Apollo Global Management, Inc. (APO) Earnings Call Transcript & Summary

Well, it's my pleasure on behalf of our entire team to welcome everyone to today's event. It looks like we have a lively audience here at the WP Theater in New York, and many more tuned in on the live stream for this afternoon's Apollo matinee, as I heard some calling it on the way in. At our Investor Day 2 years ago, we articulated the 3 key growth pillars of our business; origination, global wealth and capital solutions. Today's session will explore the origination pillar and specifically the platform ecosystem within it. We will also highlight the connection to the Capital Solutions business as there's an important linkage between the 2. And based on our engagement with all of you, it's clear that both of these areas are of high interest. Let's start with a reminder of what we're aiming for. Our north star is to provide excess return per unit of risk. We seek to do this along the entire spectrum from investment grade all the way up through private equity. And we're doing this for whom, for our clients who need alpha and in many cases, need retirement income. We have 3 primary objectives for today. First, we want to illuminate the market trends leading to the growth of private credit and address how we see the marketplace versus conventional definitions. Think IMAX theater versus iPhone screen. There's a massive difference in experience. Next, we want to identify how we use excess return. Quite simply, we use it to build our business while serving the needs of our clients. And then finally, we want to illustrate how sourcing this excess spread ultimately creates significant value for our shareholders. So on to the agenda. In a moment, I will hand it to Chris Edson, our co-head of FIG. Chris is one of the chief architects responsible for our platform investments. He is going to deliver our playbook to you and explain exactly how we do what we do. And then to make it even more tangible, we thought it would be valuable for you to hear directly from a few people who are leading some of these origination businesses day in and day out. We're delighted to have Howard, Shlomo and Jay provide perspectives on their respective businesses, some of our largest platforms in mid-cap, Wheels and Atlas. Then Martin is going to tie it all together by translating how origination provides fuel to drive increasing earnings power for Apollo. The presentation you're about to see represents a significant body of work. So I'd like to take the opportunity to thank my team and many other colleagues across Apollo as well as at the platforms for their collective effort so we could bring this forward to all of you. So with that, let's give Chris a warm welcome to the stage and enjoy the show.

