Apollo Third-Quarter Profit More Than Triples on Athene Unit

  • Gain contrasts with losses posted by private equity peers
  • Company's stake in annuity-seller Athene increases by 20%

Apollo Global Management LLC said third-quarter profit more than tripled as it marked up the value of its stake in annuity-seller Athene Holding Ltd.

Economic net income rose to $104 million, or 26 cents a share, from $32 million, or 8 cents, a year earlier, New York-based Apollo said Wednesday in a statement. Analysts were expecting a per-share loss of 11 cents, according to the average of 15 estimates in a Bloomberg survey.

Athene, which plans to go public next year, gained 20 percent in value in the quarter as it continued expanding and entered the German market with an acquisition of Delta Lloyd Deutschland AG, according to a separate statement Wednesday from AP Alternative Assets, a publicly traded investment vehicle managed by Apollo and Athene’s biggest shareholder.

Rivals’ Losses

Apollo’s gain contrasted with losses reported by rivals Blackstone Group LP, KKR & Co. and Carlyle Group LP as a stock-market slump in August reduced the value of their holdings. Apollo’s private equity investments declined 3.7 percent overall in period, including a nearly 60 percent drop in EP Energy Corp., one of the firm’s biggest stakes.

Apollo fell 1.3 percent to $18.22 at the close of trading in New York. The shares have sunk 17 percent this year, including reinvested dividends.

Economic net income, an earnings measure used by Apollo and most of its publicly traded rivals, reflects value changes in a firm’s unsold investments in addition to actual cash income. Accounting rules require firms to mark the value of their private and public holdings to the market every quarter.

Apollo, which oversees $161.8 billion in private equity, credit and real estate assets, is at the end of a three-year sales spree that brought in big profits, and disposals have tapered off. Last quarter Apollo sold part of its stake in Norwegian Cruise Line Holdings Ltd. It also collected a debt-financed dividend from Hostess Brands.

Investing Front

Distributable earnings, which reflect cash that can be used to pay dividends, were $142.6 million, or 36 cents a share, down 58 percent from $342.8 million a year ago.

Apollo hasn’t been idle on the investing front. Deploying an $18.4 billion flagship fund, it acquired home-security companies Protection One Inc. and ASG Security Inc. for an undisclosed amount and agreed to buy OM Group Inc., a chemicals maker, for $1 billion.

Apollo co-founder Josh Harris, speaking Wednesday on a conference call with analysts, said investment opportunities are starting to pick up in distressed credit as valuations have edged lower. In Europe, Apollo has been targeting purchases of distressed commercial real estate loans from banks, Harris said.

The firm moved in August to expand its real estate business by agreeing to take control of embattled investor Nicholas Schorsch’s operations. Expected to close this quarter, the purchase stands to boost Apollo’s investor capital in real estate to $27 billion from $10.6 billion.

Apollo said it will pay shareholders a dividend of 35 cents a share on Nov. 30.

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