Apollo Founder Harris: Big PE Firms Have Left Alpha Behind

Apollo Global Management's co-founder, Josh Harris, recently made headlines by asserting that large private equity (PE) firms have lost their edge in generating alpha, or market-beating returns. Harris, who founded 26North Partners, believes that the industry's giants have become too focused on size and public listings, losing sight of the nimble, value-driven approach that once defined alternative asset management. In an interview for an upcoming episode of The David Rubenstein Show: Peer to Peer Conversations, Harris stated, "They were sort of the beta of alts," referring to investments that produce returns in line with market benchmarks.

Apollo, one of the largest asset managers serving prominent investors, has maintained a value-oriented approach across private equity, credit, and real estate. With over $74.2 billion in assets under management, Apollo Private Equity has generated a 39%/24% gross/net IRR across its flagship funds since inception. Apollo's success can be attributed to its focus on bespoke capital solutions and flexible mandates, which enable it to embrace complexity and identify compelling opportunities across transaction types, industries, and geographies.

Apollo's commitment to sustainability and ESG initiatives sets it apart from other large PE firms. As of March 31, 2024, Apollo had a 5% carbon reduction target for its latest flagship fund and aimed to achieve $2 billion in spend with diverse suppliers across its PE portfolio. Apollo's tenured team works in partnership with management teams to build stronger businesses, recognizing that one size does not fit all. Apollo's flexible and vast platform enables it to add value throughout the lifecycle of an investment, making it a responsible steward of capital.

Apollo's value-oriented approach and creativity in identifying opportunities have influenced its performance across market cycles. With a flexible mandate, Apollo embraces complexity and allocates capital in attractive risk/reward opportunities in any market environment. Its tenured team, with nearly 20 years of average experience, has a proven track record of investing through market cycles. By providing bespoke, innovative capital solutions and supporting portfolio companies throughout their lifecycle, Apollo has consistently demonstrated its ability to generate attractive returns for investors.

Apollo's strategy of supporting portfolio companies throughout the investment lifecycle has contributed to its ability to generate attractive returns for investors. By offering expertise, support, and resources through Apollo Portfolio Performance Solutions (APPS), the firm helps position each company for growth. This approach, coupled with a value-oriented investment philosophy and a flexible mandate, enables Apollo to allocate capital in attractive risk/reward opportunities across transaction types, industries, and geographies.

Apollo's flexible mandate enables it to identify compelling investment opportunities across different transaction types, industries, and geographies. Its diverse investment portfolio includes buyouts, corporate carveouts, and deleveraging transactions. Apollo's Private Equity platform supports great businesses in their journey toward growth and transformation, providing bespoke, innovative capital solutions. With a vast platform and a team of over 100 investment professionals, Apollo can add value throughout the lifecycle of an investment.

Apollo's commitment to sustainability and responsible leadership drives value creation for its portfolio companies and investors. The firm has set a 5% carbon reduction target for its latest flagship fund and aims to achieve $2 billion in spend with diverse suppliers across its portfolio. Apollo's sustainability initiatives not only align with its ESG principles but also contribute to value creation. By integrating sustainability into its investment strategy, Apollo seeks to enhance the long-term performance of its portfolio companies and generate attractive returns for its investors. This commitment to responsible leadership has been recognized, with Apollo being voted one of "America's Most Responsible Companies" by Newsweek in 2021 and 2022.

Apollo's focus on creativity and flexibility helps it navigate market cycles and maintain a value-oriented approach to investing. With a flexible mandate, Apollo embraces complexity and identifies compelling opportunities across transaction types, industries, and geographies. This adaptability is exemplified by its diverse portfolio, including investments in Yahoo!, Brightspeed, and Sun Country Airlines. Apollo's tenured team, with nearly 20 years of average experience, applies deep expertise to allocate capital in attractive risk/reward opportunities. By offering bespoke capital solutions and engaging with portfolio companies through Apollo Portfolio Performance Solutions (APPS), Apollo creates value and positions companies for growth. This strategy enables Apollo to maintain a responsible stewardship of capital, generating attractive returns for investors while committing to sustainability and diversity.

Apollo's vast platform and deep expertise support its portfolio companies throughout the entire lifecycle of an investment, contributing to alpha generation. Apollo's flexible mandate, deep expertise, and vast platform enable it to add value across transaction types, industries, and geographies. Its Apollo Portfolio Performance Solutions (APPS) offers expertise and resources to position companies for growth, while its commitment to sustainability drives better business outcomes. Apollo's success is predicated on the success of each business within its funds' portfolio, ensuring responsible stewardship of capital.

In conclusion, Apollo's focus on bespoke capital solutions, flexible mandates, and sustainability initiatives has contributed to its success in generating attractive returns for investors. As large PE firms face criticism for losing their alpha edge, Apollo's approach serves as a reminder of the importance of value-oriented investing, creativity, and responsible leadership in navigating market cycles and driving long-term success.