Thanks, Noah. Hi, everyone. I'm Chris Edson. I'm the co-head of our Financial Institutions Group, our FIG team. This is my 16th year at Apollo. I started covering origination platforms about 10 years ago with the first acquisition of MidCap. It's hard to imagine what this has grown into and then we have this room together today to talk about what we've built. Today, we have about 100 people in our financial institutions group. There's over 500 people across Apollo that touch these origination platforms and the origination ecosystem on a regular basis. We have 16 origination platforms. There's about $130 billion of assets in these platforms, and there's about 4,000 employees inside these platforms. This is at a scale where we're generating excess origination volumes, and we're starting to share these origination volumes with third-party coinvestors through our marketing team and also with distribution partners through our capital solutions team. Today, we're going to walk through some of the key themes across how this powers Apollo and Athene about the ongoing shift in private credit, which we've talked a lot about publicly. We'll talk about how we've built this over the last decade. We'll talk about the types of assets we're focused on, which really focuses around the investment-grade side of things. We'll walk through our track record and we'll cover how we think about growth from here. So first, what do these mean for Apollo? And how does Apollo create value off of these? We create value in 2 main ways, in creating spread-related earnings or SRE, and creating fee-related earnings or FRE. The spread relating earnings all starts with the equity. We make equity investments the same way you think about us making equity investments anywhere. Everything starts with purchase price matters, everything starts with downside protection. We're focused on really stable investments into businesses that have long track records of performance. Our returns are primarily driven by the net income generation of this business, not by changes in franchise value or other things like that. These equity investments create platforms. These platforms have origination volumes that we can consume across the rest of Apollo. This drives debt deployment. The way we think about debt deployment is twofold. First, we're looking for high-grade assets that are in excess spread, a couple of hundred basis points of excess spread. And second, we're looking for outsized deployment. We typically think about this as a multiplier effect. We typically think about this as a gearing ratio. And we're looking for about $3 to $5 of debt deployment for every dollar of equity deployment. As this has grown to scale, this deployment is driving management fees, and these management fees are also coming from third parties. The scale has allowed us to raise third-party co-investment and it's allowed us to drive distribution through our capital markets business. This is also creating a positive feedback loop. The excess returns that we're generating from these origination platforms and from the broader origination ecosystem are allowing us to share some of these returns with our annuity holders and our policyholders, that's increasing the demand for these annuities, and it's helping us grow our balance sheet, which in turn makes us more relevant in the origination ecosystem and more relevant to our potential clients. Our model is unique and really has helped us achieve what we're trying to do here. And it starts with the scale of our balance sheet, Athene at a $260 billion balance sheet is incredibly relevant in the overall origination market. This also is facilitated by our long-duration liabilities, and we'll talk a lot about match funding as we go through this. And lastly, we're focused on unique assets, high-grade assets, investment-grade assets. This is very different than traditional funds that are typically focused on more junior credit. We also think there's a potential for a retirement crisis in this country. There's a significant growth in retirees, and there's a reduction in the potential to be able to generate guaranteed income. All of this is helping provide solutions to this growing problem. How do we think about private credit. Historically, if a company or a consumer needed a loan, they call the bank. And if they were a big enough company, they could access the bond markets. Banks have amazing business models. Banks have very low funding costs, essentially at negative credit spreads. This drives attractive spread income for banks in their business models, but they also provide critical services. They're providing a daily demand or an instant demand deposit. This deposit allows people to have access to their cash to run and operate their businesses and it allows consumers to have access to cash to pay their daily expenses. This does not mean that banks are great holders of long-duration illiquid assets, because of the structure of their liability structure. And the changes we're seeing in the financial system are driving diversification of capital providers and providing better match funding on an ongoing basis. The new entrants to private credit are primarily focused on insurance companies, pension funds and other institutional investors. Insurance and pension funds have long-duration fixed liabilities. And institutional investors typically invest in fund format, which does not have a maturity. This makes these types of businesses and these types of capital providers the right types of buyers and holders of long-duration illiquid assets. This is increasing the diversity of capital in the system and it's giving borrowers more access to credit. A lot of people think that private credit is leverage lending. These are 4 recent clips that size the private credit market at about $1.5 trillion and highlighted primarily as being focused on leverage lending or LBO debt. We think private credit is much larger. We think it's about a $40 trillion market. And this is not a new market. These are assets that have been around for decades. These are assets that have sat on bank balance sheets. These are assets that set on other financial institutions and these are assets that have been in the capital markets. These are traditional assets like mortgages, like trade finance, like transportation finance. We don't think all private credit is attractive. We are focused on a couple of key areas of private credit. We're focused on the investment-grade side of things, and we're also focused on structured products and asset-backed finance. What do we like about asset-backed finance. We like asset-backed finance because it has a long track record of performance. The data on this page shows that investment-grade asset-backed securities have outperformed like-for-like rated corporates over the past couple of decades. You'll also notice that some of the noninvestment-grade ABS underperformed in a precrisis basis. This is because before the crisis, there was a different structure for these securities. They didn't have the same documentation, they didn't have the same diversification. That's all been changed post crisis, which is why you see that all ABS has outperformed like-for-like credits on a post-crisis basis. Why is this? Why does ABS perform so well? There's a couple of reasons. The first one we always think about is there's no single point of failure. If you lend to a large corporate, there's one corporate unsecured guarantee on the other side. Asset-backed securities have very diversified collateral they have over-collateralization. Second, they're self-liquidating. They do not rely on a bullet payment that needs to be refinanced at the end, they wind down with full amortization over the life of the securities. They're not covered by bankruptcy protection. They have front pay amortization that helps derisk them quickly, and they have very tight documentation with covenants and triggers that provide protection to the underlying lenders. These things also don't just enhance what the probability of a default, they also help enhance recoveries in the event of a default. Apollo has built a large asset-backed finance franchise. Over the last 13 years, we've deployed $200 billion into asset-backed finance assets. And we've done this across a wide variety of different sectors. This team is very closely connected to our FIG team and very closely connected to our overall origination ecosystem. This team has also experienced very low losses over their history. On that $200 billion of deployment, they've experienced only about 1 basis point of losses. And this is really because they're focused on high-grade assets with over collateralization and they've done all of this while earning a few hundred basis points of excess spread. So what is an origination platform. An origination platform is a stand-alone company. It has a stand-alone management team. It has a Board of Directors, it's independently capitalized. It has a fully matched funded balance sheet as we'll talk about, and we're focused on businesses that have very long track records of performance. These businesses also have dozens or hundreds of employees that are providing a lot of different services. It's not only the front-end origination and sourcing, but the underwriting, the servicing, the operations, all of these things are critical to these portfolios and to their performance. And we're also focused on doing this in a very granular way. No individual origination is driving our year. We're doing this for thousands of very small transactions, and we're trying to do this in a repeatable way. What do these platforms do. They have a lot of different things that will look very familiar. These are not new asset classes. Mortgages, we have 3 different mortgage finance businesses. Travel, we have a business that provides aircraft debt that we bought from GE Capital called PK AirFinance. Fleet Leasing, you'll hear from Shlomo shortly about our Wheels business. Franchise Finance, MidCap acquired a business from PNC Bank a couple of years ago, and this is providing loans to quick service restaurants. Home improvement, our Aqua business provides home improvement loans. We have a business that provides green energy, finance to corporations, and this business is called Petros and then inventory. We have a business called Eliant. Eliant is our trade finance business. It's primarily providing inventory solutions to very large technology companies. These are companies that were faced with chip shortages during COVID and other supply chain shocks that are looking to hold more inventory on their balance sheet, and these are investment-grade companies. The word platform is one of the most overused words in our industry. Everybody claims to have a platform, everybody claims to have differentiated origination. We do not think the traditional fund investments are origination platforms. That's because they're held in transitory funds, the primary driver of returns is the exit and incentives drive behavior, short-term decisions outweigh long-term decisions. These funds also only make equity investments typically. They can't drive value from investing across the capital structure, they can't drive deployment. Our platforms are owned in permanent capital vehicles. We have taken all of the pressure off of the exit. We are focused on doing things that generate long-term returns and enhance our net income because the return KPI that we are focused on is net income, return on equity, free cash flow yield. We're also investing across the capital structure in both the debt and the equity. This helps us in 2 ways. First, it gives us an edge when we're making these acquisitions or running these businesses because we have more access to capital. And second, it drives value across our system because we're able to create incremental deployment. Not all volume is created equal. We're looking for businesses that generate both low risk and excess spread. We've looked at businesses in the past that don't meet this. We were recently looking at a business that had about $10 billion of origination volume. The underlying assets were high-quality assets, but they were mispriced, and so we passed on this opportunity. We also see lots of opportunities where there are businesses that generate really high yielding assets, but they're not low-risk assets. We're looking for things that have both. Atlas and PK, as examples on this page, both have many public comps. Atlas is our warehouse business. You'll hear from Jay shortly on. Atlas is providing warehouses at lower LTVs than the underlying assets in the term markets, which means they have more collateral and more downside protection. They also have higher spreads, and we'll talk about how we're doing this. The PK business is the same. This is our aircraft debt business. This is providing loans against planes at lower LTVs, than an aviation ABS would attach to in its investment-grade tranches. So we have more collateral and we have lower risk, and we're earning excess spread. That same couple of hundred basis points of excess spread that we always talk about. We've been working on this for a while. This has been a 10-year project. Our first acquisition was MidCap, which you'll hear from Howard on shortly. And we've done 16 of these platform acquisitions over the last decade. If we started with the Atlas transaction, our most recent one, we would not have been able to do it. That was an incredibly complicated transaction and required the decade of learning and all the things we'll talk about in our ecosystem shortly to be able to accomplish that. Our platforms now, we have 16 of them. We've invested $8 billion of capital. We have $130 billion of assets in these, and most importantly, there are 30 different products in these platforms. These products are important for a couple of reasons. First, they give us more breadth and more diversity. And second, they're creating a positive feedback loop and a flywheel benefit. And this is allowing us to drive cross-sell and create incremental opportunities, not just in the platforms, but in the broader Apollo system. This is how our platforms are organized. We think about them across a couple of different industries. I'm not going to walk through all of these. You'll hear shortly from Howard, Shlomo and Jay about MidCap, Wheels and Atlas. A couple of others to just highlight quickly on this page. Redding Ridge is another one of our commercial finance businesses. Inside of this business, we also have a large ratings and structuring team. This helps us continue to provide an edge across our other platforms to drive value. And at the bottom of the page, you'll see we have 2 de novo strategies listed, CADMA and APTERRA. These 2 businesses are new, and we're trying to build them organically but we've not done that with new teams. We've hired teams that have decades of experience with very long track records of low losses that have come out of banks and come out of other finance companies. There's no shortcut to excess spread. It requires an edge and it requires a lot of focus. The edge for us comes from our broad and deep employee base. These 4,000 employees are waking up every day looking to source, underwrite, originate, service and operate these portfolios and these assets. Our platforms typically have hundreds or thousands of line items. We often think about the rule of 10 to 20x for an origination platform. Or what that means is that only about 5% to 10% of the volume that we look at and review gets funded and gets originated. So that means for every 1,000 line items we have on our balance sheet, we've had to look at tens of thousands of line items before finding the ones that we're going to originate and fund. And this is really why we need a large origination and servicing team across this portfolio. We often compare this to a traditional credit fund that would have a couple of dozen people and a Bloomberg. This is our ecosystem slide. And this is really what we've built over the last decade and really what sets us apart. We talk a lot about culture at Apollo. And the most important part of that for us is the One Apollo culture. We have spent 10 years honing this process. The first platform acquisition involved about 20 people at Apollo. And then after we finished, we realized all of the things that we had missed. So we do a postmortem after every single acquisition, and we've continued to hone this process even after the last one. The FIG team or the team that I'm a part of is really just the M&A team. And we think we're pretty good at M&A, but there are lots of people that are good at M&A. It is not something that differentiates us. What differentiates us is the rest of this page. We have a credit team that has research on 3,000 different companies. We have quant teams, we have asset experts. We have one of the largest ratings teams that would rival any investment bank. Our technology and operations team has people that have 30 years of experience and have worked on hundreds of different transactions and integrations. We have regulatory, insurance, government solutions teams, we have tax, legal, hedging, accounting, these are all critical to how these get structured, how they get treated, how value gets created and how value gets protected. And we're starting to originate significant amounts of excess origination volume, and these transactions are large. So we've needed to include our marketing team to help with third-party co-investments and our distribution team to help with syndication. This whole ecosystem is really what made the Atlas transaction possible. This was a very complicated carve-out from a large old European bank. It had hundreds of people. It had dozens of systems and had a significant operations footprint. They were sending millions of wire transactions a year. This business was large. It had $40 billion of assets. It had a couple of hundred facilities in it, warehouse facilities. And inside those warehouse facilities, there were millions of line items. We had to go through and we had to underwrite all of these. We also had to raise tens of billions of dollars to consummate a transaction of this scale. All of this required a couple of hundred people and we got this all done in a matter of a couple of weeks, which was important to our counterparty to be able to succeed in this transaction. This would not have been possible without the One Apollo culture or without the 15 trial runs that we had in advance of this. How do we think about risk? We think about it a lot. We are not paid to sleep well at night. We are paid to be maniacal about risks. The 2 main risks that we focus on for financial services businesses are liquidity risk, which we often refer to as the heart attack risk and credit risk, which we often refer to as the cancer risk. This page has been -- the left side of this page has been the cause of the demise for many great financial institutions over the last couple of decades. Why do people use short-term liabilities. For one reason, they are a lot cheaper. And if you can have very low-cost liabilities, you can earn a higher spread income if the market is working. And what's happened over the last couple of decades is we've seen that there have been multiple tail events and multiple times where the market is not working, the GFC, COVID for certain businesses, and the regional bank crisis earlier this year. The most recent 3 names that have faced the left side of this page and a blow up that's caused because of it were Silicon Valley Bank, First Republic and Signature. We have always been focused on the right side of this page. We have long-duration liabilities. We match fund all of our assets, we have long-duration debt. This is more expensive. And we do this because this is safer, and this is the right way to run a long-term business where we're not just focused on a quick pop or an exit. We're focused on stable generation of income for decades to come. And because this is more expensive, we can underwrite this into our model. So we're only counting excess spread when we describe it to you as a spread that is excess of full liability costs that are fully matched to our underlying assets. Credit. A lot of people talk about track records. We've seen a lot of different track records. We typically see short track records, 5 years, 10 years. These are track records that have not been tested. We look for track records that have been tested through the cycle. 15, 20 or even much longer than that, as you'll hear from Shlomo shortly. These businesses over these very long track records have shown very stable performance. You'll notice on here, we say Eliant has a 20-year track record. Eliant was only founded 18 months ago, but Eliant is a joint venture with BNP Paribas. And BNP has been operating this business for about 20 years with no losses. Why are our losses so low? They're so low for all the things that we underwrite in these businesses. We have a focus on high-grade assets, we're focused on diversified collateral. We're focused on overcollateralization. We're controlling the documentation. We're negotiating directly with the counterparties. We're not entering into standard documentation. It's all customized. We're doing full due diligence, and we have relationships with all these borrowers. This is our risk playbook. We have standardized this across all of our platforms. Every one of our platforms goes through this checklist. And you'll notice some things that are familiar for what we've been talking about, match funding. Everything starts with a match-funded balance sheet. We have all of our companies go through what we refer to as a wind-down analysis. So what they do is they assume that none of their liabilities ever renew and they all have to be repaid at maturity. And we ensure that these companies can sustain a full liquidation. None of these companies are actually going to go through this case, but this is the case that ensures that we're fully insulated from blow up risk in all of our businesses. Second, diversification of funding. This is critical. And we don't want all the funding to be concentrated from any individual source, not even from Apollo or Athene. So all of our companies have significant access to third-party capital and third-party funding. We have a lot of safety nets to watch over all this. And none of these businesses are consolidated into Apollo. But as our role as the manager, we have risk officers inside of each of these platforms. We have a risk officer at Apollo on our FIG team that oversees all 16 platforms, and then we have other risk functions at Apollo and Athene. So how do we think about growth? We've shared this slide in the past at our Investor Day a couple of years ago. We're currently run rating at about $100 billion of annual origination volumes. About half of these volumes are coming from our origination platforms. The other half are coming from our broader ecosystem. On a go-forward basis, we continue to expect $150 billion or more of origination volumes over the next couple of years. And we continue to expect about half of this to come from our origination platforms and the other half to come from our broader ecosystem. Our platforms are all at various stages in their growth cycle. We have start-up businesses. We have new businesses. These businesses are focused on organic growth and continuing to expand what they're doing. We have medium-sized businesses. These are $2 billion to $10 billion in size. These are focused on both organic and inorganic growth. And we've recently done acquisitions at both Wheels and at PK. And then we have very large transactions -- large platforms. Two of these platforms were startups, MidCap and Redding Ridge and these have grown to $20 billion and $50 billion. This is a snapshot of some of the history of how our platforms have grown over time. Howard and Shlomo will talk a bit about MidCap and Wheels. Both of these have grown significantly, both through acquisitions and organically. We expect there to continue to be future growth in these businesses as well. Eliant. Eliant was a startup. This is our trade finance business. It has now grown to a $2 billion platform, and this is a multitrillion dollar industry. So we expect significant growth on a go-forward basis for our Eliant platform. You'll notice on this page, we have one arrow that points down, and that is for Atlas. The Atlas business was a much larger business a couple of years ago. But if you recall, a couple of years ago, this business was inside of Credit Suisse. There were a lot of changes going on in Credit Suisse that were very idiosyncratic to the parent company that what caused this business to shrink. They had nothing to do with the market opportunity or the future, and we think this business should be at least at its historical size, if not significantly larger, and Jay will talk shortly about a lot of the opportunities that we're seeing there. Redding Ridge was also a start-up. It started from nothing and now it has over $20 billion of assets. When we think about the white space, we think about this as a lot of assets that will look familiar. These are not new assets. We are not trying to invent new asset classes. These assets have been around for decades. We're focused on high-grade assets, and we're focused on assets that have historical performance. We do not expect to grow from 16 to 32 platforms. We expect that we'll more likely to add on to existing platforms through either organic growth, new product development, or through acquisitions where we can drive synergies on the funding side and on the operating side. And because of the scale that we've already achieved, we're able to be very selective on a go-forward basis as we think about future acquisitions. As we've scaled, we have brought third parties in to co-invest in these acquisitions and these businesses and the deployment alongside of us. Why do people invest with us? They invest with us for 3 reasons. The first is alignment. A typical GP would invest 2% or 3% alongside of its investors into an asset. We are investing 25%, 50% and in some cases, 75%. This very large co-investment and alignment pledge is giving our co-investors a lot of confidence in investing alongside of us. Second, our track record. We have been doing this for a very long time because we've been doing this for our own balance sheet. Our 13-year track record for our asset-backed finance franchise and our decade-long track record for our origination franchise. And lastly, risk reward. The assets that we're originating are unique. A lot of people are focused on mezzanine investments, equity investments, junior investments, we're focused on investment grade and high-grade assets and that's very different than what we're seeing in the broader market. How do we think about banks? Banks, we think about as a very interesting partnership opportunity. Banks have amazing business models. They have incredible breadth and reach, and they have a very large client bases. And these client bases are looking for more and more things. They're looking for more duration. They're looking for more diversity of capital. We have been partnering with a lot of different banks. We talked a little bit about the Eliant partnership with BNP, the Atlas partnership with UBS. Our Aqua business has a partnership with another large U.S. bank. We have multiple other conversations that are ongoing around bank partnerships. Why do banks partner with us? They partner with us at Apollo for a couple of reasons. First, because of the scale that we've achieved. We're a very relevant partner because we bring a very large balance sheet to help support these partnerships. And second, because of the types of assets we're focused on, we're much more aligned with the banking system as we're focused on these high-grade assets. I mentioned the flywheel a couple of minutes ago. We're seeing a significant cross-sell and flywheel benefit across our origination ecosystem. We talked a little bit at our last Investor Day 2 years ago about Hertz. Hertz was a transaction where our credit team had done a number of transactions with Hertz, and they helped us identify and execute on the acquisition of Donlen. This has led to multiple other acquisitions in the fleet space, which has brought together the Wheels platform that you'll hear from Shlomo on shortly. Second, Atlas. Right as we were closing the Atlas transaction earlier this year, the Atlas team helped us identify and execute a very large private credit transaction with PacWest Bank. We're also seeing other areas of cross-sell. Our Equipment Finance business, Capteris, has partnered with Mid-Cap and Wheels and is driving a lot of cross-sell benefit as we think about growth there. And our PK AirFinance and Merck's business, our aviation platforms. They helped underwrite and execute on a large private credit transaction for Air France. As Apollo has grown materially, we are still small in the overall market. Most of our AUM is in credit and most of our AUM is investment grade. It's important to rehighlight that all of our assets are match funded. None of our platforms are cross-collateralized. They all operate independently with their own capital structures. These are not consolidated into Apollo or Athene's financial statements, and there is no support that is explicit across these platforms. Most of the funding for these assets is disparate and independent from us. So it has been a fruitful 10 years. We have been focused on really building out our ecosystem on origination. We think what we've built is highly differentiated and very difficult to replicate. We are seeing cross-sell benefits and flywheel benefits across the system. We're seeing very unique assets with our high-grade focus and our investment-grade focus. We're generating excess origination volumes, and we're able to now share this with our co-investors and with our distribution partners. And we think we're poised for growth in the private credit space. So next, we have a couple of our platform executives. I'm very proud of the teams that we have pulled together and that we've built here. And I look forward to you all hearing from them about what they're doing. So with that, I'd like to introduce Howard to talk about Mid-Cap.

