Apollo Global Management CFO Sees Higher Rates Ahead as Origination Hits $300B, FRE Jumps 23%

Apollo Global Management (NYSE:APO) CFO Martin Kelly outlined the firm’s macro view, growth priorities, and distribution strategy during a conference discussion with UBS analyst Mike Brown, emphasizing Apollo’s focus on origination and the demand environment for private capital. Kelly noted that Apollo is “one of the world’s largest alternative asset managers,” with assets under management totaling $938 billion.

Macro outlook: bias toward higher rates and inflation

Kelly said Apollo is seeing a “mixed” economic picture, both in public data and across its portfolio companies, but he argued several tailwinds point toward higher rates and higher inflation over time. He cited fiscal stimulus, deregulation, tax policy that supports capital expenditures, AI-related spending, a “cheap dollar,” and rising government debt needs as factors that could pressure rates upward. In Kelly’s view, the market’s expectation for additional near-term rate cuts is uncertain, and he suggested long-term rates are “probably biased to the up” on balance.

For Apollo, Kelly said the environment is driving high activity levels and robust pipelines, as “all of the demand for capital is just creating activity levels and pipelines that are really robust.”

Earnings discussion: origination breadth and fee-related growth

Referencing Apollo’s earnings reported the prior day, Kelly said the firm finished “a really strong year,” highlighting that Apollo exceeded its initial guidance for mid-teens fee-related earnings (FRE) growth by delivering 23% FRE growth. He also pointed to $300 billion of origination, which he said effectively achieved the firm’s five-year target in year one.

Kelly described origination as broad-based across the platform:

• About 40% from “platforms” (Apollo’s lending businesses)
• About 40% from credit businesses (broadly defined)
• About 20% from hybrid equity and high-grade lending businesses

He said origination drove management fee growth, supported syndication revenue through capital solutions, and helped generate “attractive spread assets.” Kelly also said Apollo’s capital solutions business (ACS) produced an $800 million year, which he said exceeded expectations, and he emphasized that ACS results are linked to origination.

Realizations and performance income: credit-led strength

Kelly said upside in realizations and performance income was driven primarily by Apollo’s credit business rather than private equity. He noted that many credit funds with carry have annual payouts, typically in the fourth quarter, and Apollo’s credit businesses were “up between 8%-12% across the board.”

On the private equity side, Kelly said Apollo’s Fund 10 crossed its escrow threshold, allowing carry distributions related to prior exits. He characterized this as more of a “catch-up” tied to appreciation in fund value than a function of in-quarter realization activity.

Looking forward, Kelly said Apollo is “cautiously optimistic” about a pickup in capital markets activity, but stressed it is “the hardest part of the business to predict.” He said conversations with M&A bankers suggest they are busy, though the form of exits—IPOs versus sales to sponsors or strategics—remains uncertain.

Capital formation priorities: wealth, institutional, and insurance channels

Kelly discussed Apollo’s inflows—$42 billion in the fourth quarter and $228 billion for the year—and said the firm expects capital raising to be higher, including continued growth in the wealth channel. He said Apollo has 12 wealth products, seven of which are above $1 billion, and described ongoing investments in teams, product structuring, and regulatory “wrappers” across geographies. Wealth raised $18 billion in 2025, and he said Apollo expects that to be higher in 2026.

He also said institutional capital raising is expected to be “meaningfully higher” than 2025, supported by the launch of the firm’s next private equity flagship, Fund 11. Kelly added that, by dollar value, credit strategies—including asset-backed, direct lending, and investment-grade credit—are expected to drive fundraising, alongside infrastructure and “equity-adjacent” businesses.

On third-party insurance, Kelly said Apollo participates through managed accounts and by syndicating mostly investment-grade flow to insurers, including firms that could be viewed as competitors to Athene. He said the underwriting framework is reinforced by Apollo’s willingness to hold similar risk through Athene, creating a benchmark for third-party clients. Kelly said he expects third-party insurance growth to continue in 2026.

Private credit, origination platforms, and operational initiatives

Kelly drew a distinction between private credit defined as below investment-grade—often associated with non-traded BDCs in the wealth channel—and Apollo’s focus on investment-grade private credit. He said demand for investment-grade private credit “continues to increase,” supported by Apollo’s origination engine.

Kelly cited Apollo’s disclosed origination spreads, stating that in the most recent quarter the firm originated investment-grade credit at 290 basis points over Treasuries, which he compared to the BBB index as roughly a 200 basis point pickup. He also described a larger pickup in non-investment-grade origination relative to comparable public high-yield indices.

Discussing Apollo’s origination platforms—described by Brown as 16 platforms and nearly 4,000 employees—Kelly highlighted Atlas as the largest originator by volume, historically concentrated in the U.S. He said Atlas has the potential to expand internationally and suggested it could grow from a $40–$50 billion annual business toward $100 billion over time. Kelly also referenced other platforms including MidCap and Redding Ridge.

On margins, Kelly said Apollo focuses more on FRE dollar growth than FRE margin as a primary management metric, citing continued investments needed to scale distribution and operations. He said that excluding Bridge, Apollo’s margin was up 50 basis points, while including Bridge it was flat, and he guided to roughly 100 basis points of margin expansion in 2026 inclusive of Bridge.

Kelly also discussed AI initiatives, saying Apollo is evaluating both how AI could disrupt portfolio companies and how it can improve internal efficiency. He said Apollo runs “an AI stress” as part of risk management, and described widespread adoption of AI tools internally, noting that 95% of the company is using apps every day. He emphasized that extracting cost efficiencies depends on organizing and owning end-to-end processes rather than relying solely on point solutions.

About Apollo Global Management (NYSE:APO)

Apollo Global Management, Inc (NYSE: APO) is a global alternative investment manager that specializes in private equity, credit and real assets. The firm originates, invests in and manages a broad set of strategies across distressed and opportunistic credit, direct lending, structured credit, buyouts and real estate. Apollo provides investment management and advisory services to institutional clients and individual investors through pooled funds, separate accounts and publicly listed investment vehicles.

Its private equity business pursues control and non-control investments across industries, often focusing on complex or distressed situations where operational improvement and capital solutions can create value.