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Athene’s Would-Be Parent Grows Its Own Assets

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What You Need to Know

  • Apollo hopes to close on a deal that will give it control over Athene in January 2022.
  • Apollo's CEO says Athene will hope it show that the assets it originates are great.
  • The flow of cash into Athene annuities increased to $1.7 billion.

Executives at Apollo Global Management — the investment firm that’s acquiring Athene Holdings (ATH) — say their goal is to originate loans and other investment assets that can generate high, safe returns, to give investors an alternative to low-yielding bonds.

Athene is a big, rapidly growing, Hamilton, Bermuda-based annuity issuer and reinsurer. Apollo hopes to close on a transaction that will give it control over Athene by January 2022.

Marc Rowan, Apollo’s co-founder and CEO, said Apollo wants to be in the business of generating “high grade alpha,” rather than to be in the business of collecting assets for the sake of collecting assets.

Rowan said Apollo can achieve those high returns by agreeing to lock capital away in secure but “illiquid” investments, or assets that are difficult to convert into cash quickly.

“Origination gives us control of documentation,” Rowan said. “It gives us control of diligence. It gives us control of structure. And it gives us improved economics.”

Apollo recently formed a relationship with Victory Park, a company that lends money to businesses, and Athene recently agreed to acquire Foundation Mortgage, a mortgage lender in the United Kingdom.

Both deals, and other deals now in the pipeline, should help Apollo originate more and better high-yielding investments Rowan said.

If Athene uses investment assets that Apollo has originated, that should also help Apollo sell the assets to other companies, because outside investors like to see that an investment company is using the investment instruments it has originated, Rowan added.

Athene’s Earnings

Apollo executives talked to analysts during a call they held to go over their company’s earnings, and Athene released its earnings Thursday.

The Hamilton, Bermuda-based company is reporting $931million in net income for the second quarter on $4.4 billion in revenue, compared with $1.8 billion in net income on $6.4 billion in revenue for second quarter of 2020.

Athene’s operating earnings fell to $470 million for the latest quarter, from $945 million loss.

The flow of cash into retail annuities increased about 2%, year-over-year, to $1.7 billion.

(Image: Shutterstock)