Thanks, Chris. I'm Howard Widra. I am the Head of Direct Origination for Apollo and more relevantly today, I am the co-founder of MidCap Financial. So I'm going to give you a deep dive into MidCap on behalf of the 300 employees that work for us. Simply put, MidCap is a plain vanilla diversified commercial finance company, which makes senior secured loans to the broad middle market. We're one of the largest in the country, and we're certainly one of the most diverse by product. To just give you a little sense of our history, when Apollo -- we were founded in 2008 by a team of people still together today and when we joined the Apollo family in 2013 when Athene bought us. At that point, we had $2.6 billion of commitments under management. Since that time, we've done meaningful portfolio acquisitions. We've added a managed asset business, and we've grown a lot organically on balance sheet. So fast forward to today, we have close to $50 billion of commitments under management. Just to talk a little bit about what our competitive advantages are. First, we are scaled and full service. We do everything in-house from sourcing to underwriting portfolio management servicing, et cetera. We have a long tenured management team, who has been together and been through cycles, and we have access to diversified funding and long-dated funding. As Chris said, everything match funded, and I'll go into that in a little bit more detail. To talk a little bit about the assets in our business. As I said, we have about $48 billion of commitments under management. If you break that down, that's $18 billion of commitments on balance sheet, about $15 million with third parties and about $14 billion with MidCap and Apollo affiliates. So to give you an example of how that works, we do a $200 million asset-based loan. We may hold $75 million of that on MidCap's balance sheet, maybe $50 million of that will go to a third party who the borrower has a relationship with and wants us to bring into the transaction. And the remaining $75 million will go to either side cars with MidCap or other Apollo vehicles, based on their credit appetite. On the right side, you'll see the funded assets on balance sheet. It's about half leverage loans, a little bit more than half and half other products. This is, again, consistent with the theme that Chris said that private credit is a lot more than leveraged lending. When you look at most asset manager private credit vehicles, they really mean leverage lending, but our business is truly diverse, which allows us to drive a lot more stability in our performance and a lot more opportunity for growth. Talk about our credit history a little bit. We have low losses throughout the cycle. This is our loss history of 28 basis points against all our origination since 2008. There are a bunch of reasons for this. Again, everything we do is senior in the capital structure. We have large underwriting teams specialized to each of our products, again, all in-house. And then lastly is our portfolio strategy. We are focused on stability for our business, and that starts with how we build our portfolio. So we make sure we're diverse by industry, by geography, by obligor, et cetera. And the best example of that is of our $13 billion of loans on balance sheet. We have about 600 loans. So we make sure that we're as granular as possible. Again, our management team has been together for a long time. All these people with one exception were at MidCap at the outset, and actually all of them were also on our previous iterations of our businesses. So been together for a long time. On the right side of this chart, you can see the comprehensive team, each of these parts of the business are built out to scale. This is our funnel. And again, as Chris said, this sort of shows you the 20:1 origination to closing that is important to this business. So since inception, we've looked about 30,000 transactions and closed about 2,000. I just want to focus for a second on the top of the funnel because I think it shows 2 things. One is we have a lot of proprietary origination. This is not just people taking calls from the sell side for large corporate loans. This is 51 people dedicated specifically to origination as well as a senior management team that originates as well. And those people are allowed to be dedicated only to origination because they're supported by 250 people, who can execute on the business. And secondly, this large funnel is actually the key building block of our good credit performance. It's our view that good credit performance comes from very, very broad origination or else, you end up being adversely selective. So the idea that we have this much origination from this many different products ensures that we're able to be selective while actually being able to grow well. Just to give you a little sense of our growth. Graphically, as I said a decade ago, we were $2.6 billion of assets. We're $48.4 billion of commitments under management today. And we think there's a lot of opportunity to continue to grow. So we expect this to be -- continue to be up into the right over the next decade. This is a lead tables for the third quarter for middle market leverage lending first on the lead table. Sort of any quarter you would pick, we would be pretty high up. And I think you'd be hard pressed to find a competitor who wouldn't list as one of sort of the meaningful players in our market. To dig in a little deeper to our balance sheet to get a sense how we're funded, the $13 billion of assets on our balance sheet, we have, first, are funded with warehouse financing commitments. Those are commitments from banks that lend to us either individual banks that lend us against a given pool of assets or large credit facilities. For example, our asset-based business has a $2 billion line led by Wheels with 20 banks in it. CLO financing, we are a regular issuer of securitizations, CLOs for leveraged loans and term securitizations for our other assets. We have a $1.7 billion of high-yield bonds or loans outstanding, and $2.9 billion of equity capital. So that is how our whole business is funded. And as I'll talk about later, that also gives opportunity for people to invest in our platform, not just in the equity, but across our whole business. Just to give you a sense, again, I've been focused on stability. So this is our spread over time. It has been stable, as you can see for the last 10 years, and this is regardless of the change in our product mix, our growth, the competitive environment, where base rates have been, the size of our portfolio, is really important because in order to generate stable returns, I've talked a lot about credit, but it starts at the top line. And our diversity of products and our proprietary origination reach allows us to sort of continue to produce stable returns even as we've grown substantially. So to dig into this a little bit more on the P&L side. If you look at where we are today, about $1.5 billion of interest and fee income off our loan book, that $650 million net after interest costs, added about $150 million of fees, mostly off of our asset management business, subtract out losses and operating expenses, we generate about a 17% ROE this year. So really steady returns for our shareholders. But, what I think is most important about these numbers is that if you take the $95 million of losses, which is more on an annualized basis than we have experienced over our history, and you multiply it by 3. So 3 times cycle worse losses, we would still have a double-digit ROE. And this, again, is a really important point that our equity investors understand and our capital providers understand, which we can produce stable returns because of our granularity and diversity regardless of where the cycle takes us. So to talk about our downside a little bit qualitatively. First, it's our direct lending strategy. 100% senior secured, as I said, we are the administrative agent or a rec lender in almost every loan we do. So we control documentation, and we also control how a loan is managed. We have these diverse lending products, which again gives us a lot of ability to build our portfolio the way we want. But there are also many of them are heavily collateralized. So even in defaults, we liquidate at very high levels. And then we have the scale proprietary deal flow. So I continue to come back to that because we think that's really important for downside protection. But in addition to the loan book, we have the franchise and the value in the franchise. And so that value comes from a lot of things I talked about, the full soup to nuts capability to do everything, the diverse portfolio of the durable financing. But there's also the Apollo strategic relationship, which I've not talked about much. So I'll dig in for a second there. I think there's a couple -- lots of advantages, but a couple of key advantages. One, access to capital, obviously, being affiliated with Apollo gives us the benefit of that reputation and reach in the marketplace, which is really important to us. Secondly, I think more importantly, are all the product synergies. When we call on, for example, private equity sponsors, and we are delivering loans for their buyouts, the fact that we are part of Apollo, and we can deliver secondaries through S3 and NAV lending and GP Capital and hybrid value for more structured transactions for them is a really key differentiator for the people we're competing with. And so it enables us to be more important to those people and more likely for them and want to use us. By the same token, Apollo, the fact that Apollo has a direct lending arm that is really important in the market, allows them to be more relevant to those counterparties when they're looking for capital. And so Chris was talking about the flywheel overall with all the originations, this is our sort of own mini flywheel with Apollo, well integrated and really beneficial. Just to talk a little bit about the benefit to our investors. Athene and Athora have $1 billion of equity invested into our business. As you saw this year, 17% ROE, good steady returns as an equity investment. But they have $6 billion of capital invested into MidCap and MidCap assets. So that other $5 billion is mostly liabilities from our balance sheet, either being a participant in our warehouse facilities or buying the portions of our securitizations that appeal to them or holding our high-yield bonds. And so from the Athene and Athora perspective, not only do they get an equity investment that has generated stable returns and good dividends for them, they also can effectively opportunistically pick off the liabilities that work best for them and have access to them on a proprietary basis. In other words, get filled for as much as they want. By the same token, our other investors because we are 60% owned by LPs also get benefits beyond the equity investment. There are very few groups that are invested in our equity that don't also have SMAs with us. So they get access to private credit that they like that fits their strategy beyond our investments. So for them, they get a good return and they can take advantage of our excess origination. This slide really just shows you the opportunity for growth. We are meaningful players in all these markets, but we're still small relative to the size of the markets, and they're all growing. And so we feel like not only is there an opportunity to continue to grow as the markets grow, but to also increase the slice of our pie because of our competitive advantages. So as I said, over the next decade, we expect to continue to be able to take advantage of where the market is for us. So just key takeaways for the business. We are a large, stable diversified generator of yield. That's first and foremost. Many aspects of our business are really difficult to replicate. We have diverse proprietary origination. The sheer number of years of management experience, unfortunately, for our age is hard to replicate. And we have a durable liability structure with over 250 counterparties that provide us capital. Last, we bring a lot of benefits to our owners. Of course, our equity returns have been good, but the access to other assets. In the case of Apollo, that's building and strengthening the relationships throughout the middle market and for Apollo and all our investors, it's extra return beyond their equity investment. So that's it with that, I'll hand it to Shlomo.

