During the Apollo Investor Day in 2024, Apollo's CEO Marc Rowan, a PE giant, delivered a speech, stating that the global asset management industry's good luck of the past fifteen years has come to an end. In the future, one must seize four huge opportunities, which will not only be beneficial to Apollo but is also expected to benefit the entire industry.

These four major opportunities involve global industrial revival, huge capital needs of global large companies, retirement market's significant demand for fixed income, and rethinking the public offering and private equity markets.

Among them, global industrial revival involves long-term and complex capital needs for infrastructure, energy transformation, next-generation data, and electrical utilities. The retirement market has a substantial demand for fixed income, especially individual investors have great demand for alternative investments, fixed income, and other opportunities.

Rethinking public offering and private equity assets involves challenging traditional concepts. In the current market environment, private equity assets and public offering assets both have security and risk aspects, which may promote the trend of private equity assets as alternatives in the fixed income and stock sectors.

The summary of the key points of the full text is as follows:

• In 2008, the assets under management of all our peer companies were $40 billion. By the end of 2023, our managed assets increased to $650 billion. Our assets grew 16 to 17 times. No financial services company could grow like this. Our growth actually surpassed Apple, Microsoft, and almost every growing company you can think of.

• Our intelligence lies in positioning our business ahead of the 'tailwind,' driving a sevenfold increase in business revenue. In 2008, every existing global financial institution adopted a defensive strategy. We were fortunate to establish a new financial institution in 2008, basically being in an 'attack mode' for most of these fifteen years.

• I have always emphasized that change is coming, the tailwind that has been driving our development is no longer there, and there will be new trends. It is a mistake to think that continuing to repeat past practices will lead to success, we must adapt and change, not only for us but for the entire industry as well.

• Global industrial renaissance, huge capital needs for global large companies. In addition to the tens of trillions of dollars borrowed by the U.S. government each year, this capital is used for infrastructure, energy transformation, next-generation data, and electrical utilities.

• Forty years ago, Australia adopted a method called the retirement savings system, a great way for investors to include private assets with public assets in a portfolio under appropriate supervision. After forty years of compound interest, the results are simply amazing. I believe we are at the crest of re-examining this opportunity, just beginning with Athen.

• Looking back at the retirement market, it is a huge opportunity, there is a great demand for fixed income, especially from individual investors for alternative investments, fixed income, and other opportunities, it is just the beginning. Just this business alone can double our industry and company.

• I think this is the most direct, most concrete opportunity, and the fastest developing opportunity, which is to rethink the public and private markets. Private equity, venture capital, and hedge funds are the only three products in the private market, they are indeed good investments but come with risks. I believe the world we live in today is both safe and risky for private markets and the same goes for the public markets.

• In the technology ecosystem, it is natural for us to think that companies like OpenAI or Spotify can remain privately owned for the long term and raise equity. So, why can't this be more universally applicable?

Below is the full text of the speech, with some content omitted:

In the past fifteen years, asset management has grown 16 to 17 times, surpassing Apple and Microsoft.

Good morning everyone, I am Marc Rowan, the CEO of Apollo. It is the best time to develop a five-year plan, where we have compressed all plans into a very short time frame, and all difficult decisions are now laid out before us.

In terms of financial goals, we are looking at an average annual growth of 20% over the next five years, with $15 per share, a capital of $21 billion, but the only number I really want you to focus on is the annual issuance volume of $275 billion, which will be more critical for our industry.

Looking back at the history of our industry's development, we have been very fortunate as our revenue has grown sevenfold. But let me give you a more interesting data point, back in 2008, the total asset management of all major companies in our industry was $40 billion, with each individual having $35 billion in private equity and $5 billion in other assets, which were credit.

By the end of 2023, our managed assets have increased to $650 billion, our assets have grown 16 to 17 times, no financial services company can grow like this, our growth actually surpasses Apple, Microsoft, and almost every other growth company you can think of. Do you think we are lucky or smart?

The streak of good luck over the past fifteen years has come to an end, and we must adapt and change.

We are fortunate, and we are smart because we positioned our business before the 'tailwind' arrived, driving a sevenfold increase in business revenue and achieving a 16 to 17 times growth in total managed assets.

