Q3 2019 Earnings Call

Earnings Conference call.

During today's presentation, all callers will be placed in listen only mode and following management's prepared remarks, the conference call will be open for questions.

This conference call is being recorded.

This call May include forward, looking statements and projections, which do not guarantee future events what performance.

Please refer to Apollo's most recent FCC filings for risk factors related to these statements.

Apollo will be discussing certain non-GAAP measures on this call, which management believes are relevant in assessing the financial performance of the business.

non-GAAP measures are reconciled to GAAP figures and Apollo's earnings presentation.

She is available on the company's website.

Also note that nothing on this call constitute an offer to sell or solicitation of an offer to purchase an interesting any Apollo fund.

The guy like to turn the call over to Gary Stein head of Investor Relations.

Thanks, Operator, welcome to our third quarter 2019 earnings call. Joining me. This morning, our Josh Harris co founder and senior managing director and Martin Kelly, Chief Financial Officer encodes Chief operating Officer, Jim Zelter Co President Gary part senior managing director are also here with us and will be available during the Q and a portion of today's call.

Earlier. This morning reported distributable earnings of 54 cents per share, which led to a cash dividend of 50 cents per share for the third quarter. The quarters distributable earnings were primarily driven by pre tax fee related earnings were 40 or 52 cents per share.

As a reminder, we'll be hosting an investor day next Thursday November seven and we look forward to engaging with all of you there.

With that I'll turn the call over to Josh Thanks, Gary and thanks, everyone for joining us.

Looking back on our performance over the third quarter and the last 12 months.

We continue to move a path forward in terms of our financial results as well as our strategy.

Regarding our financial performance.

We've grown a AUM and fee generating a 19% year over year, whatever he has grown by 30% during the same period.

From a strategic standpoint, we have also been active in a number of ways.

Okay.

On September says, we completed our conversion.

I'm a publicly traded partnership to a C Corporation.

We've been very pleased with the reaction since we announced our conversion we believe the positive effects R&D becoming evident.

Our average daily volume volume has more than doubled from pre conversion levels to 2.6 million shares currently.

We have recently been added to the Chris indices, which for example.

Resulted in the purchase of nearly 13 million shares by Vanguard.

End of September .

We've seen a meaningful shift and apollo's ownership days towards large institutional investors essentially now would be converted.

We believe the growth in long only in passive ownership of our stock has only just begun.

And is already grown from 35% of our flow to more than 50%.

We think we're only in the middle innings in terms of realizing the benefits of our C. Corp. conversion.

Leave we will continue to see a transition of our shareholder base going forward.

We expect to be added two additional indices over the next few months such as MSC I.

And we've also been actively engaging with large long only in institutional investors they could not on our stock prior to conversion.

Ultimately.

Based on what we have seen from some of our parents that converted before Hello.

We believe that more than 70% of our public float.

On slide long only enhances investors [noise].

Which would be more than twice our level prior to conversion.

In addition, as many of you know earlier this week, we announced a strategic equity exchange transaction was the scene.

Through this unique transaction, we are more than doubling Apollo.

And certain of its related parties and employed ownership stake and his team from 17% to approximately 35%.

At the same time seen will be eliminating its dual class structure and taking approximately 7% stake at Apollo.

Making marking the first time that they love a direct economic interest in our financial success.

In total we are investing $1.55 billion this transaction.

Which includes the exchange at 1.2 billion of common equity with a fan.

And the purchase of an additional 350 million of in seeing common stock.

As we said on Monday, we are doing it's because many investors were telling us that the structure of the themes Super voting shares held by Apollo.

Well they negative on the valuation of a theme at Apollo shares for scene that concern was that a policy not have enough capital at risk while managing the assets.

So there was an unfounded concern upon me might take too much risk or causes seem to grow on profitably.

Apollo.

There was concern that machine would want to change the asset management contract because we were not fully aligned with that.

Although we thought the concerns and founded we listen.