Hello, good afternoon. I have to say that I'm honored to tell you a little bit about Wheels on behalf of our over 1,500 colleagues in Chicago, Atlanta and Mississauga. I've devoted the last 18 years of my professional life and to be perfectly out with it and also a lot of my personal life for Wheels, the first 16 years, I had the privilege to work with the Frank family and to learn from them, and the Frank family founded our industry in 1939, so 84 years ago. And in 2021, I was entrusted with the honor and the responsibility of leading Wheels as the CEO. So some of you might ask, what is Wheels, what do you do? At Wheels, we assist businesses in handling their transportation and mobility needs. This starts out with identifying the appropriate vehicle, procuring it, getting it to the right place and then putting it into service with the driver. And for many clients, this involves entering into a commercial vehicle lease agreement. Our fleet has an initial capitalized cost of $17 billion, and our leases amortize down to 0 over 4 or 5 years. So our book value today is $9 billion. If you do the math, you'll see that we're at 53% of the initial capitalized costs. So we are well into the black in terms of collateral value on our fleet. And our business involves all sorts of tasks to support daily needs for vehicles used in business and also to support the drivers who use our vehicles. To give you some insight into our scope and scale, we manage over 800,000 vehicles for over 1 million drivers. Our fleets are critical business tools primarily used by large investment-grade companies to generate revenue. These fleet vehicles are instrumental in delivering services to our clients' customers as well as transporting sales personnel and goods. And I see that I didn't flip to my page. So thank you for someone who helped me. I will be better about that. We are both a finance company, and we are also a business services outsourcing firm. We bring expertise and scale that is beyond the capabilities of any individual client or a regional leasing company, and we have a greater than 80-year history of annuity-like cash and income generation that's valuable to Athene. And Wheels has relationships with over 2,000 clients that are large corporations, many of which are investment grade and the relationships are at multiple levels of management. So we will create new opportunities in the Apollo ecosystem for collaboration and for additional private credit business. So scale is critical in the fleet industry and the partnership between Wheels and Apollo is highly strategic. Over the last 2.5 years, Apollo acquired 3 distinct platforms in legacy Donlen, Wheels and LeasePlan. Each legacy company brought distinct capabilities developed over decades. For example, Donlen has strong productivity in operations and a thriving middle market business. Wheels has a second to none exceptional client list, which is a fantastic portfolio, but also brings a service orientation valued by large corporate clients. And in LeasePlan, we've added products like last mile delivery, white label services and truck syndication, together with a forward-looking and innovation-oriented culture. So one of our very first objectives was to keep the unique value of each company, and I'm very proud to say that we've kept the goodness while unifying the Wheels platform. You can see this in the numbers to my right, is we've added leased assets of $1 billion and added 100,000 managed vehicles, and this was all done while bringing our company together. Fleet management companies have been generally sought after the last few decades. And in my experience at Wheels, we received many inbound offers to buy the company. The interest came from a diverse mix of global conglomerates, private investors and private equity firms. And I worked with the Frank family on inbound calls and we knew the firms and the people who are interested in investing in Wheels and in our industry. So after rejecting inbound offers for 8 decades, we knew who to call at that pivotal moment after Donlen was acquired, and that's why we contacted Apollo in 2021. Apollo brought a unique perspective and a capability to our company. And what I mean by this is Apollo had a long-term focus and an understanding that goes beyond the obvious benefits of scale. Apollo recognized opportunities from our services business and envision the benefits from smart investments and all while maintaining our commitment to high touch and laser-focused customer service. This allowed us to continue meeting expectations and adhere to the values that our clients and prospects hold dear. Apollo and Athene brought new ideas and capabilities, including a balance sheet and a capital strategy that promotes growth and allows us to invest in our business and unlock opportunities. Apollo and Athene's balance sheet were differentiators that facilitated the acquisitions of each of our platforms. Apollo brought stability to Donlen as our ABS was in rapid amortization due to the Hertz bankruptcy. And Apollo also helped us stabilize and give comfort to our clients. In the case of Wheels, Apollo funded the entire capital structure so that the transaction could be done quickly and very quietly. And this was to meet the private owners desires. And in fact, we announced this transaction the day after we closed, which was pretty unique for an acquisition of a $4 billion company that does business with hundreds of corporations. For LeasePlan, Apollo needed to carve out a U.S. subsidiary from a foreign company, actually a foreign bank to make it a little more difficult, and we needed to stand up an ABS facility where there was none. This was done in a matter of months in order to complete the deal. So if we look at Wheels today, it's run as a consolidated business. And with the best-in-class management team that I am super excited about and that has leadership representation from each legacy organization. And all of our leaders are seasoned and they have a mix of fleet and other corporate experience. And that, I'm going to catch -- apologize, here we go. So their corporate experience includes experience at GE Capital, Transamerica, KPMG, Hewlett Packard, Bank of Montreal, Navistar, and this is just to name a few. And our team is eager and relishing the opportunity to propel our company and industry forward. And our workforce of over 1,500 colleagues has a specialized knowledge, a strong customer orientation and also a track record of ethical conduct, and this is critical to our success. We also are incredibly fortunate and Apollo helped a lot with us to have an independent Board with members who have expertise in fleet leasing and also in business integrations. We have 5 former CEOs from our industry. And there's another face on here that's not an industry CEO. It's Rich Dubitsky who's an Apollo partner who brings us wisdom from 70 previous integrations during his role as Head of M&A, Transformation at GE. And we also collaborate with several members of the Apollo FIG group. So thank you, Paul, Jason, Emma, Chris, Mark and Adam. So one of Wheels values is centered on customer success. And this is about more than paying attention to clients. It's about more than great service. It's focused on planning, measurement and then delivering results. We deliver results through a methodology developed over decades and updated regularly. The methodology is fantastic, and I want to give you some extra insight. The methodology is powerful because we pair it with a full suite of services that gives us the ability to address the needs of corporate fleets and drivers. So we really can deliver results for our clients. Our services address the complete life cycle of a vehicle, beginning with selection, ordering, delivery, we title and register vehicles and manage significant regulatory requirements across 50 U.S. states as well as 10 provinces and 3 territories in Canada. Our services streamline the management of corporate fleets and add value for our clients. Services include management of maintenance, fuel, collision, safety, training, telematics, violation and toll processing and remarketing. We also have a suite of services to help clients with the transition to electric vehicles. And believe it or not, we can also provide consolidated billing for the drivers who use Uber, Lyft or SpotHero. We address driver needs and work with service shops through our specialized call centers. Many clients have few, if any, employees fully focused on fleet and we provide full outsourced fleet administration. Our capabilities are quite extensive and constructed over decades, and this includes our vendor network with 100,000 vendors who address vehicle needs and manage transactions electronically. A little more about the vendor network. This includes companies like Jiffy Lube, Firestone, Cox, it also includes vehicle manufacturers, so the OEMs, tag agents, registration runners, rental companies, towing companies, glass and collision shops. We know how to address anything that could be needed by a driver for her fleet or her vehicle. Our network vendors provide great service, and we have service level agreements with them. We have insurance requirements, and we've agreed to special economics for the benefit of both our clients and for Wheels. So I want to tell you a quick story. Early in my time at Wheels, we have an industrial client who wanted us to have a network shop near one of their drivers in a remote part of Hawaii. I don't know how, but I somehow got involved in this. We found and worked with a sole proprietor who owned a shop where this driver was at. And I'll always remember this because in my mind's eye, I imagine seeing this maintenance shop on the top of a hill in the middle of Paradise. And we have thousands of vendors like this. This is -- we cover remote areas that are important to our clients. We have shops in North Dakota, Colorado, Utah, to support oil patch clients. Shops in Idaho, Montana, the middle of California and across the Midwest to support our agriculture clients. And the network is vast and dynamic as we include the best vendors in the network, and we remove low performers. We also invest in technology, intellectual capital, and we have a fleet lab working on new products. We already use machine learning and artificial intelligence to improve some services and we see many more opportunities to expand this in the near future. So a little on our financials. Wheels is incredibly resilient, and delivers reliable cash flow and net profit over time and across economic cycles. We have a diversified revenue-generating capability and continue experiencing growth as our corporate customers outsource more and more to us. We can purchase goods and provide services at lower cost than our clients can, and we share the benefits with our clients, and this is how our industry works. It's very attractive to our clients. And so this really is a win-win arrangement as our clients contribute only a portion to our net profit, and this includes our net interest margin, and the rest is from our vendor network. If we focus on our gross profit, it's increased every year except for 1 of the 16 shown, and our vehicles owned and leased as an indicator of future profitability. And you'll see that, that's also increased almost every other year. And the only time that it's been flat is when we've been going through an economic downturn. We leased just under 500,000 vehicles and our managed VIN count stands at 906,000 and this shows opportunities for future leasing and service penetration. So I previously talked about all the services we provide and the trend towards more and more outsourcing. We have an amazing business, and it straddles 4 different addressable markets. We have business in the market of auto finance, vehicle acquisition and disposition, logistics and various vehicle life cycle management services. And I was chatting with a member of our executive leadership team right before you came up here, and we were talking about something related to the business, and I wanted to share a chat with you. He sent me a note and he said, we have the most valuable thing that any company dreams to have, it's clients. We have amazing clients and we don't take this for granted. And when we invest and innovate, we think from our clients' perspective, and when we build capabilities, our clients do use them. We are one of the few companies in North America that has strong capabilities across the board and there are massive opportunities given the gigantic markets where we focus. So thinking about our competitive position, I need to repeat myself, we are one of the few companies in North America that has the capabilities to serve corporate customers across all the addressable markets and needs. We benefit from operating a unique vendor network and tailored technology that's been developed and enhanced over decades. And we have the largest global reach through our 14-year global alliance with Ayvens, which is the recently combined ALD and LeasePlan, where we together manage 4.5 million vehicles across 61 countries. Our client portfolio is also diversify by industry with our largest industry being pharmaceuticals at 12%, and all other industries are at or under 10% of our leased assets. Our portfolio is 75% investment grade, and our top 25 clients are 84% investment grade as we would expect that our larger fleets are generally our better credits. Our largest client is less than 4% of our assets. We take great pride in companies that we are fortunate to call clients, and our relationships are deep and lasting. Our business touches people who drive the vehicles and are often our clients' greatest resource. And our team takes their responsibility for drivers very seriously. The result, though, is that we grow and we keep our clients including our very first client that was a company called Petrolager, which through many acquisitions is now Pfizer and an 84-year client. And I want you to know that the list on the page is a sampling of our 40-plus year clients. We work with many of the largest companies in the world to manage their fleets. And to get their drivers what they need to get home safely at night. While we are a service provider, we're also an asset originator of attractive investment-grade assets, Wheels creates $3 billion to $4 billion of new leases annually. There is a strong appetite for our originations in the market, and Athene participates in our funding opportunistically while Apollo agents, all of our funding activities. So less than 1 basis point. That's what the page is about. This is Wheel's average charge-off experience. And on Chris' chart, it showed 15-plus years, and that's how far back Apollo can see. But I'll tell you that this experience goes back 84 years. Our business and credit model has several layers of protection. We start with large corporations that are substantial, that are often investment grade, that would have low losses on an unsecured basis. Our credit underwriting focuses on vehicle use, and leases are for business and critical revenue-generating assets that companies will continue using, and this is true even when cash is tight. Our collateral is highly liquid. And we have the ability to quickly turn cars into cash when necessary. And our team at Wheels is expert in transporting, deploying, remarketing and most important, getting value from our vehicles. Our approach to business is to have intimate relationships with our clients. And during good times, it means we can provide tailored and special services. But during difficult times, it means that we get helpful insights because our teams are in direct communication with our clients' employees. So when a client is in trouble, all 1,500 employees are part of the credit team. And last, we predominantly use a track lease that's a triple-net hell or high water lease that's considered an executory contract and affirmed in bankruptcy. This tight arrangement and alignment with clients create 0 or near 0 credit losses. So to wrap up, the roll-up of platforms that is now Wheels is something that only Apollo could pull off. And now Wheels is a strategic addition to Apollo. Wheels is unique and resilient as our business is mostly investment-grade companies and includes several layers of protection that results in near zero credit losses. We create attractive assets and have produced growth each year and originations continue to increase, and over the last 12 months were over $4 billion of new assets. Earnings and cash flow are highly reliable, annuity-like. And this is because Wheels has so many ways to provide value to our clients and, in turn, generate revenue. We have an impressive client list with several deep and long-tenured relationships along with the special trust with many of our clients that allows us to expand our business. And my last thought, and what I want to leave you with is the best is yet to come as our addressable markets are huge. And our team at Wheels and at Apollo are focused and eager to innovate and grow this business. So thank you.

