Bloomberg Audio Studios, podcasts, radio news. Bloomberg's Danny Berger sat down with Apollo co president Scott Kleiman, and here's what they have to say.

Bloomberg Audio Studios, podcasts, radio news. Bloomberg's Danny Berger sat down with Apollo co president Scott Kleiman, and here's what they have to say.

Thank you so much for sitting down with me.

Thank you so much for sitting down with me.

It's a pleasure, Danny. Thanks.

It's a pleasure, Danny. Thanks.

So, you've had an investor day, you've had earnings, there's been an election in between. But within all that, you and the team at Apolo said that you wanted to double your au by twenty twenty nine to one and a half trillion dollars. That is a punchy number.

So, you've had an investor day, you've had earnings, there's been an election in between. But within all that, you and the team at Apolo said that you wanted to double your au by twenty twenty nine to one and a half trillion dollars. That is a punchy number.

What gets you there?

What gets you there?

Yeah, you know, Aum, as we always say, is the output not the input. You know, ultimately, if you're able to deliver good investments with good returns, the dollars will come. You know, there is no shortage of asset managers providing beta out in the market.

Yeah, you know, Aum, as we always say, is the output not the input. You know, ultimately, if you're able to deliver good investments with good returns, the dollars will come. You know, there is no shortage of asset managers providing beta out in the market.

You know.

You know.

The key is to be able to provide alpha, and everything we do, the entire way we tune our business is to find those places where we can find excess return in the market. And our investors are apreciate that. And that's really at the end of the day, what's driving it.

The key is to be able to provide alpha, and everything we do, the entire way we tune our business is to find those places where we can find excess return in the market. And our investors are apreciate that. And that's really at the end of the day, what's driving it.

Where do you think is the biggest opportunity to do that right now.

Where do you think is the biggest opportunity to do that right now.

You know, lots of places.

You know, lots of places.

You know, one of the areas we talk about a lot is uh, you know, fixed income replacement. You know, the the market is waking up to the fact that the opportunity to just you know, carry your fixed income portfolio at essentially no access spread is you know nice, But the opportunity cost of doing that is pretty massive. And there are structural ways to earn excess return on that fixing fixed income without taking more risk and without sacrificing.

You know, one of the areas we talk about a lot is uh, you know, fixed income replacement. You know, the the market is waking up to the fact that the opportunity to just you know, carry your fixed income portfolio at essentially no access spread is you know nice, But the opportunity cost of doing that is pretty massive. And there are structural ways to earn excess return on that fixing fixed income without taking more risk and without sacrificing.

Meaningful, meaningful liquidity.

Meaningful, meaningful liquidity.

And you know, more and more investors are opening up to that, and we've proven it with our own balance sheet for many, many years, and that's starting to become attractive to the market.

And you know, more and more investors are opening up to that, and we've proven it with our own balance sheet for many, many years, and that's starting to become attractive to the market.

What about politics as a driver of growth. I know the market is really excited that with a t upcoming presidency they'll be deregulation m and A starts to swell to some degree. Do you share that enthusiasm, Yeah.

What about politics as a driver of growth. I know the market is really excited that with a t upcoming presidency they'll be deregulation m and A starts to swell to some degree. Do you share that enthusiasm, Yeah.

I'd say I'm a little more balanced about it, right, I mean, the economy. Everything starts with the economy, and you know, the economy has been incredibly robust for the last several years in an environment that you know, let's be honest has been you know, fairly anti business from a regulatory, you know environment. I do think, you know, there's hope and expectation with the new administration that there will be a more conducive environment to business, to business.

I'd say I'm a little more balanced about it, right, I mean, the economy. Everything starts with the economy, and you know, the economy has been incredibly robust for the last several years in an environment that you know, let's be honest has been you know, fairly anti business from a regulatory, you know environment. I do think, you know, there's hope and expectation with the new administration that there will be a more conducive environment to business, to business.

Growth, to allowing more M and A and so that should help.

Growth, to allowing more M and A and so that should help.

That should help, But ultimately I think things are dictated more by the underlying economy and business rather than the regulatory environment.

That should help, But ultimately I think things are dictated more by the underlying economy and business rather than the regulatory environment.

That that's an added that that.

That that's an added that that.

Can speed things up or solol things down, but doesn't really change the direction of travel.

Can speed things up or solol things down, but doesn't really change the direction of travel.

There does seem, though, to have been more scrutiny from regulators on private equity, on private capital in general. Do you expect that that's going to ease off.

There does seem, though, to have been more scrutiny from regulators on private equity, on private capital in general. Do you expect that that's going to ease off.

Hopefully?

Hopefully?

