Apollo Global Management LLC said second-quarter profit more than doubled as it marked up the value of its stake in annuity-seller Athene Holding Ltd., and its private equity and credit holdings gained.
Economic net income, a measure of earnings that reflects both realized and unrealized investment gains, increased to $395 million, or 98 cents a share, from $155 million, or 38 cents a share, a year earlier, the New York-based private equity and credit investor said in a statement Wednesday. Analysts had expected earnings of 20 cents a share, the average of 14 estimates compiled by Bloomberg, with the highest expectation at 39 cents.
Apollo, which aggressively sold private equity holdings from 2011 to 2014, has slowed the pace as its remaining portfolio shrinks and the firm focuses on deploying new money. Apollo returned $1.3 billion to investors in the quarter, down from $3.4 billion in the same period last year.
The firm marked up the value of its nearly 10 percent interest in Athene to $615 million from $512 million three months earlier. An annuities seller Apollo created in 2009, Athene plans to go public this year.
Shares of Apollo rose 2.8 percent to $17.43 at 10:11 a.m. in New York. The stock was up 16 percent, including reinvested dividends, this year through Tuesday.
The firm, led by Chief Executive Officer Leon Black, said its private equity holdings, including companies it’s taken public and still owns, rose 3.1 percent in the quarter. That was despite a slide in Apollo’s biggest stake, in Norwegian Cruise Line Holdings Ltd., of $558 million, or 28 percent, during the quarter.
Apollo’s main buyout fund, an $18.4 billion pool, surpassed a return threshold that allows the firm to start collecting its share of investment profits, known as carried interest. That boosted Apollo’s carried interest income, including realized and unrealized gains, to $322.2 million from $94.9 million a year earlier.
Rival buyout firm Carlyle Group LP’s private equity investments rose 4 percent in the quarter, Blackstone Group LP’s appreciated 2.5 percent and KKR & Co.’s gained 4.5 percent.
Distributable earnings, which reflect profits on asset sales and fund management fees, were $161 million in the quarter, compared with $199 million a year earlier. From that pool of profits, Apollo said it will pay stockholders a dividend of 37 cents a share on Aug. 31.
Apollo last month set the stage for a payday later this year by agreeing to sell snacks maker Hostess Brands LLC to the private equity firm Gores Group for about $725 million.
The dearth of major sales in the second quarter contrasted with a flurry of activity on the investing side, with Apollo investing $7.5 billion in private equity, credit and real estate deals during the three months. After completing a $1.4 billion buyout of grocery chain Fresh Market Inc., the firm wrapped up its acquisition of home-security company ADT Corp., which at $12 billion was the biggest private equity-backed acquisition announced this year.
Apollo also hopes to finalize pending buyouts of time-share seller Diamond Resorts International Inc., movie-rental company Outerwall Inc. and for-profit schools operator Apollo Education Group Inc. The deals have a combined value of $4.9 billion.
Assets under Apollo’s management rose to $186.3 billion as of June 30 from $172.5 billion on March 31. The increase makes the firm the second-largest U.S.-based manager of alternative assets after Blackstone, which oversaw $356 billion as of June.
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