Apollo Global Management, Inc. (New)

Good morning, and welcome to Apollo Global Management's third quarter 2020 earnings conference call. During today's presentation, all callers will be placed in a listen-only mode, and following management's prepared remarks, the conference call will be opened for questions. This conference call is being recorded. This call may include forward-looking statements and projections, which do not guarantee future events or performance. Please refer to Apollo's most recent SEC filings, including the 8K Apollo filed this morning, for risk factors related to these statements. Apollo will be discussing certain non-GAAP financial measures on this call, which management believes are relevant in assessing the financial performance of the business. These non-GAAP measures are reconciled to GAAP figures in Apollo's earnings presentation, which is available on the company's website. Also note that nothing on this call constitutes an offer to sell or a solicitation of an offer to purchase any interest in Apollo Fund. I would now like to turn the call over to Gary Stein, Head of Investor Relations.

Great. Thanks, Operator. Welcome to our third quarter 2020 earnings call. We hope you and your families are doing well in these challenging times. Joining me this morning are Leon Black, Chairman and Chief Executive Officer, Josh Harris, Co-Founder, and Martin Kelly, Chief Financial Officer and Co-Chief Operating Officer. In addition, Mark Rowan, Co-Founder, and Jim Zelter and Scott Kleinman, our co-presidents, will be available for Q&A on this morning's call. Earlier this morning, we reported distributable earnings of 47 cents per common share, pre-tax fee-related earnings, or FRE, of 63 cents per share, and we declared a cash dividend of 51 cents per share for the third quarter. We'll open today's call with comments on our business and our quarterly earnings from Josh Harris and Martin Kelly, and then we'll move to a personal statement from Leon Black regarding his relationship with Jeffrey Epstein. Leon's remarks will be the extent to which this matter will be discussed in light of the review, the independent review currently underway. As we have continuously stated, Apollo never did any business with Jeffrey Epstein. We as a firm are appalled by Jeffrey Epstein's horrific acts and despicable conduct. Following Leon's statement, Mark and Josh, Mark, Jim, and Scott will be available to answer questions about our business and performance this quarter. With that, I'll turn things over to Josh.

Thanks, Gary. I clearly echo your sentiments on behalf of our firm. and believe the complex committee review is an important step. Thank you all for joining our third quarter earnings call. I hope we continue to find you in good health. And to our employees, thank you very much for another quarter of hard work and dedication, which has resulted in strong results for our clients and shareholders. Starting with the investing environment, the equity markets remain ahead of fundamentals. The swift pace of economic recovery that we saw in the second quarter and into the third quarter has more recently slowed. As a result of low rates and the overvalued public markets, global investor demand for private market opportunities remains strong. Notwithstanding high valuations, Hull continues to source attractive risk return investments for clients through selective market opportunities in credit, private equity, and real assets. In the third quarter, Powell continued to demonstrate the strength of our platform. For the nine months ended September 30, we achieved AUM growth of 31%, FRE revenue growth of 17%, and FRE growth of 16%. Revenue growth of 17% and FRE growth of 16%. For the third quarter, AUM increased to $433 billion. and we reported an FRA of 63 cents per share, a record for Apollo. Year-to-date asset under management growth of $102 billion was largely due to growth of our insurance clients through strategic acquisitions and strong organic growth. Specifically, insurance accounted for $82 billion in inflows year-to-date, the large majority of which is fee generating immediately. Athene and Athora have now reached $238 billion, and permanent capital vehicles now represent 60% of our asset base, while over 90% of our assets under management are either permanent in nature or have a contractual life of five years or more from inception. We believe this long-dated capital base gives us an advantage on the capital deployment side and provides resiliency for our FRA and all market environments. While increasingly our peers are focusing on insurance, we continue to believe that our platform has a number of advantages that make us the premier player in the space. Our insurance affiliates are well capitalized, having raised over $18.5 billion of equity capital which allows them to target large and transformative transactions. Just this week, it was announced that Venerable, which Apollo helped create, will buy a variable annuity block from Equitable that has total assets of approximately $35 billion, roughly doubling the size of Venerable. While this transaction has limited direct impact to Apollo's financial results, it speaks to our expertise across insurance segments. As we consider the big themes of investing over the last several years, financials, particularly insurance, is a key focus of our firm, and as such, we have approximately 150 investment professionals focused on the sector, providing a broad set of capabilities across U.S. and European spread, variable, property and casualty, and life settlements. Additionally, as we sit at the crossroads of providing yield for our investors and and capital solutions for companies in need of liquidity, we have developed extensive asset management capabilities, including a large and growing direct origination business. This expertise spans middle market and large cap origination and a number of asset-based lending categories that benefit our insurance and third-party clients. One example of our leading origination platform is the sizable transaction platform we completed this quarter with the Abu Dhabi National Oil Company, or ADNOC, in which Apollo sourced, structured, and executed investment for our clients in a $5.5 billion real estate portfolio. This was an investment-grade transaction that was placed with our insurance and third-party clients looking for long-term and high-quality yield. Given the sustained low-rate environment, the size and strength of our asset management and origination capabilities, current organic growth trends, and our acquisition capabilities, we expect continued growth in these insurance platforms. In addition to the strong growth we've seen in insurance, we've made progress in a number of other business initiatives. This year we launched a $12 billion large cap direct origination strategy announced our impact investing platform, and listed Apollo's strategic growth capital SPAC. Additionally, we've continued to grow our existing strategies such as accord, hybrid value, infrastructure, and our total return strategy, to name a few. In terms of third-party fundraising, we closed on $3.9 billion of third-party capital in the quarter, highlighted by a number of first closes, including Hybrid Value II and Accord IV and our new Infrastructure Opportunity Strategy. These and other strategies have resulted in a strong year-to-date third-party fundraising of $18.4 billion through the end of the third quarter. Looking forward, we expect that third-party fundraising will slow over the near term, and some investors await the findings of the review, which Leon will discuss. Martin will also provide additional color on the potential impact to revenues. Before I turn the call over to Martin, I would like to reiterate my appreciation for those responsible for our strong earnings, our employees. Led by our impressive global leadership team, including co-presidents, Jim Zelter and Scott Kleinman, who are here with me today, our 14-person management committee, and our leadership advisory forum of 60 senior global professionals. With each day that passes, I am increasingly impressed by the commitment and the collaboration of our Apollo team towards one another and our business. Thank you again for all of your hard work. With that, I will hand the call over to Martin to cover some financial highlights of the quarter in greater detail. Thanks, Josh.