00:00Apollo is the firm that everybody wants to be in terms of growing your credit product. But it's true. The growth has been insane coming from a period where it was already insane. I mean, does this does this thing slow down? Are we in a world where like private credits kind of eating everything? I think listen, I think you're asking the right question, which is credit has grown tremendously. And our view is that it's going to continue to grow. Our view is that private credit is an enduring asset category. And we've expanded the definition of what that means. We focus not just on kind of direct lending. Of course, we have a big
00:29franchise that does that. But I think our leg up has really been the fact that we have an insurance balance sheet that has allowed us to originate private assets and private credit across the risk return spectrum. Right. Everything from investment grade, lower returning through to higher returning opportunities for our third party investors and having a broad aperture in terms of what does private credit really mean, I think is something that we will continue to see going forward. We had Cliff asking this on a couple of days ago and he raises questions about the marks. Right. The
00:59opacity of opacity of this asset. I saw a story that BlackRock had been marking Renovo home partners debt at 100 cents on the dollar, you know, weeks before it went bankrupt, even though BlackRock knew they were restructuring like earlier this year. How can investors rely on that kind of asset? I think it's a great question. And I think the reality is, is we have to continue to raise the bar in terms of transparency on these situations. At the end of the day, there's been a lot of commentary on a number of the names like the ones you mentioned.
01:29And in terms of what does that really mean for private credit and private markets, our view is with any asset class that's growing so tremendously, there are likely to be accidents. Right. It comes down to fundamental risk taking and understanding the structure behind and what you're investing.
01:44And I think from our perspective, making sure that there's transparency and that you're talking to your investors frequently, as well as getting, you know, third party marks and ensuring that you're having that two way dialogue with your investors.
01:55Right. And I'm pretty sure Paul had like a teeny tiny little exposure to the one Matt's Matt's talking about. Again, not nowhere near the size of BlackRock. But with these, again, you grow. There are more accidents. It happens. Has it changed at all due diligence? Like, is there more due diligence happening? Have watch nameless increases that change anything on that front?
02:13I think absolutely. I think the reality is, is as this asset classes continue to grow, underwriting standards just have to continue to be maintained. And you have to avoid the exuberance to deploy capital. Right.
02:23It's about being prudent, being OK, missing things and making sure that you're aligned, which we are with what we're investing in with our third parties. So from our perspective, it's definitely raising the bar and making sure you maintain that bar and not get succumbed by having to deploy capital for the sake of deploying capital.
02:38Wait, didn't you just interview John Gray? Yes. And he was saying, like, as the Fed cuts. Returns will be lower. Yes. And how do you guard against that sort of reduction in yield? Do you go longer duration? Do you just aim for more scale?
02:53Do you take on SRTs? Like, what do you do? I think for us, we would focus on longer duration assets, which honestly is very much akin to a lot of the way that our investors invest, which is they have longer, longer maturities in terms of what they're looking for.
03:07So making sure that asset liability is matched. I think it's about making sure you can create structural alpha. Right. And ensuring that you're still getting the protections that you need.
03:15And to your point, it's about making sure that you are not necessarily chasing yields. We would rather not go lower in quality to get that outsized return.
03:23But we'd rather be very intellectually honest about where rates and yields are, while still creating structural alpha, working with companies with scale, and then also trying to make sure that we have the right duration.
03:34Not too long ago, you launched a sports platform. It feels like a lot of people are launching sports platforms, but you have your first big deal this week, buying Atletico Madrid, the first big football investment.
03:45Matt wants me to say soccer, I'll say football. How much of this when you think about it? Because the ticket sizes for some of these are smaller than the huge AI deals you're doing, for example.
03:54So how do you think about the potential of this platform? And what is, one, kind of good marketing for the company? Because it is, these deals are really cool, and a lot of people are excited about them, versus something that's really scalable and gives juicy returns.
04:06Right. I think that, so we launched Apollo Sports Capital in September of this past fall, and we were really excited about it. Our approach has been to really focus on long duration kind of strategy for the sports ecosystem holistically.
04:18If you think about sports today, the way that typically people have invested in it, it's been in the equity ecosystem. It's been almost an over-equitized asset class from our perspective, and so we're approaching it from a hybrid, debt-oriented, structured equity perspective, and we think that will open up a really broad array of opportunities.
04:37Sports, in our mind, is growing, right? You're getting more and more demand for it. When you think about AI, it's a little bit insulated, not fully, but a little bit insulated from those trends, and it tends to be uncorrelated.
04:46So from our perspective, if you broaden the definition of sports, right, it's not just teams, it's not just leagues, it's also stadium financings, it's also player transfer rights, it's also media-related rights, you can actually have a pretty broad addressable market, which can deliver scale.
05:01We're very excited about Atletico Madrid, the football team, and I think that it's going to hopefully be a really marking investment for us, right?
05:11We believe that it is a top team in the Spanish league, and we're going to work with our management team there to make sure that we add value where we have historically enough.
05:20It's so interesting, as you get into a world, as you get into deglobalization, you really see borders fall when it comes to appreciation for sports.
05:30There's no longer a controversy about soccer versus football.
05:33There's a huge inventory of companies that you could buy here.
05:37I see what you're doing here.
05:38What's next?
05:39I think that we don't have any sort of specific, we need to be in football or we need to be in baseball or F1 or NFL or NBA.
05:47We think that it's a really broad-based opportunity set, and so long as we're getting the right valuations, we're structuring things that make sense for the ultimate capital structure, we're very open.
05:55Paddel, probably.
05:57Paddel, yeah.
05:57Over pickleball, right?
05:59Oh, please, please, over pickleball.
06:01We started this conversation with kind of like Apollo being the envy and people trying to replicate some of the strategies you've had.
06:08That's also happening, but in a different part of this market, in hedge funds.
06:11Millennium and Point72 are launching private capital strategies.
06:15Point72 is specifically doing credit.
06:18That's failed in the past, having these hedge funds do private capital.
06:21What does it say about where we are in the cycle and the potential risks to get more tourists, as it were, participating in private capital?
06:27I think private markets are generally growing, right?
06:31And if you look at earnings, if you look at revenue, if you look at employment, it is mostly a private market as compared to a public one.
06:37So it doesn't surprise me that many other investors are starting to dip their toes, so to speak, in the private markets.
06:42It just comes down to experience, knowing how to structure, where to lean in.
06:46And so we'll see how that evolves.
06:48But it doesn't surprise me that additional market players are investing in private markets.
06:53I wonder just a little bit about the regulatory response.
06:56So not now during this term, you know, but eventually to this kind of growth, especially as it's funded by insurers.
07:03You were pioneers in that sense, but everybody else seems to be following suit.
07:07Do you worry a little bit about a crackdown in other administrations?
07:11We don't really worry about that too much because at the end of the day, a large part, the majority of our balance sheet right now, is a regulated entity by our insurance balance sheet.
07:19We are fully transparent on pricing.
07:21We are fully transparent on our positions.
07:22We have to adhere to various regulations.
07:25And so for us, we're not necessarily worried about that, but it is something that is very top of mind for many people.
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