No, No, the the reality is there's been a lot of rhetoric. I don't know that there's been meaningfully more definitive regulation, right I think, to be fair, regulators are trying to understand as alternative investments, private equity, private capital becomes a bigger part of investors' portfolios, they rightly want to understand, you know, what it is, what does it do to the systemic risk of the system. I think they're figuring out that it actually doesn't change it. In fact, things like private credit reduce systemic risk. Private equity is an investment product like any other investment product and doesn't necessarily, you know, increase portfolio risk. And so I think the more investigation that's happened, the reality is, the more regulars have figured out that it's not inherently an inherently riskier I do think though the tone at the top matters and the nature of you know, is there a support for business growth, is there support for M and A? Is there support for champions in the US in industry? That makes a difference, and that's what I think we'll see, we'll see more of.

No, No, the the reality is there's been a lot of rhetoric. I don't know that there's been meaningfully more definitive regulation, right I think, to be fair, regulators are trying to understand as alternative investments, private equity, private capital becomes a bigger part of investors' portfolios, they rightly want to understand, you know, what it is, what does it do to the systemic risk of the system. I think they're figuring out that it actually doesn't change it. In fact, things like private credit reduce systemic risk. Private equity is an investment product like any other investment product and doesn't necessarily, you know, increase portfolio risk. And so I think the more investigation that's happened, the reality is, the more regulars have figured out that it's not inherently an inherently riskier I do think though the tone at the top matters and the nature of you know, is there a support for business growth, is there support for M and A? Is there support for champions in the US in industry? That makes a difference, and that's what I think we'll see, we'll see more of.

So to be fair, is it fair to characterize it as animal spirits are going to be awakened regardless of what's happening in DC.

So to be fair, is it fair to characterize it as animal spirits are going to be awakened regardless of what's happening in DC.

I think that's always the case. I think you know, DC can certainly make it more conducive. Okay, yeah, you know. There's other things too though, that I think will benefit. You know, when you think about retirement products, when you think about alternatives for individual investors, I do think there's going to be more interest in that, or more willingness to see that proceed.

I think that's always the case. I think you know, DC can certainly make it more conducive. Okay, yeah, you know. There's other things too though, that I think will benefit. You know, when you think about retirement products, when you think about alternatives for individual investors, I do think there's going to be more interest in that, or more willingness to see that proceed.

Can you get into that a little bit, because I know wealth products are really important from Apollo that that's a huge source of growth. And a lot of the Trump policies, at least as we know what they're likely to be and what he's promised, are going to help a lot of wealthy individuals. How do you sort of make Apollo informant that you can take advantage of some of that to come.

Can you get into that a little bit, because I know wealth products are really important from Apollo that that's a huge source of growth. And a lot of the Trump policies, at least as we know what they're likely to be and what he's promised, are going to help a lot of wealthy individuals. How do you sort of make Apollo informant that you can take advantage of some of that to come.

Yeah, Well, to be fair, we think we know we don't actually know what policies are going to be. What we'll wait and see, But I do think it's less about wealthy individuals and it's more about individual investors in general, you know, retirement accounts, retirement savings. You know, we know for a fact that the excluding alternatives from iras four to one k's other DC plans has been a real detriment. Other countries have figured this out, and you know, for a variety of reasons, we just have not seen that adoption here in the US. I think we're getting closer to a point where with a little more impetus, a little more push, you know, you will see that and that's a huge game changer. Right think about you know, the four to one K market, right, we ask individuals to put money away for the next thirty years to save for their retirement. If we could get them an extra couple of percent, you don't need to take the most extreme risk.

Yeah, Well, to be fair, we think we know we don't actually know what policies are going to be. What we'll wait and see, But I do think it's less about wealthy individuals and it's more about individual investors in general, you know, retirement accounts, retirement savings. You know, we know for a fact that the excluding alternatives from iras four to one k's other DC plans has been a real detriment. Other countries have figured this out, and you know, for a variety of reasons, we just have not seen that adoption here in the US. I think we're getting closer to a point where with a little more impetus, a little more push, you know, you will see that and that's a huge game changer. Right think about you know, the four to one K market, right, we ask individuals to put money away for the next thirty years to save for their retirement. If we could get them an extra couple of percent, you don't need to take the most extreme risk.

Just a couple of percent return.

Just a couple of percent return.

Compound that over thirty years is pretty massive and eventually.

Compound that over thirty years is pretty massive and eventually.

You know, good ideas prevail.

You know, good ideas prevail.

And I think this may be the window where we see that push and that opening from regulators to be able to start doing much.

And I think this may be the window where we see that push and that opening from regulators to be able to start doing much.

More of that elsewhere. There is this fear might be too extreme to explain it, but renewed concern maybe about inflation. And I know your colleague Mark Rowan has talked about that the Fed's cut was a cheap one and perhaps wasn't necessary given the economic strength we've had. The concern also stems from Trump policies too. How concerned are you to be operating potentially in an environment where inflation isn't as tame as we thought it was and maybe is more sticky.

