Rowan identifies hybrid as a $30 billion business offering mid-teens returns with lower risk than opportunistic strategies.
“This thing called hybrid, which is 30,000,000,000, is actually really interesting because it is neither yield nor opportunistic. It is never going to be the highest rate of return.”
Rowan reports 44% gross and high 20s net returns on Apollo's $25 billion fund.
“For the last time we announced results, 44% gross on the $25,000,000,000 fund, high 20s net.”
Rowan cites 44% net returns in Apollo's 2001 fund and recent funds ranging from $15-25 billion.
“And in that fund, which was the 2,001 fund, 44% net returns. So, now you fast forward and you look at the last three funds we've done.”
Rowan commits Apollo will grow 15% plus cash on cash annually with embedded options in democratization of finance.
“what we've told the Street is we will grow our business 15% plus cash on cash year over year, and I think that's really good.”
Rowan cites 44% net returns on Apollo's 2001 fund to counter concerns about too much money chasing deals.
“And in that fund, which was the two thousand and one fund, 44% net returns. So now you fast forward and you look at the last three funds we've done.”
Rowan reports Apollo's $25 billion fund is delivering 44% gross returns and high-20s net returns.
“44% gross on the $25,000,000,000 fund, high 20s net. The world just keeps moving. The world just keeps changing. It's our job to continue to reinvent ways to extract and to produce value.”
Rowan reports Apollo's 32-year track record shows 36% gross and 26% net returns with every fund profitable.
“If you look at the now thirty two year history, 36% gross 26% net returns every fund has made carry. We've done really well.”
Rowan questions whether massively scaling private equity benefits investors or is even possible given return requirements.
“It is unclear to me that massively scaling that business is good for investors or good for us or possible. Our job as investors and alternatives is to produce excess return per unit of risk.”
Rowan reports Apollo's thirty-two year track record shows 36% gross and 26% net returns with every fund making carry.
“If you look at the now thirty two year history, 36% gross 26% net returns every fund has made carry.”
Rowan says Apollo runs private equity for returns not growth, calling it a farming business.
“But literally, we run this business for rate of return. If we do a good job for investors, we will grow a little.”
Rowan says investors can earn single A corporate rates plus 300 basis points for 90-180 days of illiquidity.
“If you can earn single A corporate bond rates plus 300 for being less liquid for ninety or one hundred and eighty days, it seems like a pretty good trade.”
Rowan says Australian superannuation with private market access delivers 50-60% better outcomes.
“The returns have been nothing short of spectacular. Outcomes for investors can be not a little better 5060% better.”
Rowan dismisses disappointment from investors who expected a God-given right to 11% annual returns.
“Those people who are tied to asset prices who thought we were had a God given right that everything move up at 11% annually are disappointed.”
Rowan says investors move from equity and high yield to levered lending for same returns with less volatility.
“Generally, what investors are doing is they're taking money out of equity or out of high yield bonds and moving into levered lending. It's roughly the same return, and it is less volatile.”
Rowan calculates an extra one percent compounded return produces 50% to 100% better retirement outcomes.
“And if you go to the extreme and you take retirees, for instance, in 04/2001, an extra percent compounded over the duration of how long you're going to be in there is a 50% to 100% better outcome by having better investments.”
Rowan claims an extra 1% return compounded over time produces 50-100% better retirement outcomes for retirees.
“But if you look around the world, every place that private assets have been added to public portfolios, you've gotten better outcomes.”