Okay. We hope you found the presentations by Chris, Howard and Shlomo very insightful and informative. We're going to let you catch your breath. We're going to take about a 10-minute break. You're welcome to some refreshments. For those in the room, we would appreciate if you could use both the rear and front exits of the auditorium. And we're going to be playing a video and that's your cue to rejoin when we reconvene. Thank you. [Break]

Good afternoon, everybody. So I'm here today to speak about one of Apollo's newest and largest platforms, Atlas SP Partners. I got to tell you, I'm really excited about the potential of this company. No other company in the market right now looks like us, and we'll go into why I say that. It's a business that I spent 26 years of my life in, but most importantly, I'm surrounded by people that I know and love. This team has been together for quite some time. We've been successful together. And there's people on the team that I've worked with for over 25 years. I'm Jay Kim, I'm the CEO of Atlas SP. And most recently, I was the Global Head of Credit, the Global Head of Securitized Products and the Co-Head of Fixed Income at Credit Suisse Investment Bank. Now let's jump into the presentation. Atlas SP is a market-leading stand-alone asset-backed finance company. We provide financing to institutions and other finance companies that originate or own large portfolios of assets that exhibit statistically predictable cash flows or contractually obligated cash flows. And if you take a step back, if you think about us, the best way to describe us is we're essentially a finance company that provides financing to finance companies. An example of a typical Atlas SP client is a residential mortgage originator. What we do at Atlas is we provide this mortgage originator, a highly structured warehouse facility that allows for on-demand financing and gives the originator more time to focus on just efficiently running their operations and originating mortgages. We handle the liquidity and the financing of their businesses. Another example that we often see is when there's an acquirer of a large portfolio of assets, we'll provide that acquisition financing. And oftentimes, we'll be brought into a transaction and actually structure the deal for the ultimate sort of equity owner of that portfolio. We launched Atlas SP with the vision of being the leading provider of size, speed and certainty of financing to institutional borrowers in the marketplace. We see tremendous opportunity to execute on this strategy simply because the demand for this capability is growing. And what we're also seeing is that the capacity for this type of capability continues to come under pressure. I believe that Atlas SP is well positioned to fill this growing to band because not only have we been doing it successfully for many years together as a team, but now we have uncapped growth potential. Atlas SP is built on top of a long history of success with an extraordinary track record. This business was established decades ago at Credit Suisse and earned market-leading franchise reputation for 9 consecutive years in the most recent decade. We launched Atlas SP fully staffed with over 95% of the existing team in place, ranging from first year analysts all the way up to our senior executive management team. This in-place team of currently 270 employees is a team that built this consecutive and successful track record together for many, many years. Frankly, I believe this is our single biggest competitive advantage and establishes an unbelievable competitive moat in the marketplace. There's no other asset-backed credit franchise in the market that has the depth, the scale, the breadth and the capability that exists within Atlas SP. And just to give you some sound bites. I mean, for example, this year, despite being a brand-new company, we've issued already 73 capital markets transactions as Atlas SP. We've also introduced the most inaugural issuers in the market this year, more than any other player in the market in '23 by bringing 5 brand-new ABS issuers this year. We have a fully integrated, institutionally focused origination business, a distribution team. We have a large portfolio management team. We're fully stood up controls, operating infrastructure, and we have a global presence with a full breadth of asset-backed expertise and client coverage. We launched this business knowing that our scaled infrastructure would be a unique and competitive advantage in the market. And after 10 months, it's certainly playing out as we've anticipated. Chris mentioned earlier how Apollo has positioned its strategy around this asset-backed credit opportunity. Atlas SP is squarely positioned right at the core of the strategy. Atlas SP touches every corner of the asset-backed credit market. Our investment professionals help our clients develop strategies to optimally finance their operations and are supported with all the capabilities and resources necessary to deliver that financing capability to our clients. Without asset-backed credit, capital in these markets would be less available and often significantly more costly. Let me explain to you how Atlas SP helps our clients make their products more accessible to the broader market. At Atlas SP, we provide loan originators with the capital that they need to make their loans accessible to their customers. We lend to our clients typically in the form of a warehouse facility that provides financing flexibility against all their assets. We earn fees and carry income on these facilities. When these facilities become full or if we reach critical mass of asset volume, we typically structure a securitization, which is a static pool financing in the form of a loan or a security and then subsequently syndicate that product into the public or private capital markets. And in that process, we earn additional fees for the structuring and the syndication of those products to investors. Now I'm going to take a little time to explain exactly what is a warehouse facility and why it's so mutually beneficial not only to our clients, but to Atlas. The best way to describe a warehouse facility in layman's terms is think of it as a single-purpose institutional credit card, but that it can only be used to finance prenegotiated eligible assets in a highly structured vehicle with performance and borrowing base requirements monitored at all times. Because these facilities are often structured as bankruptcy-remote, we're able to lower the cost of the debt by legally delinking the credit of the originator with the credit of the underlying assets. Now I want to spend a little time explaining the chart to the right because this is at the core of why I believe this is an amazing business and why it adds a lot of value to our clients, but it creates a lot of value for Atlas and Apollo. So let's start with the blue bar to the left, the dark blue bar. And so that's the asset, okay? So that asset, and let's assume that's a house. So oftentimes, that house needs to be financed to be acquired. And oftentimes, the purchaser of that house will go to a mortgage originator seeking financing for the purchase of their house. After the mortgage originator appraises value, assesses the counterparty risk, sizes the advance rate on that house, and let's just say that's 80%, the 20% that's not financed serves as equity below that loan. And so the loan provider, the mortgage originator is our client, okay? Now Atlas steps into the picture by providing a warehouse facility, the orange box, senior financing against that loan that was originated by that mortgage originator. But like the mortgage loan originator, we also asked for a haircut, a second layer of protection for the financing that we're providing them. And so ultimately, this is how we're able to attach to an investment-grade attachment point. And most importantly, we now have created 2 layers of protection against the exposure that we have against the loan and ultimately the house. Now the last column to the right, we've got the ABS securitization. And oftentimes, what you'll find is that the markets will advance much further than we do in our warehouse facility. And that's intentional because our warehouse facilities by design are revolving high-velocity instruments, and we don't use these facilities to serve as end-user financing. And so to structurally incentivize our borrowers to seek more permanent long-duration financing, we oftentimes provide less advance rate and we'll charge more spread for the heavy operational nature of the warehouse facility. So borrowers are highly incentivized to take these assets out of the facility and securitize them in the capital markets for a better advance rate and more efficient pricing. So not only has the financial ecosystem become more reliant on our products, but also the market opportunity for growth is tremendous. Over the last 10 years, the private asset-backed credit market has almost doubled and continues to be more diverse. For example, 10 years ago, the residential mortgage market represented 40% of the market. And today, it's around 20%. Additionally, we continue to see opportunity to expand the asset-backed financing market into areas that have historically been financed with corporate debt. One example of this is our growing intellectual property financing business. At Atlas SP, we launched the business at $40 billion in AUM. And as Chris had mentioned earlier, this business grew to $60 billion at Credit Suisse, but was unable to continue to grow due to capital constraints at the firm. While at Credit Suisse, we collectively believe that the market opportunity was substantially larger than $60 billion. And our expectation at Atlas SP is that we will far surpass the historical high watermark that we experienced. Our well-established vertically integrated finance company for finance company model is able to deliver size, speed and certainty and is very, very well positioned to capture a piece of the significant and growing opportunity. To our borrower clients, we often serve as outsourced extension of corporate finance and treasury departments, providing strategic debt advisory support, financing capability and access to the capital markets. Since our close in February, Atlas SP has originated $10 billion of new warehouse volume and currently manages 247 warehouse facilities. Our scaled platform and full suite of capabilities allows us to generate excess returns per unit of risk as compared to others in the marketplace who hold the same risk. Being a fully integrated and scaled origination platform with a broad range of capability allows Atlas to be a one-stop shop for our clients. Additionally, vertical integration leads to less economic leakage, resulting in better execution for our borrowers and an enhanced risk-adjusted return profile as compared to others in the marketplace. Atlas SP routinely earns up to 200 basis points of additional yield as compared to similarly rated tranches sold in the capital markets. Now let's talk about our portfolio. Our portfolio is the senior investment-grade equivalent risk diversified and again, protected with 2 layers of protection. We structure our facilities to investment grade, oftentimes, single A to BBB ratings equivalents. And we know these ratings attachment points intimately because we use this exact same ratings methodology to structure and distribute the rated securities that we sell into the market. Now let's talk about our historical performance. The high-grade nature of our portfolio along with stringent portfolio management has led to de minimis losses. And I just want to pause a little bit on the management. So we have a dedicated portfolio management team of 25 individuals, that monitor our 247 facilities on a daily basis. These assets are not like you buy a bond and you throw it on the shelf and hope it pays back. These are living, breathing organisms that require touch in some cases, daily, in some cases, weekly, many times monthly, but we're interfacing with our borrowers. And we're having to check borrower base compliance, making sure the covenants are in compliance, making sure performance triggers are not being tripped and making sure that the facility continues to operate as negotiated. And so this is a business that's not very easily replicated. I would also like to take a minute to explain why we're an ideal partner to other market participants such as banks and credit funds. We believe that there are 2 fundamental components that are essential to filling the growing need for asset-backed financing in the marketplace. The first is flexible capital, and the second is scaled origination, structuring and operating infrastructure. Credit funds are supplied with an abundant amount of flexible capital but are often limited from an origination and operating infrastructure standpoint. While banks have scaled platforms have abundant amount of capital, however, are experiencing increasing restrictions on the bank capital, which has resulted in reduced flexibility and less predictability of outcomes. Our goal is to be partners with credit funds and banks to help bridge these limitations by being a delivery mechanism, a partner for the risk that they wish to obtain, while being able to provide complete size, speed and certainty of execution to our borrowers. Now I'd like to share with you a few recent case studies that illustrate some of our capabilities. I've chosen these 3 case studies as they represent a range of the different types of partnerships and capabilities that we have at ATLAS SP. The first is a transaction that Chris referenced earlier, PacWest. This was an example of a transaction that demonstrated our ability to deliver size, speed and certainty of execution in a period of extreme stress for our client. So back during the regional bank crisis, PacWest among other institutions, we were experiencing substantial deposit outflows. And so in that period of time, the Fed put together an emergency Repo Facility to help banks who are experiencing these deposit outflows to finance some of its balance sheet. But the problem was many banks had assets that were not eligible for these liquidity facilities. And in PacWest case, they almost $2.9 billion of DCR loans -- DSCR loans, excuse me, that were not eligible for this facility. And we knew this asset class intimately. And so we ended up providing PacWest a $1.4 billion financing secured by this $2.9 billion pool of DCR loans (sic) [ DSCR loans ]. And we did that in 7 days. From the time they picked up the phone, negotiated term sheets, work through legal documentation and actually funded the transaction. It took us 1 week to fund the deal. Sunnova is another example of the capability that we provide to our clients. In this particular circumstance, we were providing strategic debt advisory services for a client to access a government-guaranteed program offered by the Department of Energy. So we helped advise our client to gain access and develop the guarantee program. And then on the heels of that, we were able to assist in structuring and distributing a AAA-rated solar ABS bonds. And then finally, KKR is an example of providing a credit fund, acquisition financing, followed by the structuring and distribution of a bond securitization for a large music royalty portfolio. Once acquired, ATLAS SP structured and distributed the ABS transaction backed by the music royalty assets, and it served as the takeout financing for the bridge financing that we provided the credit fund. Intellectual property assets are just an emerging asset class in asset-backed finance that ATLAS SP has a dominant position in. So in summary, ATLAS SP is a one-of-a-kind asset-backed finance business that lends to finance companies and institutional borrowers. It's built on top of a long track record of successful management and operating performance. ATLAS SP is an ideal partner to institutional borrowers, to banks, to institutional credit providers in the marketplace due to our scaled operations and our flexible capital base. Our vertical integration leads to a one-stop shop for our borrowers and ultimately results in excess return per unit of risk for the company. And most importantly, ATLAS SP sits right at the core of the Apollo asset-backed finance ecosystem strategy. Thank you for your time. And now I'll hand it over to my colleague, Martin Kelly, the CFO of Apollo.