More of that elsewhere. There is this fear might be too extreme to explain it, but renewed concern maybe about inflation. And I know your colleague Mark Rowan has talked about that the Fed's cut was a cheap one and perhaps wasn't necessary given the economic strength we've had. The concern also stems from Trump policies too. How concerned are you to be operating potentially in an environment where inflation isn't as tame as we thought it was and maybe is more sticky.

Yeah.

Yeah.

Look, I've been pretty adamant about this. When we spoke last a few months ago, I said, you know, I think rates are going to be higher for longer because inflation is not tamed. You know, the FED can say what it wants you know, you just have to open your eyes and look around, you know, think about the last flight you were on and how.

Look, I've been pretty adamant about this. When we spoke last a few months ago, I said, you know, I think rates are going to be higher for longer because inflation is not tamed. You know, the FED can say what it wants you know, you just have to open your eyes and look around, you know, think about the last flight you were on and how.

Crowded it was.

Crowded it was.

Or the fact that you're paying eighty five dollars for a stake and next week it'll probably.

Or the fact that you're paying eighty five dollars for a stake and next week it'll probably.

Be ninety dollars, you know. Or housing prices right.

Be ninety dollars, you know. Or housing prices right.

Everywhere people want to live, right, there's not enough homes. Housing prices are going up, notwithstanding you know, the backdrop of the rate environment, and so we see inflation not as beaten but as suppressed. And the more the FED cuts, the more you're lifting your hand off that off that lever to hold inflation down. And and look, nobody's got a crystal ball. But you know, we live in a world that is inherent The mega trends that are driving the world today.

Everywhere people want to live, right, there's not enough homes. Housing prices are going up, notwithstanding you know, the backdrop of the rate environment, and so we see inflation not as beaten but as suppressed. And the more the FED cuts, the more you're lifting your hand off that off that lever to hold inflation down. And and look, nobody's got a crystal ball. But you know, we live in a world that is inherent The mega trends that are driving the world today.

Are pretty inflationary.

Are pretty inflationary.

You have things like the build out of the digital infrastructure, so between you know, chip fabs and data centers and the power that's I mean, that's one hundred trillion dollars we have to spend over the next decade. Uh the uh you know, decarbonization, the deglow mobilization of the economy. All of these things are inherently very inflationary. Then later on top of that, what might be you know, some of the new administration's policies that are you know that sound inflationary, you know, deficit spending, some of these other programs that are going to add to inflation. It's it's very hard to say that inflation is beaten or inflation is over. That doesn't mean inflation is going to run away. It just means we're going to have to live with a higher rate environment for a lot longer.

You have things like the build out of the digital infrastructure, so between you know, chip fabs and data centers and the power that's I mean, that's one hundred trillion dollars we have to spend over the next decade. Uh the uh you know, decarbonization, the deglow mobilization of the economy. All of these things are inherently very inflationary. Then later on top of that, what might be you know, some of the new administration's policies that are you know that sound inflationary, you know, deficit spending, some of these other programs that are going to add to inflation. It's it's very hard to say that inflation is beaten or inflation is over. That doesn't mean inflation is going to run away. It just means we're going to have to live with a higher rate environment for a lot longer.

And you've been really good and really right on this idea that we're going to have a higher rate environment. And one of the things you said at a conference in Berlin this year, in what feels like a lifetime ago in June is that not everything is going to be okay, that we're going to have some refinancing coming into the market and it's going to be a problem for a lot of private capital. Again, that was in June. Is the moment of racketing nine.

And you've been really good and really right on this idea that we're going to have a higher rate environment. And one of the things you said at a conference in Berlin this year, in what feels like a lifetime ago in June is that not everything is going to be okay, that we're going to have some refinancing coming into the market and it's going to be a problem for a lot of private capital. Again, that was in June. Is the moment of racketing nine.

Now for sure, I mean we're getting you know, closer and closer to this the as I alluded.

Now for sure, I mean we're getting you know, closer and closer to this the as I alluded.

To back then.

To back then.

You know, the private equity industry, you know, invested in a lot of companies, you know, over the say, the five years leading up to twenty twenty two before the rate change happened, good companies, but at very full prices. So sitting here today, when private equity companies would firms would be normally selling their portfolios, there's stuff they're holding on to, big portfolios of good companies.

You know, the private equity industry, you know, invested in a lot of companies, you know, over the say, the five years leading up to twenty twenty two before the rate change happened, good companies, but at very full prices. So sitting here today, when private equity companies would firms would be normally selling their portfolios, there's stuff they're holding on to, big portfolios of good companies.

Right.

Right.