We believe we now have a stronger we now have stronger alignment to ensure the durability of the relationship.

We believe our investment in a team.

As a great example of our highly efficient use of apollo's balance sheet to pursue to pursue strategic capital initiatives.

And occasionally scene.

Warm up for this transaction Apollo will have an investment at these equity valued at approximately $2.3 billion.

Which has helped create and growing business, where we manage approximately 125 billion of assets.

In connection with Apollo ongoing efforts to drive it feeds strategic growth.

We have now closed $3 billion of capital commitments today.

For investment into it seems strategic capital vehicle, which we refer to as a debt.

When this third party capital vehicle as combined with a gain standalone capital.

Cumulative buying power represents more than $70 billion of potential incremental assets were seen through M&A and pension risk transfer transaction.

In addition to the C Corp conversion and a theme transaction.

From a strategic standpoint, we've also continue to make progress on building a apollo's direct origination platforms.

During the quarter, we announced the acquisition of GE capital's industry, leading aviation lending business.

Okay Air Finance.

Which is highly complimentary to our existing.

Also during this quarter Midcap financial.

Specialty finance for managed by Paul Capital Management.

Marty franchise finance business from PNC bank broadening their range of origination capabilities.

We continue to make significant progress in terms of expanding our origination platforms.

And we very much look forward to sharing the details with you at next week's Investor day.

Before I turn the call over to Mark I'd like to make a comment about our senior leadership team.

We continue to be focused on building a great.

We've been a promoting hiring in developing the vacuum of writers in the industry in a variety of leadership position.

And we look forward to share more details about this at our Investor day.

With that I'll turn the call over to Mark.

Great. Thanks, Josh starting with the results for the third quarter, we continue to demonstrate the strength and stability and growth that fee related earnings on a year over year basis, which supported distributable earnings of $220 million will 54 cents per share.

Pre tax fee related earnings of $213 million, well 62 cents per share we're complemented by modest realized performance fees unrealized investment income.

Basically generated by private equity segment.

For the 12 months ended September 30, 29, saying, if I read totaled $2 23 per share.

Reflecting 30% growth over the prior year period.

This growth was supported by 19% management fee growth.

And an emphasis on efficiency and cost discipline driving margin expansion.

In the third quarter management fees grew 3% quarter over quarter, and 11% year over year, driven by strong inflows across the platform.

Advisory and transaction fees were lighter in the quarter due to the timing of deal closings.

We expect fourth quarter advisory and transaction fees to increase based on several transactions that we expect will close within the quarter.

Costs increased in the quarter driven by increases in headcount as we invest in our business.

Performance fees grew quarter over quarter, but remain modest consistent with our expectation that performance phase will be more back loaded for the year.

We declared a 50 cent per class a share dividend in a light realization and light advisory and transaction fee quarter, bringing the total phosphate cash distribution for the 12 months ended September Thirtyth 29 chain.

To $2.02 per share.

Turning to investment performance and net accrued performance fees balance grew 25% in the quarter supported by positive marks across our private equity credit and real assets businesses.

And reached its highest level in nearly two years.

In private equity funds, we manage appreciated by 3.6% in the quarter. Despite some energy headwinds as revenue and EBITDA growth remained consistent with long term trends.

The successful IPO of right at the beginning of the fourth quarter and increasing visibility into other monetization processes also added supports a third party marks.

Third quarter much.

Our funds private portfolio company holdings appreciated by 4.6% during the quarter.

While the funds public holdings depreciated by 0.6%.

Impacted by Mark to market adjustments on debt investments.

Importantly fund eight appreciated by 7.6% in the quarter, bringing 2019 year to date appreciation to approximately 17%.

In credit we generated positive performance across the board with gross returns of 1.8% for each of corporate credit and structured credit.

And 2.9% for direct origination.

Outperforming the S&P leverage loan index total return of 1% and the Merrell high yield index return of 1.2%.

Within our credit business energy constitutes just 2% or $1.7 billion of our credit I'm, excluding a thing.

