategic
bet on the financialization of educational content
and services. At the same time, they became highly
active in entertainment and leisure. And they
proved they were adept at the rapid flip. They
were. They acquired Great Wolf Resorts in 2012
for $703 million and sold it. just three years
later for $1 .35 billion, a near doubling of
their capital in a pretty short time. And then,
of course, the acquisition that everyone can
relate to. They literally saved the American
snack aisle. The Twinkie deal. In 2013, they
secured the winning bid for the snacks business
of the bankrupt Hostess Brands for $410 million.
It's a great example of applying that distressed
asset expertise to a high -visibility consumer
brand. But while they were saving Twinkies, they
were also moving into much more serious infrastructure
and security assets. Right. They acquired the
ADT Corporation, the massive residential security
provider, in 2016 for $6 .9 billion and the cloud
computing company Rackspace in the same year.
That move into technology and security, it signals
their growing interest in services with strong
recurring revenue streams. And this period also
features an acquisition that thrusts them directly
into the geopolitical spotlight. The 2016 purchase
of Constellas for $1 billion. Constellas is a
major private military contractor and its structure
included academia. Which listeners will know
better by its former name. Blackwater USA. This
is a critical detail. It meant that Apollo, a
financial firm managing pension money, now owned
a company directly involved in national security
and foreign military operations around the globe.
Given the very serious historical context of
the Nisar Square massacre involving Blackwater
guards, acquiring a private military contractor
just demonstrates the full depth of Apollo's
mandate. They're operating in sectors traditionally
reserved for governments or highly specialized
defense companies. It's this direct link. between
finance, geopolitics and military operations.
Let's shift to their media strategy, which really
shows how they can consolidate vast market sectors
very, very quickly. Look at the complex deal
for Cox Media Group in 2019. This was a multifaceted
$3 .1 billion deal. Apollo structured it through
a new entity called Terrier Media, which later
just took the Cox Media Group name. And it didn't
stop there. They concurrently acquired Northwest
Broadcasting, bringing their total TV station
count to 25. It shows this deep appetite for
mass media consolidation. The complexity of these
deals often triggers regulatory action. For instance,
the FCC actually required Apollo to sell the
Ohio newspapers they had acquired back to Cox
Enterprises in 2020. So sometimes regulatory
cleanup is just part of the process. It is. They
also achieved a really clean consolidation in
the retail photo space. In 2019, they acquired
Shutterfly for $2 .7 billion and almost at the
same time bought its direct competitor, Snapfish,
for around $300 million. You basically owned
the entire consumer photo printing market overnight.
And the financial services sector, of course,
that remained the constant. They bought Aspen
Insurance for $2 .6 billion in 2019, further
building out their insurance assets. And crucially,
they were also acting as a primary debt facilitator
for other firms' deals. Like providing $1 .8
billion in debt financing for New Media Investment
Group's massive acquisition of Gannett. It just
shows their continued importance as a market
maker. And we have to touch on one deal that
underscores how deeply interwoven these firms
are with the highest levels of influence. Our
sources highlight a politically. noteworthy real
estate transaction in 2017. That's the $184 million
loan provided by Apollo to Kushner Companies
to refinance a mortgage on a Chicago skyscraper.
And the timing is what's important. The loan
followed meetings at the White House with company
executives. Now, the source simply presents the
facts of the loan and the meetings, but it illustrates
the critical role firms like Apollo play not
just in finance, but in the political and real
estate capitals of the world. Their capital flows
are often tied to major political actors and
decisions. So the era from 2020 to the present,
it's defined by one. single strategic objective
for Apollo. Achieving financial immortality.
That's a good way to put it. Securing a dedicated
source of capital that never expires. And this
led to their most critical strategic move ever,
the Athene merger. This is the culmination of
everything they learned in the previous three
decades. They mastered distressed debt. They
mastered the LBO boom. But they were still constrained
by the cycle of fundraising. Right. That traditional
model where you raise a fund, you invest for
five years, try to exit over the next five, and
then you have to go back to your pension funds
and, you know, ask for more money. That fundraising
cycle introduces risk and uncertainty. The Athene
merger, which was completed in January 2022 and
valued at $11 billion, it solved that problem.
It provided them with permanent capital. And
let's unpack the significance of permanent capital
because it is the holy grail of modern private
equity. Athene is a retirement services and insurance
business. So when customers pay premiums to Athene
for annuities and life insurance, Athene assumes
a long -term liability. It has to pay that money
back plus interest years or even decades down
the line. But in the meantime, Athena is sitting
on this massive, continuous and highly stable
pool of cash flow. This float, this capital,
is managed by Apollo. And since the liabilities
are decades away, Apollo can invest that money
in long duration, less liquid, high yielding
assets, exactly the kind of complex credit and
infrastructure deals they love. The merger with
Athene completely transformed their balance sheet.