So good afternoon. Great to see everyone and thanks for investing time in our business. We're delighted to be off in front of you. Before I start, actually, I'd like to invite a bit Shlomo live here and acknowledge that in our presence he is someone who has voted #2 IR professional in our sector with his team by the IR rankings this last week. So I think that's terrific. I think in our sector of brokers, exchanges and asset managers, of which #60, nowhere and his team were acknowledged as a #2 overall. So not without a lot of work and striving to be really good at what they do. So congrats to the team. So why are we here? Actually, more importantly, why are you here? It's the platform strategy and the origination strategy is something, which has garnered quite a lot of focus as we've traveled around in the last -- really the last year or so. And we've been publishing more information because it's so important to what we do. But it's something that really, it was the Credit Suisse and Atlas transaction that catalyzes the interest. It really sort of brought home more of what the strategy is. And so we've heard feedback from many of you and others that people want more information. So that's why we're here. And so you've heard from Chris on the strategy, you've heard from 3 of the platforms, which are really interesting case studies they're each scale and they're each different from each other. And so what I'll do today is connect the strategy to the financials. And I think what I hope you'll find from today from what you've heard and from what you'll hear from me is we are able to produce a recurring supply of investment-grade quality assets. We have the infrastructure to do that. I do think we have a competitive advantage based on what we've built. Our credit loss experience is de minimis, and we focus a lot of time on managing credit risk, as you've heard from each of the case studies. We have a highly capital-efficient model, which I'll delve into. And all of this brings with it earnings benefits in the form of both fee earnings for the asset manager and spread earnings for the Retirement Services business. So it's been 2 years actually almost to the day since we did our Investor Day in the fall of '21. It's been a little under 2 years since the merger between Apollo and Athene was consummated. And so I think at the time, we had laid out the thesis for the merger in 4 steps, which are here, and I'll address them. I do think, though, it's important that the benefits of the merger today I think a better understood and greater than we thought they'd be back then. And I actually think from all of our travels and meeting with different constituents externally, I think that's also acknowledged externally. And so in some cases, I think the benefit are meaningfully greater. So for benefits, we'll cover 2 of them, and we are covering 2 of them in more detail. But firstly, alignment. What does alignment mean? We talked about alignment a lot. Alignment is a couple of things. Actually, it's alignment between the asset manager and the Retirement Services business in developing products and transactions and coming to market. It's also alignment between the firm, the package of that group and our LPs. And there's multiple points of cooperation and co-participation in financially and transactions that demonstrate that. In cross-platform, and I think this is where we've seen more benefit than we expected. If we go back to the 3 initiatives that we laid out at the time of the Investor Day, of which originations is one. And then if we think about the other 6 or so that we've unveiled since then, including more recently, Atlas and our asset-backed financing strategy, most of them at least require cooperation between both sides of the house, some of them are dependent on that cooperation. And so I think it's really, really important to acknowledge that the merger brought about a lot of the growth that we're focused on now, which is almost exclusively organic, is a function of the merger. Importantly, we believe that owning production is critical. It's a competitive advantage, and you have to be able to create differentiated production of credit. And then we have lots of capital flexibility. We are highly capital efficient, and that's partly driven by Athene's alternatives portfolio, which has -- since become AAA, which is being marketed to outside LPs. It's partly a function of Athene's investment credit balance sheet, which takes senior risk. It's partly a function of the equity sidecars that Athene has in the form of the ADIP family. And it's also probably in the form of syndicated capital that comes into us through our Capital Solutions business. So plenty of ways for us to access capital around the system. I didn't mention HoldCo Capital. And so we have very few uses for HoldCo capital, which I think is really important. So why are we focused on origination. In our opinion, the public markets off a little harder today. It's hard to find, providing our effort to clients is what we need to do. It's fundamental to our purpose. And so if we can do that, it's pretty simple. We can create benefits and earnings to shareholders in both fee-related earnings terms and spread-related earnings terms. And I'll go into the multiple forms of those earnings in a minute. So as we originated and you'll see it's different for each of the platforms. There's not a formula that is consistent across the board given the construction of platforms and the production and the capitalization of each of the platforms. But in simple terms, we allocate across 3 capital pockets. We allocate to our Retirement Services balance sheets, principally Athene, also Athora. We allocate to our third party funds and what we call SMAs or separately managed accounts, which are really just funds of 1 large institutional investor comes in. And then lastly, we allocate to the market, if you like, through our Capital Solutions business, credit -- mostly investment credit, some below investment grade is syndicated through this business to the market. What we are finding is we want repeat business. We want LPs to come into our funds. We want participants in our Capital Solutions business to know us and to come back for repeat transactions, which they're doing. We're also finding crossover between the 2. LPs become participants in our syndication business and vice versa. So Chris earlier talked about the 25% of everything, and it's been touched on a few times. What actually does that mean. Mathematically, it's something like this. And it's not a formula. We're not sort of -- we don't hold to this strictly. But we want something like 25% of the high-grade origination -- created origination coming up platforms to go to our Retirement Services balance sheet. Think Athene's investment grade fixed income portfolio. We want something like 50% to go to our third-party funds and SMAs, and we want the last 25% thereabouts to go into market to our syndicate capital partners through our -- what we call our Capital Solutions business. Really importantly, I think for each of these 3 shoots, if you like, we share the same assets at the same time at the same price on the same terms. So everyone is getting equal economics on a product that goes into each of these channels and making sure that each of the capital pockets derived that equivalent benefit is really important. So how does this pull through into earnings. It's really at least in 2 ways in each of our asset manager business, fee-related earnings and our Retirement Services business spread-related earnings. So when assets are allocated into funds, or separately managed accounts, we own management fees. That's 1 of the key reasons our credit business management fees have grown by 16% over the last 2 years. For the piece that goes through our syndication process, we're on a fee upfront, no management fee or front fee. That business -- some of you will recall, we had indicated that business should get to $500 million of annual revenues by 2026. We said that 2 years ago at our Investor Day. We're at that level today. So it's 2 year into our 5-year plan. So that business, partly benefiting from this whole strategy has really hits [indiscernible] and met its plan. And on the -- and Chris touched on some of this earlier, on the Athene's proxy for retirement services side, the equity that's deployed through AAA, which is its alternatives portfolio, earns a return mostly a cash-on-cash return in the case of these platforms, which is we say low to mid double-digit ROEs, and that creates alternatives income, which comes through Athene's earnings into SRE. And then the investment-grade credit often in tranche structured form that goes on to the senior part of Athene's balance sheet, which brings with it 100 to 200 basis points of excess return, then comes through spread earnings as net yield. And so both of those last 2 reasons are a key to -- the benefit we're seeing in Athene's earnings, where it's grown by 30% annually for each of the last 2 years is driven by the excess spread that we can create and higher rates, which are also favorable for the business. So if we look at the example -- an example of a scale platform. And again, you can see just from the 3 we've highlighted today, no platform is equal in terms of capitalization and production. But on average, if we were to invest $1 billion in a platform, if we average this across our ecosystem, we would create about $6 billion of annual flow of credit. And so economically, I think the easiest way to look at this chart is horizontally. If you focus on the top part of the page, that $1 billion of equity derives a management fee that we own as a result of it being owned by AAA. So we charge a management fee on that equity piece. And then we've modeled in the case of these platforms, a 14% return. And so return on equity, and so that comes through the spread earnings business of Athene. So that's the equity piece. It's a management fee and its spread earnings at a low to mid-teens return double digit -- low double digits to teens return. And then on the debt side, we've assumed illustratively the same split. We've assumed over $100 of investment-grade credit. We're of the $6 million in this example. 25% goes to the market through Capital Solutions, 50% goes into funds and accounts and under management fee and the last 25% goes onto the investment-grade piece of the things balance sheet. And I want to go through all the assumptions that the math is on the table to show how that falls through. I think on important point I make is that the top right box, the 14% return on the equity in and of itself is an attractive return to AAA and to the third-party investors that come into AAA. So each of the other earnings streams here are incremental to that and accrue to Apollo to AGM. So if we dig in with a little bit more of an FRE focus, I think the left side here is pretty well understood, 16% growth rate in yield, which is credit management fees over the last 2 years. This will be the key driver of management fee growth from here on out. I think the right side is interesting. If we look at the mix of business in our Capital Solutions business, and I want to transition from 1 to another in a moment, if we go back a couple of years, the mix was closer to 50%, 50% equity and debt. We're now run rating at close to 80% debt, 20% equity. Meaning, if you look at the fees that are derived from this business, 80% of the fees come from debt business and 20% come from equity business. And so that's important because credit or debt origination is more recurring, more predictable, more durable. And so that's what we're very focused on building out the predictability of this earnings stream. So we're also very focused, as many of you know, on growing third-party AUM, and that is also partly fueled by the origination strategy. And so if we look at the AUM in our third-party credit business, which really represents this strategy. And for this purpose, we included ADIP because it's backed by third-party capital or the assets underwriter. We've seen a ForEx increase in assets in the last 7 years. We've seen a 2x increase in the last 4 years. And this is a trajectory that we would expect to keep going. Again, origination is critical to this growth rate. And I think it's important that origination benefits a variety of strategies in our credit business, including much more recently, our asset-backed finance business. If we then look at Athene's balance sheet and for this purpose to be consistent with the prior page, I took the ADIP assets out and you look at what the sort of the net Athene balance sheet is net of the equity participation. About 45% of Athene's balance sheet today is represented by assets that have been originated by the asset manager, by Apollo. And that really comes in 2 key buckets. One is all the assets that come through the origination platforms, the 16 platforms. And the second piece is other assets that we originate in our credit business, corporate lending, CLO formation, high-grade alpha and so on, all the businesses that we talk about. But the 2 combined bring the created product in Athene's balance sheet to about 45%. The other 55% is [indiscernible] liquid sellable, that's for liquidity management purposes. So I think what's important here is that the outsized earnings that we've been able to create really come from this investment grade senior, less liquid, excess spread and risk appropriate assets for a regulated insurance company balance sheet. And it's the same type of product that Athene's competitors want. And so we often syndicate through to Athene' competitors through our syndicate business because they want the same product. So let me move on to capital efficiency across the group. I think when we announced the merger, so go back before we close the merger and through when we closed the merger, there was a perception that we had migrated from asset-light, capital-light to balance sheet heavy capital intensive. And so I do think that in all the conversations we've had since then in the almost -- well, a couple of years since then, I think that perception has become increasingly accepted as not true. But I think this is a good example of why that's the case. If you recall back to our Investor Day at the time, we suggested we'd have $15 billion of investment capacity in the holding company in the group over 5 years. And we said, think of that as 3 buckets of $5 billion, $5 billion to pay the base dividend, $5 billion to increase the dividend and do share buybacks and other, and then the last $5 billion was for strategic growth investments. And so if we look at what we've actually spent today of that last $500 million -- $5 billion, we have spent about $500 million. So we really haven't had the need or frankly, the opportunity to spend that capital. Most of the growth we were conducting and focused on across the firm doesn't require capital. It doesn't require HoldCo capital. And so I think that illustrates the point of balance sheet light post merger, I think it's also illustrated by this simple example, which I think you probably understand well. If you take any platform, the equity capital is provided by the alternatives portfolio, now AAA, now partly third parties. And that platform creates product, and then the product is allocated through -- back to Apollo and goes down these different shoots that we've been talking about creating a combination of FRE and SRE. But really importantly, is not requiring any HoldCo capital. So Chris touched on this before. It is actually, I think, a really important point that we've spent $8 billion over a decade to build this business. And so that's really hard to replicate. That's been done with de minimis HoldCo capital over that period of time. What is common is that we'll bring in equity partners into the platforms over time. And you can see here co-investors -- that coinvest column is where we have brought in a partner to take a piece of the equity in the business. And so why do we do that? For a couple of reasons. It's further alignment. It's alignment in a couple of ways. Actually, AAA as an entity is aligning between Athene and third parties who are buying into the AAA investment business. And then under AAA, the platform is set and the platforms also have equity provided both by AAA and by co-investors, by partners who bring in capital. And so that's important because I think it helps diversify risk and avoid undue concentration to us, it helps with recycling capital as well so that we can keep growing the business. I think importantly, and I'll just touch on this quickly. AAA as a source of capital has benefits far above and beyond the platforms. You can see here and I've put the Athene balance sheet back together again here to show growth because this represents the true sort of combined alternatives portfolio. We have about $14 billion today in sitting in the alternatives portfolio. That $14 billion has been allocated in 3 principal areas. One is everything we're talking about today, which is that first dark green shaded box, the 16 platforms and buying equity there. But it also provides capacity to seed funds. And so if we look at the newer businesses that we're focused on, Clean Transition, Infra, Secondaries, they are partly funded by [ C Capital ] from AAA. And then lastly, that capital allows us to invest in other strategic retirement services platforms. So think Athora, Challenger, Venerable and FWD. And we haven't modeled the financial impact or benefits of those last 2, but they are further FRE benefits and they are further strategic benefits to the overall platform. So this gets to the point about evolution of platforms. Again, it's not formulaic but it's typical for us to make an initial investment and own 100% of a platform, and then we will scale it. And then over time, we will diversify ownership and we'll bring in third-party capital for the same reasons. And that is sort of we don't want to own 100% of anything in particular. We want value diversification, risk management and capital recycling. And so that's a typical model for our platform ownership. So let me move to the last topic, which is the Capital Solutions Business and just provide a bit more focused on this because it's been very important to us. Again, we believe we have a differentiated model relative to LP in this business. And so we combine origination capabilities, capital markets capabilities and syndication capabilities. Origination is partly everything we talked about today, and it's partly originating across the entire Apollo ecosystem. It's pieces of equity from our equity business that are syndicated. It's pieces of hybrid, it's pieces of other credit business, all of which comes into this business. We have a capital markets team. We have a capability that we've assembled over the last really handful of years of people who have spent their whole careers on Wall Street in capital markets business capital, debt capital, equity capital, hybrid capital, convert capital. They bring decades -- individually they bring decades of experience in structuring and distributing transactions. And so they sit with our teams and structure transactions for our clients. And then we are with sort of partially built -- partially still building a syndication team that can cover buyers of paper. And so that's obviously important to have that last piece in place. And so you really need all 3 to make this business successful. Interestingly, so year-to-date, 9 months through September 30, we've closed 160 transactions in our Capital Solutions business. That's exactly 50-50 split between platforms. The majority of that ATLAS, but it's others as well. And then the other 50% is everything else. It's corporate, origination, investment grade, noninvestment grade, it's sponsor origination, it's equity co-invest, hybrid value co-invest. And so it's a piece of our whole ecosystem that's coming through this business. If we then look at the fees that we've earned as a good representation of what the business looks like now. This is the 9 months again. We've generated for the 9 months $420 million of fees. I think, again, you look at the mix of fees that are created by either debt or equity, and it's about an 80-20 split at the top of the page. Of that 80% debt piece, about 2/3 of investment grade and 1/3 is below investment grade. So again, an orientation to investment-grade credit down the page, the balance of that is portfolio company refinancings. And then the last piece is equity fees. And that comprises fees from syndicating equity across each of our equity businesses. Another important point I'd make here is that only a small amount of these fees actually require capital support. And that's -- so 10% to 20% of the fees are supported by balance sheet capital. That's supported by an arrangement with a partner we have that helps provide balance sheet, but that's important that most of the transactions we do here are fully syndicated at the time of commitment. So I'll wrap. I think hopefully, you've -- these are the vectors of the day. So hopefully, this has become clear that this is -- hopefully what you walk away with today. We are really pleased and proud of the business we've built. We do think we have a distinct business. We do think that there's a reliability to the production across all of the businesses, including the platforms that we have. And that's all about creating proprietary credit assets. Most of that is investment grade. We -- as you've seen from the decade, the $8 billion of capital, the mistakes we've made, the lessons we've learned, it is a competitive advantage. It's hard to replicate this business. We are focused on investment grade. We are focused on minimizing credit risks and credit losses across the portfolio. You've seen how we do that in 3 examples today. I do think we are highly capital efficient. The platforms are a good example of that. But I think spending $500 million of the $5 billion in 2 years is probably a better example of that. And then all of this translates into earnings power, multiple forms of fee-related earnings and then multiple forms of spread earnings, at the same time, making sure we have capital -- a supply of investment-grade credit to allocate to our capital partners. So I will stop there. I'll invite now -- we're actually up to the stage. We'll take a minute break to get some chairs up and then we'll take some Q&A. [Break]