During the quarter, there was negligible impact to credit results from energy.

In real assets performance remained strong with aggregate appreciation, excluding real estate that of 4.6% for the quarter.

And approximately 11% for the 12 months ended September 30.

I'd now like to move on to asset growth, which forms the basis for growing management fees and ultimately fee related earnings.

During the third quarter Polish oil gross inflows of $16 billion driven by a scene on a thorough flaws and capital raising across a number of funds.

We held first close as far out FC I for Us real estate, three and navigator funds during the quarter.

Navigate a represents our first dedicated fund related to aircraft leasing.

Strategy, we've been active and for many us.

During Q3, we closed on $500 million for eight it fund and as Josh mentioned, we just closed on an additional $1.5 billion.

Over the last four quarters gross inflows have totaled $75 billion.

Our asset raising remains robust consistent with the growth trends, we've been able to demonstrate not just over the past three or five years, but since our IPO eight years ago.

We think credit fee generating inflows totaled $9 billion during the quarter.

And $48 billion over the 12 months ended September 30, 29 chain.

Looking ahead, we rent we remain confident in our ability to drive strong AUM growth across the platform.

You'll buy fund raising across strategic capital initiatives vehicles focused on strategies within each of our businesses and ongoing capital raising for managed accounts.

With regards to deployment funds managed by Apollo put $3 billion of capital to work across commitment based funds.

And over the last 12 months capital capital deployed and commitment based funds were $17 billion.

This is in addition to capital we've put to work across managed accounts evergreen funds and other investment structures.

During the quarter private equity fund nine closed on its take private acquisition of Shutterfly, which marks the trough public company within the last four years to be taken private.

In addition, our hybrid value fund remained active and is now approximately 40, 40% committed or invested.

After having just held its final closing much reflecting the strong pipeline in place for our newest private equity strategy.

Looking ahead, we continue to identify and evaluate and active pipeline of investment opportunities across a broad spectrum of asset classes.

And we're optimistic about our ability to deploy capital at a solid face in various market environments.

Finally, as it relates to realizations, we sold shares during the Virginia IPO earlier, this month and have visibility into several transactions some of which have already been announced that should contribute to fourth quarter performance fees.

As we mentioned during last quarter's call. We also expect that the crystallization of carry in several credit funds should be additive to fund eight monetizations in the fourth quarter.

Partially offsetting these higher realizations in the fourth quarter will be an elevated profit share expense of approximately $50 million related to our incentive pool.

Depending on the timing of the close of the sale of Presidio, We expect that net carry realized in 29, saying well, we inline with or higher than it was in 2018.

With that we'll now turn the call back to the operator I'd like from the Lion for any of your questions.

Thank you Sir the floor is now open for questions. If you wish to ask a question at this time. Please press Star then the number one on your telephone keypad.

It's a question has been answered you may remove yourself from the Q by pressing the pound team.

For today's call, we will be taking only one question per person initially and to the extent their follow up questions. We ask that you. Please reenter the queue Biden pressing star then the number one on your keypad.

Our first question comes from the line of Craig Seigenthaler of Credit Suisse.

Thanks, Good morning, everyone.

Morning.

Can you walk us through the composition of the 8 billion of credit inflows in the quarter by product.

Sure most of that was what's coming through a thing actually so the permanent capital platforms contributed.

Hey majority of that both.

Seen organic flows.

Pension deal that they did as well as increases in sub advisory mandates across both the thing.

Nfoura.

Then I call out the.

The other funds that I mentioned in the.

In the remarks.

Thank you Mike.

Sure.

Our next question comes from one of Bill Katz of Citi.

Okay. Thank you very much taking the questions slowing so maybe thats sneak in a two parter I guess on the fee related earnings margin on sort of wondering if you could sort of give us a walk through how you see that progressing as we go into 2020, and then could just clarify the 50 million dollar profit share of what is prompting that relative to the realization activity. Thank you.

