By Chibuike Oguh
NEW YORK (Reuters) -Apollo Global Management Inc said its distributable earnings rose to an all-time high in the third quarter driven by more asset sales in its private equity portfolio and income from its credit business.
Apollo joins peers Blackstone (NYSE:BX) Inc and Carlyle Group (NASDAQ:CG) Inc that reported record distributable earnings last month due to strong asset sales, as economic recovery from the COVID-19 pandemic and low interest rates drove mergers and acquisition activity to new highs.
Distributable earnings, which is the cash used to pay dividends to shareholders, rose to a record $752.1 million, up from $205.1 million a year earlier. That translated to distributable earnings per share of $1.71, which surpassed the average Wall Street analyst estimate of $1.10, according to Refinitiv.
A big chunk of Apollo's earnings came from the $248.8 million it generated from the divestment of its annuities platform Venerable to a fund it manages and its insurance subsidiary, Athora, Apollo Chief Executive Marc Rowan said during an analyst earnings call.
"In our view, Venerable is not a great product to be part of a public company, given the inherent volatility of GAAP results if business is run properly," Rowan said.
Apollo reported a drop in net income under generally accepted accounting principles (GAAP) to $249.2 million, down 5% from the prior year, owing to an uptick in compensation expenses and income taxes.
Its shares were trading down 1.67% at $75.05 on Tuesday morning after the call.
The New York-based firm said it cashed out $8.8 billion worth of investments in the third quarter, including selling down its stake in financial firm OneMain Holdings (NYSE:OMF) Inc and profits from education provider Apollo Education Group.
Apollo said it invested $28.3 billion to acquire new assets, including its $5 billion takeover of Yahoo from telecoms giant Verizon Communications Inc (NYSE:VZ).
Apollo said its private equity funds appreciated 4.8%. Its corporate credit funds and real estate, infrastructure and principal finance funds rose 1.7% and 6% respectively. Blackstone's private equity funds rose by 9.9%, while Carlyle's buyout funds rose 4%.
Total assets under management rose to $481.1 billion, up from $471.8 billion in the prior quarter, driven by growth in premiums from its insurance businesses Athene Holding (NYSE:ATH) Inc and Athora.
Apollo ended the quarter with $46.9 billion in unspent capital and declared a dividend of 50 cents per share.