Okay. So we have some time for questions. We have Chris and Martin joining us for this. A couple of ground rules, if I may. If you could keep the questions focused on the content that we discussed this afternoon that would be preferable. And then we have mics coming around, if you could just identify your name and firm, that would be helpful for those tuning in on the web. Alex, maybe the first question.

Alex Blostein from Goldman. Martin, I want to ask you a question around capital management and it goes back to 1 of the points you made earlier that originally at the Investor Day, you talked about $5 billion being used for future growth investments, you used $500 million of that, and it sounds like you really feel you have enough not to use that excess capital for similar things. So should we be thinking about that capital as future buybacks, dividend increases? Or how are you thinking about that and over what time frame?

Yes. So when we set out the goals, we were anticipating a normal exit environment, as best you can predict normal. Obviously, the whole industry had a slowdown in exits. And so that's a component of capital creation. And so as we've looked through and we do extensive work on this looking through what creates carry income, which is -- it's easy to predict FRE growth. The dividend up from Athene is effectively fixed. So the delta, the variable is capital -- is carry. We believe that the carry projections we had back then remain appropriate, but they've probably been pushed back a year or so. So there's a slight delay to capital creation. You then sort of look at the mandatory convert that we issued in August as a way to find excess growth at Athene. And so we're trying to -- our objective is to make sure that we retain the capital dividend coming up from Athene each year at [ 750 ]. Athene's growth has been far greater than we expected back at the time. And so we've raised the mandatory for the purpose of funding the excess growth. And then we have choices to make. And so, so far, we've spent some on buybacks, we increased the dividend at the start of this year. We want the dividend to be competitive with an S&P 500 company. So that's an objective. We want to maintain solid ratings at the A level. So that's a binding constraint to the overall model in terms of leverage and interest coverage. And so -- and last week -- actually, yes, last week, we had an upgrade from S&P, reflecting that. So we're trying to solve for -- and we want excess capital at the top of the house to be offensive if and when and as the need arises. So that's what we're balancing. I think what we will having now -- issued some employee comp last week and having issued the mandatory. Our objective now is to immunize the share count pollution from both of those events over the next couple of years, call it, 3 years. And so I would expect that we will pivot the capital policy to be retain A rating, retain dividend increases, get the share count down to 600. And then with any excess we'll decide as and when we have the ability to do that. But at all times, making sure we have plenty of dry powder effectively at the top to be on the front foot when we want.

Glenn Schorr, Evercore ISI. So I think what you built is very unique. I understand the benefits that you laid out today. I also understand that it's different than some of their traditional owners in banks and insurance companies. But my question is -- some of this is owned on balance sheet, some of it owns in third-party funds. So the question is how do you value them? The public markets have historically not valued origination platforms, good or bad, too well. How do you value them on balance sheet and in the funds? And then also how do you value them like right now, like where are we at?

And Glenn, you're talking about the equity valuation?

Correct. Yes.

Do you want to start question?

Yes. So for all these investments, our returns are all driven by the net income of these businesses. So they're typically book value style businesses, and they grow with the net income that they generate. That net income in some circumstances, is paid out in the form of dividends, and that's a cash yield, and that income is sometimes retained to support growth. And as you've seen some of these businesses have grown pretty materially with that retained earnings. So we typically look at this through a number of different lenses. It starts with that. We look at multiples of income. We looked at, obviously, what we bought them for. We looked at where these have traded in the market. And there's a number of comps for different types of businesses like this that have been private transactions. And we triangulate that all around and have that validated every quarter.

But it's pretty much a constant multiple with a cash-on-cash yield, which is at the levels we're talking about. And then the question is, does the cash lay in the box will get distributed up? And the answer is it's probably a bit of both, depending on the structure.

First question, no, this may not be the venue, but any chance in a commentary on forward-looking view on impairments? Or is this not the venue?

Impairments you're talking about specifically at Athene or within the platforms, what are you -- what was the question focused?

Originated from the platforms inside of Athene.

Yes. I don't think we want to provide forward-looking information on impairment specifically.

Okay. I got a second 1 here, though. So I think this was in Chris' presentation. I think the language was that Apollo will not support kind of the credit businesses. Maybe I got that wrong. But if that's the case, the equity of the credit businesses are held inside of AAA and in the alts bucket of Athene. So to me, they kind of look interconnected. And if they're interconnected, doesn't that mean Apollo is connected to them too? This was my question.

Yes. So these are all separate independent companies. We're large investors in all of these businesses. But we're investors as equity investors. We have not given an explicit guarantee of their balance sheets. So the funding that these businesses all have is based on the creditworthiness of them without support from Apollo. So it doesn't mean that -- I mean we're incredibly connected. This is all part of our ecosystem. This is something that we're focused on, but we have not issued any explicit support for these and none of their funding costs are based on support from Apollo.

Brian Bedell, Deutsche Bank. Capital Solutions business. First of all, I guess, strategically, how do you think about that mix changing in different environments of the 75% that you're not keeping? So between the 25% for Capital Solutions and the 50% for third party, what type of environment would shift that allocation, and then you're already ahead of your plan on capital solutions fees. What would prevent you from not continuing to grow that stream pretty significantly given the growth of the platform?

Yes. I think the mix -- we want to write risk appropriate and risk attractive business in any environment. So I don't think the mix shift changes in different economic environments. So I think the business is attractive. We want it and our partners want it. And so I would expect that, that we're not going to want to step in and take more business if our other partners don't want it. That's going to be a pretty strong indicator that it's not good business. So I think I would use that as a rough proxy for what the allocation should be in any point in time in the cycle. In terms of where do we go from here, we're obviously really delighted with the progress of the business. It's come together really well. So it's a great business, great team, well managed. And the ingredients are there for it to grow. So we're not going to provide further guidance on where we go specifically from here. I think that will be a next fall conversation when we do our next update formally. But the business is off to an incredibly good start. And it would -- you could infer that it has room to grow.

Brennan Hawken, UBS. I'd also echo Craig's comments. Thanks a lot for taking the time and organizing the day. It was really helpful. I had a question on ATLAS. So warehouse business, is it third-party equity? Who is the provider of the equity? It sounded like that from the presentation but if you could get a little more color on that. And also indicated it's not meant as an end financing securitization is the goal but the footnote also said that not all of the warehouses do end up in a securitization. So could you maybe give some stats around how much don't end up in the securitization of those? What was it 247 facilities managed, like what is the aging of those facilities, and so we can think about that potential risk?

