For Apollo Global Management and other managers of alternative investments, a growing focus on retail investors is providing them with a much-welcomed source of permanent capital and a way to expand their investor base.
They're tapping into the retail market through special purpose acquisition companies, the addition of newer strategies such as interval funds, which are private closed-end alternative investment funds for individual investors, and insurance company acquisitions.
"We are among the largest providers of alternative asset services in the retail marketplace," said Marc Rowan, New York-based co-founder and senior managing director, during Apollo's Feb. 3 fourth-quarter earnings call.
"We elect to do that though in the form of guaranteed income rather than in the form of funds," said Mr. Rowan, who will succeed Leon Black as CEO after Mr. Black's retirement sometime before July 31. Apollo serves individuals directly through its insurance company affiliates, Athene Holding Ltd. in the U.S. and Athora, which is focused on the European market, with guaranteed income products such as annuities, he explained.
One benefit of expanding Apollo's investor base into retail is an end to reliance on raising institutional funds to increase Apollo's total assets under management, he said.
"We are not limited in our growth by the amount of money that can be raised," Mr. Rowan said. "That's not true for every fund and every product. But across our platform, if we want to raise more money, we can be more aggressive in the reinsurance market, we can be more aggressive in the retail market … and so on and so on and so on."
Some of Apollo's strategies for retail investors include $4.5 billion in one of its earliest strategies, a publicly traded business development company called Apollo Investment Corp launched in 2004, and its $7 billion real estate investment trust Apollo Commercial Real Estate Finance Inc. that went public in 2009.
Apollo interacts with retail investors in three ways: it manages money on behalf of Athene, whose annuity clients are predominately retail investors; it offers publicly listed, SEC registered investment strategies; and it distributes its alternative investment products through various high-net-worth retail distribution channels, said Joanna Rose, Apollo spokeswoman, in an email.
"Retail continues to be an important part of our distribution focus and we are adding resources to bolster our broad retail capabilities and relationships," she said.
But in response to a question, she said Apollo executives do not believe the expansion of its investor base with more retail investors affects its institutional limited partners. "We treat all of our investors equally and do not believe one investor type impacts another," she said.