Marc Rowan has a plan to make Apollo Global Management Inc. a decidedly different operation. In the last year, the New York-based firm saw record profits, hired 300 people remotely and had fewer employees leave the firm, Rowan said in an interview for Bloomberg Live’s Invest Talks series.
Yet the palace intrigue at the private-equity powerhouse was what captured the attention of Wall Street. All eyes and ears are now on Rowan as he moves firmly into his role as chief executive officer and Apollo enters a new era without two of its three billionaire co-founders. Leon Black was forced to step down over his long-time association with the late Jeffrey Epstein. And Josh Harris is in the process of leaving and starting his second act after a failed bid to replace Black as CEO.
“The noise sometimes just exceeds the reality of what’s happening,” Rowan said. “So imagine how well we’d do without noise.”
Rowan’s quiet, stabilizing influence on Apollo is unmistakable. He helped create the firm’s insurance business, which has been a huge contributor to its success. His move to acquire annuity provider Athene Holding Ltd. is radically transforming Apollo from a swashbuckling buyout and credit shop into a more staid asset manager, where two-thirds of its business comes from managing and investing insurance premiums to generate relatively modest but predictable returns.
“We are building something that’s unique,” said Rowan, who is 58. “Every firm in our industry will go through this same generational shift.”
Just this week, one of Apollo’s main competitors, Blackstone Group Inc., entered a wide-ranging agreement with American International Group Inc. In January, it struck a deal to buy a life-insurance business from Allstate Corp. The moves look likely to provide a steady stream of capital for New York-based Blackstone to invest — just as Rowan’s Athene maneuver did for Apollo.
The evolution is hardly limited to buyout firms, but representative of a world in which financial technology companies are thriving and traditional Wall Street banks are facing their own existential questions, Rowan said.
But he sees a long runway: In five years, Rowan expects Apollo’s yield and hybrid businesses will double in size and the opportunistic business with be 50% bigger.
Like its peers Blackstone, Carlyle Group Inc., and KKR & Co., Apollo has to satisfy public investors, who can often be short-term oriented. Rowan concedes he and his colleagues haven’t fully sold Wall Street analysts on the firm’s new look.
“It is not Berkshire, it is not Brookfield, it is not BlackRock,” Rowan said. “It is Apollo.” And it’s a “massive pool of earnings,” he added.
Rowan said he knows he needs to convince the broader investing community that Apollo can come out on top after moving through a period of change. He thinks he has sold that message internally but not yet beyond Apollo.
“At the end of the day we offer our clients one product: judgment,” Rowan said. “Focus on the people. Avoid doing stupid stuff.”