Blackstone VS Apollo
In addressing the top-tier financial service firms, Blackstone and Apollo Global Management are the first considerations. Blackstone is a leading global investment management firm specializing in alternative asset management and financial advisory. With an intense size of assets under management(AUM) and a diverse portfolio including private equity, real estate, hedge fund solutions, and credit, Blackstone has proven to be one of the most influential providers of alternative assets worldwide.
On the other hand, Apollo Global Management is another leading global investment management firm also focusing on alternative asset management. While both firms operated within the alternative asset management sector, they diverged in their core business focuses.
Blackstone prioritizes alternative asset management services as its core revenue generator, whereas Apollo Global Management operates with a dual focus on retirement service and alternative asset management including private equity, credit, and real assets as the main revenue generators.
As of December 2023, Apollo Global Management reported assets under management (AUM) of $512.8 billion while Blackstone has an AUM of $1.04 trillion.
By looking at Apollo Global Management in the macro picture, the total assets have experienced sharp increases starting from 2022. In the past 10 years, the total asset was floating from $5 billion to $30 billion. However, in 2022, the total assets sharply increased from $30.5 billion to $257.2 billion, accounting for a 7.4X increase(Yahoo Finance). This increase is mainly driven by the acquisition of a retirement services business – Athene– that occurred in January 2022.
With two major business segments —asset management and retirement services—operated by Apollo Global Management, the retirement service segment generated the highest revenue. Based on the financial report of 2023, the retirement service sector accounted for 89.3% of the total revenue, reaching $29,137 million. On the other hand, the asset management segment made revenue of $3,507 million, accounting for 10.3% of the total revenue.
Moreover, splitting both segments into small sectors in analyzing the revenue and the corresponding costs, insurance premiums and net investment income in the retirement service segment generated the highest revenue in the retirement service segment, accounting for 85.2% of the total segment revenue. In terms of expenses, both future policy & other policy benefits and insurance-sensitive contract benefits generated the highest costs, accounting for 87.6% of the total segment expenses. In addition, the administrative-related costs only account for 7.8% of the total segment expenses, reaching $1,837 million in 2023. By calculating the administrative cost-to-revenue ratio, the retirement service segment reported a ratio of 6.3%
In contrast, the asset management segment performed poorly with a net income of 20 million in 2022 followed by a net loss of $87 million in 2023. The leading revenue generators derive from management fees and investment incomes, contributing 80% of the total segment revenue in 2023. In the corresponding expenses related to the segment, both compensation & benefits and general administrative costs contributed to the highest expenses, accounting for 96.1% of the total segment expenses. In calculating the administrative cost-to-revenue ratio, the asset management sector revealed poor performance by reporting a ratio of 102.5%. When considering the company as a whole, Apollo Global Management reported an administrative cost-to-revenue ratio of 16.6%.
Unlike the drastic changes in the total assets of Apollo Global Management, Blackstone reported a consistent increasing trend from 2010 to 2023. During this period, Blackstone’s total assets steadily increased from $13.48 billion in 2010 to $40.29 billion in 2023. Regarding the business structure of Blackstone, asset management services are the core business segment driving its overall operations. In 2023, Blackstone reported a revenue of $8 billion with fee-related earnings of $4.3 billion. The major expense incurred by the compensation & benefits costs, accounting for 41.3% of the total revenue. Compared to the financial performance in 2022, total revenue decreased from $8.5 billion to $8 billion with a decrease in fee-related earnings of 1%. Thus, in calculating the administrative cost-to-revenue ratio, the ratio remained unchanged from year to year. Additionally, in 2022, the ratio was 54.3% and had slightly increased to 55.2% in 2023.
In comparing the performance of Apollo Global Management and Blackstone, they reported distinct strategic focuses in their operations. Blackstone emphasized the asset management service, with an administrative cost-to-revenue ratio of 55.2%, which consistently outperformed Apollo Global Management in the same area.
With nearly double the assets under management(AUM) compared to Apollo Global Management, Blackstone captured more market attention and demonstrated itself as the dominant player in the asset management industry.
However, Apollo Global Management presented a different focus other than asset management service, emphasizing the development of its retirement service. While Apollo may lag behind Blackstone in the size of AUM and earnings in the asset management segments, the company reported higher total assets and proved significant performances on its retirement service, which drives the total revenue of the firm way larger than the earnings for Blackstone.
Lastly, in 2023, Blackstone reported a total revenue of $8 billion while Apollo reported a total revenue of $32.6 billion. Therefore, unlike the pure focus on the asset management service from Blackstone, Apollo Global Management may consider its asset management service as a way to capture investors’ attention in supporting the growth of its retirement service segment, eventually achieving the success of the firm.
Blackstone VS Apollo Written by Qianhang Huang
References:
Apollo Global Management Total Assets 2010-2023: APO. Macrotrends. (n.d.-a). https://www.macrotrends.net/stocks/charts/APO/apollo-global-management/total-assets
Apollo reports fourth quarter and full year 2023 results. Home. (n.d.). https://www.apollo.com/insights-news/pressreleases/2024/02/apollo-reports-fourth-quarter-and-full-year-2023-results-2825842
Blackstone reports fourth quarter and full year 2023 … (n.d.-a). https://www.blackstone.com/wp-content/uploads/sites/2/2024/01/Blackstone4Q23EarningsPressRelease.pdf
Blackstone reports third quarter 2021 results. (n.d.-b). https://www.blackstone.com/wp-content/uploads/sites/2/2021/10/Blackstone3Q21EarningsPressRelease.pdf
Blackstone Total Assets 2010-2023: BX. Macrotrends. (n.d.-b). https://www.macrotrends.net/stocks/charts/BX/blackstone/total-assets
Blackstone Total Assets 2010-2023: BX. Macrotrends. (n.d.-c). https://www.macrotrends.net/stocks/charts/BX/blackstone/total-assets
Published by Statista Research Department, & 11, M. (2024, March 11). Largest PE firms worldwide by AUM 2023. Statista. https://www.statista.com/statistics/235673/largest-global-private-equity-companies-by-aum/
Yahoo! (2024, March 19). Apollo Global Management, Inc. (APO) balance sheet. Yahoo! Finance. https://finance.yahoo.com/quote/APO/balance-sheet
