Apollo Global Management, Inc. (New)

Good morning and welcome to Apollo Global's management's fourth quarter 2020 earnings conference call. During today's discussion, all callers will be placed in a listen-only mode, and following management's prepared remarks, the conference call will be open for question. This conference call is being recorded. This call may include forward-looking statement and projections which do not guarantee future events or performance. Please refer to Apollo's most recent SEC filings for risk factors related to these statements. Apollo will be discussing certain non-GAAP 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 constitute an offer to sell or solicitation of an offer to purchase an interest in Apollo Fund. I would now like to turn the call over to Peter Mintzberg, Head of Investor Relations.

Thanks, operator, and welcome to our fourth quarter 2020 earnings call. As many of you know, I joined the firm in November as Head of Investor Relations, and I'm very glad to be here with you all today for my first earnings call with Apollo. Joining me this morning are Mark Rowan, Josh Harris, and Martin Kelly. Jim Zelter and Scott Kleiman are also on the line for questions. I'd like to turn it over to Mark to kick off our comments for today.

Thanks, Peter. Good morning, everyone. I'm excited to be here following the conclusion of my very poorly planned recent sabbatical. I look forward to engaging with our investors and shareholders as I transition into my new role. As you will hear in more detail, the Apollo platform is strong, resilient, extremely well positioned for growth in today's landscape as our exceptional 2020 results have demonstrated. Before I turn to the quarter and the year, I want to review the announcements that were contained in the various communications last week. I will first touch on governance, then leadership, and lastly, our investors. In terms of governance, we believe the changes described in Leon's letter last week were an important step in our evolution from a private partnership to the standards set by the best public companies. Our industry is in transition. Our firm is in transition. All of us are moving from the small private partnerships that we started life as to important components of a more global financial system. Proper governance and transparency are going to be essential to play the role that we are supposed to play in this marketplace. Specifically as a firm, we are committed to moving promptly to a governance structure that will enhance our board with additional diversity, possessing different viewpoints to bring experience to bear that is needed to help drive our business forward. We are committed to moving our board to two-thirds independent over the near term, and we are committed to appointing a lead independent director who will actively and regularly engage with the management and the board. As it relates to directors, we have already made substantial progress. Last week, we announced that Pam Joyner and Sid Mukherjee will be joining our board effective March 1st. Further, we are in active dialogue to bring additional high-quality talent on board to help us drive the business forward at our board of directors level. Beyond the board changes, as we have alluded to, we have begun a process with our independent committee of the board to to promptly evaluate and review the steps necessary for Apollo to adopt a one-share, one-vote structure and other changes that will be required to be eligible for us to be included in a broader set of market indices. These changes, I believe, would be incredibly beneficial for our firm and, again, further reflect our commitment to moving to a more modern state given the important role that we play in the financial landscape. I believe the independent committee of the Board will return promptly with their recommendations, and we will take it from there. Away from the governance changes, we are making a series of changes to Apollo's leadership. Leon will be retiring as CEO and will remain chairman of the board. Josh will remain a co-founder and member of the board and executive committee, working with our largest investors, evolving our integrated platform, and expanding the strategic opportunities where we look for investments. Scott and Jim will be assuming additional responsibilities as we all realign our areas of focus. We are fortunate to have an incredibly deep bench of talented partners who have been together a very long time. Leon, Josh, and I have been together and been partners for more than 30 years. We have been through all kinds of market cycles and all kinds of events, and I expect our partnership to endure for a very long time. Having reviewed governance and leadership, Let me now turn to speak about our investors. This has been a busy week plus of communication with our investors. We have had an opportunity to speak with a very broad cross-section of our limited partners and their advisors and consulting relationships regarding the conclusion of the Conflicts Committee review and the governance and leadership changes. The vast majority have indicated that they are satisfied with the announcements which they and we believe strike the right balance for the firm. Perhaps most importantly, they appreciated the seriousness with which we took the process and the transparency. As we expected, a smaller portion of our investors will need time to consider these events and the changes we are implementing, and in some instances, they may actually want to see how these changes unfold. We realize that we may not be able to satisfy each and every of more than our 100 excuse me, 1,500 institutional investors, but we have made tremendous progress. We must continuously strive to improve our process and governance, and most importantly, to deliver superior investment returns to our investors. We expect third-party fundraising to build significantly now that we have addressed these issues. The strength of the business shows that even in this past quarter with these headwinds, we continue to raise money across a number of funds and syndicated more than $9 billion of investments amongst our limited partners and insurance affiliates. As I said, the business powers ahead. As Josh will discuss, this was a record year for Apollo across multiple metrics. AUM is at a record high, increasing by more than $22 billion in this quarter alone. The momentum in this business is strong, and as we implement these various changes, I expect that momentum to increase. Now to take a step back. a unique time for me to become CEO of Apollo. We are a growth business, and we are fortunate to be a provider of a service that's in incredibly high demand, namely investment returns. In addition to the product we provide, our market is growing, and it's growing dramatically. We primarily serve retirees, either directly through our insurance affiliates in the form of guaranteed income, or indirectly with our yield and opportunistic products through institutions like retirement systems, pension plans, endowments, sovereign wealth funds, and others. All of these clients we serve are looking for investment returns, and it is our job to continue to grow our front end, meaning our ability and capacity to generate good returns per unit of risk assumed. While the AUM growth this year is nothing short of substantial and spectacular, growing AUM is just a measure and not a goal in itself. It is the result of good performance. For good managers like Apollo, the ability to raise money is not the primary governor of our growth. It is our capacity in difficult markets to source investments that provide above average returns for the risks undertaken. As long as we maintain our capacity and grow our capacity to produce returns, AUM will follow. I feel fortunate to be leading an incredibly healthy business. I believe we have a unique opportunity at Apollo based on the strength of our people, coupled with our investment expertise across numerous sectors and the benefit of our permanent capital vehicles. We are strategically positioned at the intersection of growth, yield and value. Our particular edge is being able to source assets that cater to a range of capital structures from lower yield insurance company balance sheets to high return opportunity funds. In a market that is characterized by indexation, correlation, and volatility, I believe that presents a unique opportunity for Apollo's style of investing to really stand out. An Apollo portfolio is fundamentally different than a BlackRock portfolio, a Blackstone portfolio, or anyone else's portfolio. The unique skill, the unique DNA of Apollo is to source investments. up and down the risk-reward spectrum that represent good returns per unit of risk undertaken. So long as we stick to that tenet, we will continue to be successful and we will continue to grow our firm. I would be remiss not to take a moment to thank Apollo's more than 1,500 employees around the world. They have worked tirelessly in a very difficult year to achieve the impressive results we have announced today. I'm extremely proud of the extraordinary team their perseverance and dedication they have demonstrated throughout this very interesting year. With that, I turn it over to Josh to cover our strong results for the year.