In 2008, every existing financial institution globally adopted a defensive strategy, and we were fortunate to establish a new financial institution in 2008, basically being in an 'attacking mode' for these fifteen years. Another thing that happened is, as governments around the world adopted zero interest rate policies after the financial crisis and during the COVID-19 pandemic, everyone seeking returns from policyholders, retirees, and counterparties found us.

These two favorable trends not only drove us, but also the entire industry. However, we must also clearly understand that these favorable trends no longer exist. This is another thing that we at Apollo are truly striving for. The industry has been so successful, our company has been so successful, figuring out how to make the organization win rather than just not lose, may have consumed much of our management time.

We woke up the team at 4:30 in the morning to hold a meeting, to demonstrate that we need to sound the alarm and do something different. We invited external speakers to alert everyone, we have cautionary tales, our goal is to win, and I have always emphasized that change is coming, the tailwinds that have been driving our development are no longer there, there will be new trends.

If we think that continuing to repeat past practices will lead to success, that is wrong, we must adapt and change, this applies not only to us but also to the entire industry.

How did we grow? We basically stayed ahead of these powerful tailwinds by focusing on capabilities. The entire industry and our company initially were both private equity, we were a small business, but there were huge opportunities ahead of us.

Following the global financial crisis, crediting and Athene have been the main drivers of our growth over the past few years. Many investors asked during investor day, why merge with Athene and what can be gained from it?

We gained a lot from it, the entire business is built around the retirement ecosystem, Athene holds an indispensable central position in our strategy, they essentially brought us into the platform business and capital solutions business.

One of the four huge opportunities - global industrial revival, huge capital needs of global large corporations

Let's start from reality. We are a small asset management company, managing assets exceeding 700 billion, while today the big four have all surpassed 10 trillion dollars. If we achieve great success, our business scale will double in five years, but we still won't have a place in the scale of large asset management.

I believe that to some extent, this is the most exciting and rewarding part of the strategy. We have four amazing opportunities in front of us that can drive our business forward. If any one of these opportunities is executed well, it is enough to double our business. Our current task is to focus, execute, and position ourselves in front of these four tremendous opportunities.

Global industrial revival, huge capital needs of global major companies. In addition to the tens of trillions of dollars borrowed by the usa government each year, these funds are used for infrastructure, energy transformation, next-generation data, and electrical utilities. These projects have long cycles, high complexity, and require creativity. In many cases, we are providing financing for consortiums supported by major companies, who do not want assets to appear on their balance sheets but seek the capabilities within.

Long-term solutions cover various capital costs, which are not truly suitable for banks' balance sheets that provide short-term funds for themselves and are not suitable for the average person in the bond market.

In every society, there are only two sources of debt capital: it can come from the banking system or it can come from the investment market, with no other options. Around the world, banks are required to do less, and investors are required to do more.

When we provided initial investment-grade financing for AB InBev several years ago, many, including competitors, said, 'You can only do 4 billion usd last.' However, that was before reaching 100 billion usd, with only intel having 11 billion usd. This is just the beginning, a long-term trend in our business.

The retirement market has a significant demand for bonds.

Regarding retirement, whether good or bad, we are all getting older. As a society, we are doing poorly in retirement planning, these statistics are well known. The vast majority of americans are not adequately prepared for retirement. Think about the world's largest group of retirees and how they save. In the usa, we have 12 to 13 trillion usd in 401K plans. They are mainly invested in daily liquid401Kplans.index fundsMost of it is the S&P index, which has been going on for fifty years.

Basically, we have 10 stocks from the USA's retirement savings, accounting for 39% of the S&P index, with four of these stocks determining 100% of the returns in recent years. Sometimes I joke that we attribute the entire US retirement success to Nvidia's performance, which may not sound intelligent, and we are actively addressing this issue.

Every day we see new products, new methods, new supplements happening. From a retirement perspective, the most successful country in the Western world is Australia. Australia adopted a method called the retirement pension system forty years ago, a good way for investors to include private assets with public assets in a portfolio under proper supervision. The results after forty years of compounding are simply amazing. I believe we are at the forefront of reexamining this opportunity, with Athene (Apollo Global Management's retirement business) just getting started.