Yes, absolutely. Thanks for the question. So we have been following the warehouse lending space for a long time. And we love this sector because all of these warehouses, as Jay walked through are purposely structured to lower advance rates than the investment-grade take out ABS, and they're structured at higher spreads. And that's the incentive for the borrowers to take these assets out into the market. So definitionally, excess risk reward. We tried to build this business because we like this business so much. We spent 3 years and we had a whopping 5 warehouses. It was subscale. It was very complicated. We're spending more on OpEx than we were probably earning in revenues. And that's one we found this business to be able to acquire incredibly complicated transaction to be able to get this over the line, but incredibly valuable because it's a $40 billion business, as Jay mentioned, almost 250 facilities across it. So that's the type of scale that can support the operations required to do all this. So to your question around how much of this gets taken out to the market, the majority of this gets taken out into the market. There's been about 70 transactions already this year, where this gets taken out. Some facilities go out once or twice a year, some go out once every year or 2. And the majority of these facilities are going out to the market. We're not really underwriting these to be retained, but we have that as a backstop because we've priced it way inside and structured these to single A risk across the board. So that's the type of risk profile that we're really looking for in this business. And that's what's driven the really low losses for a very long period of time. And it's that double layer of protection. So there's equity first from the originator and then there's equity from the underlying borrowers. So someone buys a house, they put equity in, house gets funded by a mortgage originator, mortgage originator puts equity in and we're a senior to both of those 2 equity sources. And then how we're capitalizing this business on a go-forward basis? As you saw in Martin's chart, there's an in-process line for co-invest equity that's coming into this business. So we're raising this. We did publicly announce something earlier this year with a large sovereign wealth fund coming in to help support this business. And so that's how we think about the capitalization. But we're also a very large participant in that as per how we think about all these platforms.

Peter Ciccarelli from Onex. I think it was the beginning of the year, Mark coined a phrase no new toys, given the success that you guys have had with these platforms, particularly ATLAS and Athene growing balance sheet and AAA coming on, like, what is the plan? Is that no new toys still in place?

So that's been in place for the year, and that's applied a lot to our business. And a big reason for that is because of the embedded growth that we've seen in these platforms on a historical basis. The amount that we've been able to grow the MidCap business or the Redding Ridge business or the Wheels business or a lot of the other ones that we have shows that we should just stay focused on what we have and not be distracted with too many new things coming in. That doesn't mean that we're not opportunistic. We continue to look at these things. This really was a year of a reset around all this to make sure we have all of the right sort of framework and structure in place. We feel very good about where we are. So we're starting to spend time thinking about where we spend our time next year. That's definitely part of it, but we're going to be opportunistic as we do it because we think there's so much embedded organic growth as part of this already.

And I'd say more broadly, if that's where your question was headed, then there's so much that's in front of us right now. And some of these initiatives are really complex and should have enormous scale potential. So you never say never. But I do think we've been pretty disciplined this year about that notion. And it's actually created a real focus in the firm to know that there's not more beyond what we've identified. ATLAS was the aberration because it was very opportunistic. But it's -- if you think about Global Wealth as a priority, enormous potential, very complicated multiyear build. You could say the same about climate or secondaries or altitude in the annuity [ rev ] products and capital solutions with [ 500 ] 2 years later, okay? So we're not done. So we'll see, we'll be back in January. But we've got plenty in front of us and it all has growth potential.

Yes. Chris talked about the platforms all have their own independent boards and managements and we learned in the MidCap presentation that Athene and Athora put in $1 billion of $2.9 billion of equity capital. And so that doesn't sound like a control stake. And it would just seem to me like you'd absolutely want control over the origination engine in your product. So I guess curious, just in general, A, what's the plan if there's ever a different point of view between Apollo and the business that you own the platform. Then B, is that a typical arrangement where it's not a control stake. And then, C, the 1 place where you think you'd want less than 100% or less than 50% would be Athene, which is kind of houses all the balance sheet risk, but there you went for 100%. And explain all that?

Yes, sure. So great question. So the smallest equity ownership as a percentage of the business that we have is the MidCap business. The rest of them are all significantly larger, and that is because the scale that MidCap has gotten to as Howard talked about $50 billion of commitments. Not all of those are on balance sheet. We have sidecar partners. We have other things that are structured around it. When we make these investments and when we build these businesses and when we bring partners in, we tell them all, there is not going to be an exit here. Underwrite this at no exit, underwrite this is a very long-term hold. So we're looking for like-minded investors that come into this with the same exact mindset for that really long-term focus. So we have brought co-investors in and we brought more co-investors in for obvious reasons to our largest platform, and this is really back to the diversification, the concentration limits, those sorts of things, but it's also driven by investor demand. We have not actively gone out to raise capital for a platform strategy. A significant portion of this capital raising has been driven by inbound demand and focus on these different platforms. So that's really how we think about this on a broader basis.

Ben Budish from Barclays. Martin, on the last earnings call, you said that Capital Solutions revenues would look similar next year to this year. But given the portion that's coming from the debt side and the inherent growth in this business and your confidence in achieving the 2026 targets, I guess, can you maybe help us kind of foot the difference between those 2? And as we think to '26, assuming you're on track to hit the targets, the $150 billion in origination. Is it a fair approach to kind of say, well, this portion comes from debt. It's growing this much and kind of triangulate at least what that portion of the Capital Solutions business you do, is that a fair approach for us to take?

You've been talking to Brian. So I would say -- on the first question, I'd sort of say that what I said, we're really happy with what we did. Our base plan is to repeat it in 2024. If we can do more, then we will. But it's still a transaction-dependent business. There's more predictability with that business and flow. That's the piece of the overall puzzle. So that's our base plan now. We'll see how the year starts. And then in terms of -- it's not a simple triangulation because fees -- the Capital Solutions business, like any capital markets and syndication business has a variety of different fees for different businesses. And so there's not just the fee on the underwrite structuring fees and there's other fees that are sort of consistent with what the industry charges. And so less of that structuring is relevant for platform origination, it tends to be the more of a bespoke corporate origination. So there's different fee rates. It's hard to give you specific answer, but triangulation is probably not appropriate.

Ryan Krueger, KBW. You showed that 45% of Athene's assets have been funded by the origination platforms and other Apollo sources. Do you think that's the right mix long term just given liquidity considerations? Or do you think there's room to further increase that?

I think making sure that Athene's balance sheet is really robust and can withstand anything is obviously critical. And so I don't see that changing. It's certainly not our plan to change that. And so that other 50%, 55% is fairly typical insurance company assets, [indiscernible], mortgages, agencies, high-grade, investment-grade corporate bonds. I think that's about right. And so we are focused on creating the excess spread at the margin as the business grows in the 100 to 200 basis point area. And if we can do that, then the returns that we're creating will continue.

Mike Cyprys of Morgan Stanley. The origination platforms that you guys own generate cash flow for you. But can you just maybe speak to what portion of the earnings were ultimately distributed as dividends versus reinvested back in the platforms to drive growth? And how would you expect the cash flow off of these origination platforms that are distributed back to you to bear over time relative to the alts mark that you guys take?

Yes. So from a dividend perspective, every 1 of these platforms is unique. And so some of them are retaining all their earnings and some of them are paying out all their earnings, probably about half, plus or minus, that's paid out in the form of a dividend. And it really depends on what we see as the future growth opportunity to retain that income, and continue to do better. So that's how we think about it from the platform level. And then...

Yes, I can. So on the second part of the question, so part of it is cash flow up and part of it is capitalized up. And so when we sell down pieces of it to other partners, that's how we recouped that capital appreciation, if you like, to build them to asset. But the markets tend to be based on the returns of the business, cash flow returns, and then, obviously, to the extent that it's not 100% dividend policy. Part of that is a markup in the book value and part of it is cash that gets distributed out to Athene and to other AAA investors now.

Brian Pirie from Reade Street. The growth that you are forecasting in debt origination volume for these platforms is impressive. I mean it looks like a 70% cumulative growth over the next few years, which if you squint looks like 20% a year almost, and I'm just wondering how much downside risk there could be to that number, the degree to which you see that as acyclical or maybe even countercyclical in a tougher economy?

Yes. Look, from my perspective, when we think about all these platforms, they're very diversified. And so we're not focused on any 1 individual asset class. And we've seen things like the demand for aircraft debt or our willingness to want to supply that vary in 2020 versus in 2022. And so by having this disparate set of 16 different platforms that are focused on so many different industries, when one industry is doing a little bit stronger and other one is doing a little bit weaker. And so there is a counterbalance and a diversification benefit that we're getting across the portfolio. So we think that helps insulate the downside here. The other piece is a lot of these are on upswings. And we talked about the ATLAS business, in particular, which is one of the largest platforms that we have. That business is at an all-time low for originations because of what was going on before we acquired it. It's going through a whole integration and come together process right now, but we see the future for that business, in particular, it's having a lot of growth. And you also noticed that there were a lot of businesses that were very small. And these businesses are new start-ups, de novo strategies. And some of the teams that we brought in for some of these businesses were originating $5-plus billion per year before they came. Right now, they're originating zero for us. They have very long track records of this high origination. So that's why we really -- we've set the bar really high for new acquisitions here because of so much embedded growth in the teams and the history and the track records. So we're really operating right now and almost like a low for how these origination platforms should be performing.

And I'll just add to that, if you go beyond the platforms to the rest of the businesses that originate, not everything is up and to the right all the time across the business, as Chris said, and beyond the platforms. But if you just look at what happened this year, it was a very difficult year for credit extension. I do think we benefited from that in the types of transactions we could step into this year. And so we're -- when times get tough, as many of us know, we are a solutions provider and we have capital. But even if you go back a couple of years and look at some of the marquee transactions that we've been able to originate, it does reflect the secular shift in capital formation into sort of investment-grade replacement. And so if you look at just recently, Air France recently, AT&T recently, marquee corporate names that we've been able to provide credit to because we could provide a single solution, one set of docs, one negotiation. And so I think we are benefiting generally speaking. But I think we should be -- and we are actually really pleased with what we've done this year. It has been a tough year and we've generated really strong business. So I think that plays to our strength in down markets as well.

We have time for 1 last question.

Samir Parikh from GiantLeap Capital. Congrats on an excellent presentation. So my observation is that over the last decade and even longer you guys have created a very powerful and strong culture at Apollo, there's about 4,000 employees at Apollo. Now you have 4,000 employees -- not employees, but people at these platforms approximately plus or minus a few hundred. How important is it to propagate the strong Apollo culture into the platforms? And how do you execute on that?

Yes. It's a great question. We spend a lot of time on this. As you know, and you hear from a lot of our Apollo presentations, culture is very important to us as a firm, and it's a key driver of really how we've brought all this stuff together at Apollo. So we don't want that to stop, where Apollo stops. We want that to continue to extend. And that extends across a number of the different mindsets that we have. It's this whole ecosystem mindset, this cross-collaboration mindset. This is something that's incredibly important. We spend a lot of time with these CEOs and with the CEOs of all of our platforms, talking about how we bring these businesses together with Apollo, so we can think about the broader origination opportunities, the cross-sell opportunities, this positive feedback loop that we're really generating across the board. And it's also on the risk side. And it's really important that the way that we think about risk and Apollo's downside protection focus, in this mantra is really extended all out into the platforms. And we spend a lot of time with our executives and the people that run these businesses see the world very similarly to us. And so we spend a lot of time doing this. We have sort of a lot of different events that bring these teams together.

Great. Well, I'll reiterate something that Martin said earlier in that. We really appreciate everyone taking the time this afternoon to spend with us and your attention around this important topic. We'd like to keep the conversation going. I know there were some hands that we didn't get to. So if you have any follow-ups, please feel free to reach out to us afterwards. And enjoy your evening. Hope you enjoyed [indiscernible]. Thank you.