Apollo now had a dedicated, continuous, vast
pool of money that isn't locked into a traditional
10 -year fund lifespan. It gives them unrivaled
stability and flexibility. It insulates them
from short -term market fluctuations and the
constant need to be fundraising. And the market
has clearly rewarded this strategic shift. The
scale of their fundraising continues unabated.
I mean, Fund IX in 2017 raised a then record
$24 .6 billion. their latest Fund X closed in
2023 with another whopping $19 .877 billion.
And this expansion is also global. We see a clear
push into the Asia -Pacific region. Yeah, evidenced
by their strategic partnership with Shinhan Life
in Korea and the opening of a new office in Seoul,
both in late 2024. They are deploying this permanent
capital model globally. And with this massive,
stable capital base, their acquisition strategy
has become almost overwhelming in its scope.
Looking at the recent deals, it's a corporate
shopping spree targeting the foundational elements
of the global economy. Let's start with media
and telecom infrastructure. In September 2021,
Apollo Funds acquired a 90 % stake in Yahoo.
They now own a huge foundational piece of the
original internet landscape, betting on its media
and ad revenue streams. And speaking of physical
infrastructure, in 2021, they acquired the local
exchange carrier operations across 20 states
from Lumen Technologies for $7 .5 billion. They
are quite literally buying the copper, the fiber,
the switching centers, the physical backbone.
of U .S. regional telecommunications. They're
also consolidating the retail and consumer space.
They acquired the Michaels Companies, the Kraft
retailer, for $5 billion in 2021 and provided
a $1 .75 billion investment in Albertsons. And
they even moved into local food retail, buying
up regional grocery chains like Tony's Fresh
Market in Chicago and Cardina's Markets in California
in 2022. It just shows the capillary -like reach
of their investments. And then there's heavy
industry. They're investing heavily in manufacturing.
for $7 .1 billion, Arconic in 2023, and the recent
acquisition of Barnes Group in January 2025.
These are global suppliers of automotive parts
specialized manufacturing. But the single most
significant recent deal, the one that demonstrates
the ultimate application of their permanent capital
strategy, has to be the mega infrastructure joint
venture with Intel. This deal is on a governmental
scale. In June 2024, Apollo announced it was
acquiring a 49 % equity interest in a joint venture
related to Intel Ireland's Fab 34. The deal was
valued at $11 billion. And Fab 34 is not a distressed
retailer. It's a critical advanced semiconductor
fabrication plant. It's high -tech, strategic
infrastructure vital to the global supply chain
and national industrial policy. Securing nearly
half ownership in a cutting -edge chip facility
is not a quick LBO. It's a strategic, long -term
bet on the stability of global supply chain assets,
exactly the type of asset their Athene -backed
permanent capital is designed to hold. So just
when you think you've mapped their entire strategy
from chemicals to telecom to semiconductors,
they dive headfirst into the high -profile, high
-emotion world of professional sports. The last
few months of 2025 reveal this rapid, aggressive
move into global sports ownership. And the strategic
interest here is less about team profitability
and more about the guaranteed accelerating revenue
from broadcast. rights, sponsorship, and streaming.
The specific examples are huge. In November 2025,
they acquired 55 % of the shares of Atletico
Madrid, making them the majority shareholder
of one of Europe's most visible football clubs.
And maybe more surprisingly, in December 2025,
they acquired a minority stake in Wrexham AFC,
the Welsh club that's gotten so much global media
attention. This confirms a really serious commitment,
one that was solidified earlier in September
2025, with plans to launch a separate $3 .75
billion Addie and investment vehicle focused
entirely on the sports sector. That's a dedicated
fund just for global sports. They are clearly
looking to own large, stable pieces of the global
sports media ecosystem, viewing them as long
duration assets, just like infrastructure or
insurance companies. They're also active in the
broader entertainment landscape. While they sold
their stake in Endemol Shine Group, they later
acquired a minority stake in Legendary Entertainment.
the studio behind massive film franchises, for
$760 million in 2022. It demonstrates an effort
to control the content creation as well as the
infrastructure that distributes it. So the incredible
scale and relentless growth we just detailed,
it came at a price. And that relentless pursuit
of capital led to a massive internal upheaval
at the very top of the organization. This is
the biggest inflection point in Apollo's corporate
history, the effective removal of its charismatic
founder. Leon Black resigned as CEO and chairman
in March 2021. His resignation followed sexual
misconduct allegations and the highly public
revelation that he had paid the convicted sex
offender Jeffrey Epstein $158 million for personal
tax advice between 2012 and 2017. The firm responded
very quickly amid significant investor pressure
and reputational risk. Co -founder Mark Rowan
immediately stepped into the CEO role. And that
leadership change signaled a necessary shift
toward... institutionalizing the firm, moving
away from the dominance of its founder's personality.