We focus on how to succeed, essentially leveraging existing products and industry trends and making them more optimized, which has been very impressive. We have not truly demonstrated its potential yet. In the coming years, you will see more because our competitors are just starting to think about our business that we initiated and led fifteen years ago.

We are in the early stages of pioneering this business and exploring the products and delivery methods of this business. I am confident we will succeed. This is not just an Apollo opportunity, it is an opportunity for large companies, but not every alternative investment company has such an opportunity.

I know we will succeed because I see the most sophisticated individual investors, namely family offices. Family offices now have over 50% in private assets. For us, family offices are essentially institutions, they are typically not guided by advisors, other benchmarks, or restrictions, but are guided by common sense and risk-return principles. This is a huge market. They are not restricted by benchmarks; they actually show the future to institutions.

Let me go to the bottom of the pyramid, the mass affluent segment. We do not believe Apollo or our peers will directly serve the mass affluent market. These people are hard to reach, they have established relationships, usually well-serviced, typically not serviced by individual advisors, and do not receive advice in very limited circumstances.

This does not mean they will not have private equity assets. Whether working with us or with our peers at Capital Research Global Investors, I believe this mass affluent market will be served by their existing asset managers and advisor relationships, and the product mix will change.

Our industry, especially our Apollo Global Management, will become a supplier to the high-net-worth market segment. Talking to high-net-worth investors is very rewarding because you can clearly understand your position before you leave, and sometimes even leave with an order, which is truly satisfying.

Looking back at the retirement market, this is a huge opportunity with a great demand for fixed income, especially as individual investors have a great demand for alternative investments, fixed income, and other opportunities, which is just the beginning.

Rethinking the public and private markets, both are safe and risky.

What excites me the most is that I think this is the most direct, most concrete opportunity, and also the fastest growing opportunity, namely, rethinking the public and private markets. Face the reality, for those who have been working in this industry for forty years, we inherently think that private equity is risky but public markets are safe because that's how it was forty years ago. Private equity only has three products: private equity, venture capital, and hedge funds, although they are actually good investments, they all carry risks.

While the public market has 8000 listed companies, a diversified investment portfolio of stocks and bonds. But what if the public market is both safe and risky? We are not concerned at all about a 20-30% fluctuation in Nvidia within a day, there is a lot of volatility in equities, but we do not consider this a risk. However, even a small deviation in the private market makes us lose our rationality. I believe the world we live in today is a private market that is both safe and risky, as is the public market.

The existence of credit rating agencies actually tells investors that certain things in the private and public markets have the same credit quality, allowing investors to make decisions about liquidity or illiquidity, and to clearly weigh the risks and returns. Everything in the public market that is investment-grade will exist in the private market.

We will start making markets, and once we start, I believe others will follow suit. The 8000 listed companies that made up diversified investment portfolios in the past have now been reduced to 4000, with fewer than 100 companies listing each year, while over 100 companies are privatized each year.

We naturally assume in the technology ecosystem that companies like OpenAI or Spotify can remain private in the long term and raise equity. So why can't this be more broadly applicable?

I think in the future, today we will talk about fixed income substitutes, but I think in the future we will talk about stock substitutes. Today, there are so many passive components in the market, active management accounts for a very small percentage. But more importantly, active management has actually failed. When a business fails to outperform the index for over 90% of the time in twenty years, the market structure has indeed changed.

Especially for daily liquid funds, profitability becomes more challenging and requires more skills. For those who can do it, I salute you, because it is indeed a very difficult task. I believe that future investors will have private equity, not in a fund without leverage, where active management may actually involve actively trading stocks, but also could be actively managing the company's operation. Today, we have a business called 'mixed investment,' and you will hear that it will grow exponentially.

Our industry, these four major trends, are not only available to Apollo, they are available to the entire industry, and I expect the entire industry to benefit from them. However, I believe we have positioned ourselves better to be able to profit accurately from changes in the market.

We continue to evaluate our business, and we continue to move towards success through indicators such as asset management scale and capital raising. I believe in the next few years, we will actually transition to thinking about the factors that truly constrain our business.

If we are right, we will have demand for private equity from retirees, demand for private equity from individuals, demand for private equity in the fixed income sector from institutional clients, and ultimately demand from them in the stock sector. I believe all of these demands will create an industry that is double or triple the size of today.