I'll positive that most of these investments are good investments. They just paid too much for them given the current rate environment, and so they are saleable, but maybe not at prices that these private equity firms would be happy with, and so they're gonna hold on to them. And by holding on to them, you have grumpy LPs who aren't getting their cash back at the rate they thought. And then you also have refinancing issues. Right, Okay, well, now I'm holding this longer, I have to refinance it, and so how do I do that. Some companies will have no problem, others will have to start being a little more creative. And we're absolutely we're absolutely seeing that part of our business model is to help those companies, the other sponsors that you might need capital somewhere in their capital structure to help get through this next hump, because again, most of these companies are actually good companies. The sponsor just paid the wrong price for it.

I'll positive that most of these investments are good investments. They just paid too much for them given the current rate environment, and so they are saleable, but maybe not at prices that these private equity firms would be happy with, and so they're gonna hold on to them. And by holding on to them, you have grumpy LPs who aren't getting their cash back at the rate they thought. And then you also have refinancing issues. Right, Okay, well, now I'm holding this longer, I have to refinance it, and so how do I do that. Some companies will have no problem, others will have to start being a little more creative. And we're absolutely we're absolutely seeing that part of our business model is to help those companies, the other sponsors that you might need capital somewhere in their capital structure to help get through this next hump, because again, most of these companies are actually good companies. The sponsor just paid the wrong price for it.

Is the matter made even worse at this moment though, than it looked in June, considering we might have more inflationary policies coming in twenty twenty five.

Is the matter made even worse at this moment though, than it looked in June, considering we might have more inflationary policies coming in twenty twenty five.

I think it only lends credence to my theory.

I think it only lends credence to my theory.

You know, we'll put it that way, okay, I think that's a great way to put it. The other thing we talked about at that time was you had done a JV with Intel to build out a big factory in Ireland.

You know, we'll put it that way, okay, I think that's a great way to put it. The other thing we talked about at that time was you had done a JV with Intel to build out a big factory in Ireland.

You said you.

You said you.

Wanted to do more deals like that. What does the pipeline look like for now? These energy necessary for AI type deals.

Wanted to do more deals like that. What does the pipeline look like for now? These energy necessary for AI type deals.

Pretty massive, you know, there are, and you know the energy is one component, but everything I was talking about, the de globalization, the digital infrastructure, the decarbonization, all of these things are massive capital you know, needs for companies, and these companies just don't have access to all the capital they need, and so finding ways to partner with these companies bringing the right cost of capital to the right situation really spanning everything from investment grade always to private equity and everything in between, really is the future. And that's going to be you know, the name of the game for years to come. I mean, we're talking about hundreds of trillions of dollars that need to be spent. There there's room for us ten times over, you know, and lots of others. And that's you know, that's the exciting opportunity. And being able to you know, partner with lots of amazing companies is what is what makes it great.

Pretty massive, you know, there are, and you know the energy is one component, but everything I was talking about, the de globalization, the digital infrastructure, the decarbonization, all of these things are massive capital you know, needs for companies, and these companies just don't have access to all the capital they need, and so finding ways to partner with these companies bringing the right cost of capital to the right situation really spanning everything from investment grade always to private equity and everything in between, really is the future. And that's going to be you know, the name of the game for years to come. I mean, we're talking about hundreds of trillions of dollars that need to be spent. There there's room for us ten times over, you know, and lots of others. And that's you know, that's the exciting opportunity. And being able to you know, partner with lots of amazing companies is what is what makes it great.

I just want to end with maybe throwing out a little bit of red meat to the team at Apollo. Private equity bonuses, according to Johnson Associations, are set to rise in twenty twenty four. That's even excluding carried interest. Is twenty twenty four to be a good year for bonuses.

I just want to end with maybe throwing out a little bit of red meat to the team at Apollo. Private equity bonuses, according to Johnson Associations, are set to rise in twenty twenty four. That's even excluding carried interest. Is twenty twenty four to be a good year for bonuses.

Scott, Danny, you're killing me. Uh no, it's it's it's it's a good year. You know, Apollo has been blessed.

Scott, Danny, you're killing me. Uh no, it's it's it's it's a good year. You know, Apollo has been blessed.

We We've had amazing momentum and continue to have amazing momentum.

We We've had amazing momentum and continue to have amazing momentum.

You know.

You know.

Fortunately, most of our employees are stockholders, and uh, you know, we're working really hard for our our team, our investors, and our shareholders.

Fortunately, most of our employees are stockholders, and uh, you know, we're working really hard for our our team, our investors, and our shareholders.

It's a great note to end it on, Scott, Thank you so much.

It's a great note to end it on, Scott, Thank you so much.

Thank you.

Thank you.

Bloomberg's Danny Berger with Apollo co president Scott Kleinman,

Bloomberg's Danny Berger with Apollo co president Scott Kleinman,