The transition completely reshaped the top management.
Co -founder Josh Harris also departed in January
2022 to focus on other ventures, meaning Mark
Rowan is now the sole remaining founder actively
steering the company. Ushering in what many see
as the new, more institutional era of Apollo.
And if we connect this back to the bigger picture,
Apollo's founding DNA. That aggressive, high
risk, distress to control strategy, it doesn't
just disappear even as they transition to permanent
capital. The firm's relentless drive for efficiency
sometimes comes with a considerable human or
financial cost that our sources. really can't
ignore. We've already discussed the painful financial
failures like the total $365 million loss on
linens and things and the staggering $1 billion
legal penalty in the hex enhancement fraud case.
That level of financial exposure and penalty
speaks volumes about the aggressive win -at -all
-costs philosophy that underpinned their operations
for decades. But the concern goes beyond financial
damage. It extends to the operational practices
of the companies they control, particularly concerning
labor and safety. For instance, in July 2021,
Apollo Funds acquired EmployBridge, which is
one of the largest industrial staffing companies
in the U .S. Right. So EmployBridge provides
temporary workers to a huge range of industries.
And the source material notes that this company
has been cited for dozens of safety violations
and wage infractions over the past two decades.
This raises a really important question for you,
the listener. What level of responsibility do
these private equity owners assume for the operational
practices and labor records of the companies
they control, especially when maximizing financial
efficiency and minimizing cost is paramount?
It creates this fundamental tension, doesn't
it? Apollo's success is built on acquiring complex
or struggling assets and injecting massive leverage
or intense operational discipline to maximize
returns. But that relentless pursuit of returns
for pension funds can sometimes conflict directly
with basic priorities like job stability, wage
compliance or workplace safety. It is the hidden
calculus of private capital ownership. Nonetheless,
Apollo is a true giant, both in scale and influence.
They rank highly on industry lists, standing
29th in the PEI 300. ranking for 2024, competing
directly with firms like Blackstone, KKR, TPG,
and Carlyle Group. The synthesis of their journey
is clear. They have successfully navigated a
massive institutional transition. They started
as this specialized opportunistic recovery fund
after the Drexel collapse, where they basically
weaponized financial crisis. Today, they're a
hyper diversified, multibillion dollar asset
manager that strategically uses not only traditional
private equity and distressed debt, but also
massive continuous credit funds. And crucially,
they have secured that permanent capital structure
provided by the Athene merger, which is. their
ticket to long -term stability and that structure
allows them to finance Everything from complex
consumer acquisitions like Twinkies and Michaels
to industrial giants like Tenneco to global media
assets like Yahoo. All the way to critical national
infrastructure like the physical telecom lines
of Lumen and now even major European football
clubs like Atletico Madrid. Their ability to
shift focus from early distressed asset acquisition
to LBO boom participation to securing that permanent
capital base needed for acquiring vast critical
infrastructure. like Intel's Fab 34. That's the
ultimate reason they've gone from $400 million
to nearly a trillion dollars in AUM. They evolved
from being dependent on financial cycles to essentially
building a machine that smooths them out. What
an extraordinary journey. I mean, we started
with the distressed securities of 1990, and we've
concluded with a firm that manages nearly a trillion
dollars, dictating ownership of everything from
global telecommunications lines to major league
sports teams. It's a masterclass in strategic
evolution. The transformation is truly extraordinary.
Apollo successfully transitioned from being a
purely reactive firm, an opportunistic recovery
fund for the 90s debt collapse, to a global financial
behemoth that proactively designs its... own
financial future through strategic mergers and
securing that long duration capital. And the
ultimate connection to you, the learner, is just
how profoundly pervasive this capital is. The
investment choices made by Apollo impact the
prices you pay at grocery stores like Tony's
or Cardina's, the security system protecting
your home, ADT, and the news you consume through
Cox Media Group. Private capital has truly seeped
into every critical corner of daily consumer
and civic life. And this leads us to our final
provocative thought for you to mull over. Apollo's
modern strategy relies so heavily on accumulating
massive, long -term, and physical assets, real
estate, infrastructure, telecom operations, and
critical facilities like Intel's Fab 34. So given
that their funding relies increasingly on credit
funds and that permanent capital from Athene,
how might Apollo's strategy of accumulating these
strategic long -duration assets insulate them
during the next major global economic shift?
And maybe more importantly, what does it imply
for national economic resilience when vital infrastructure
is increasingly owned and optimized by firms
managing international pension capital? The future
of infrastructure and security often lies in
the balance sheets of these massive asset managers.
Something to mull over until our next deep dive.
Thanks for joining us. Until next time.