So bill.

So.

The margin as we've said we were mid Fiftys percent margin Thats, where were expected to be.

We're pleased with that and.

And we balance investments in the platform and growth.

Against revenues that we have a high conviction of.

And so.

I would expect that.

The margin, which on a year to date basis has misfit mid fiftys will be around about that level.

As we look ahead.

And it really comes down to decisions we make.

Around future investment spend versus versus revenue. So typically follow after you after you expense the.

The investments so so we're committed to maintaining margins that what we see as best in class.

And we managed carefully but I would I would think sort of mid fiftys as we look forward.

And then on the incentive pool, that's a that's a year to year plan that we.

That we view is now for for many is too.

Reward individuals' with compensation derived from Kerry.

Make decisions on a unit.

Year to year basis.

And it tends to track the timing of realization. So as we expect realizations. This year to be back ended in Q4. We also expect the costs for the incentive full to be to be back ended.

Our next question comes from the line of Alex Blostein of Goldman Sachs.

Hi, guys. Good morning. Thanks.

Maybe zoning and on the theme for a second the $70 billion of incremental asset purchases potentially with old access capital that between all the all these various vehicles.

You guys anticipate could come in over time can you talk a little bit about maybe the composition of M&A opportunities you see there given the fact that lower interest rates, probably a little bit of pressure on kind of more pure kind of vanilla fixed annuity reinsurance transactions and ultimately how quickly do you guys anticipate some of these transactions to come through.

So high that this is Gary I do you couldn't get an answer this quite likes the answer even two years ago and that is as to predicting timing, we're not able to do that.

It's hard to say, having said that what we also said couple of years ago before we did some big transactions is we have a very active pipeline and it is interesting is of course the decline in rates has caused more pressure on number the insurance companies and.

And that's actually where our comparative advantage comes through to give us the an edge and is what creates a lot of the flowing that is so long as we can produce some incremental spread.

Through origination another capabilities that means we can actually do something that makes sense, where the insurers can't make a reasonable profit or get a good return on their capital. So we still see plenty of opportunity to move liabilities are way.

And so long as we can continue to add that enhance spread relative to what they can earn.

Yes, the only thing I would add is obviously with the through either 3 billion. We've closed on recently in Asia.

It's obviously the limited partner spend an awful lot of time reviewing pipeline and other things before committing those dollars and so clearly.

It's certainly not predictable theres definitely a lot of.

Things to think about and a lot of possible activity or are they.

That would be an indication that there there is based on their funding of that commitment.

Our next question comes from the line of Mike Care of Bank of America Merrill Lynch.

Good morning, Thanks for taking the question.

Do you think more recently.

We've seen some dislocation in the leverage loan market.

It seems more flow driven pricing and credit driven but just curious if you're seeing any impact on the credit performance or in terms of financing.

Well this is Jim.

Yes, what you're talking about two thirds or certainly seems to be in the leverage loan market in the new issue market.

A world of haves and have nots, and because of the preponderance of CLL buying and their ability to own Triple C. Paper. There is talk tight basket. The beep freebie minus issuers are really having a challenging time companies that have wide access do very well those that don't.

It's been more challenging so.

That there is a bit of weakness in the leverage loan market really in the B three b minus sector.

I would add that while the overall economy and the markets are doing well there's been a fair amount of dispersion this year in the credit markets.

Double beazer up quite strong.

Seven, 8%, where triples, easer down seven 8% so wide dispersion.

And I think Thats just shows you the maturity of the market.

For our credit platform, we've really had a strategy of staying very senior.

And not really playing a lot of middle market distressed that's worked well for us. So there are some pockets of weakness out there.

But we are numbers are strong and we feel very good with our strategy and our performance.

Hi, Thanks, a lot.

Our next question comes from one of Glenshire Evercore ISI.

Hi, Thanks.

A question on just your assessment on performance out of not listen tons of sleep given your last 30 years of performance, but last 12 months not what it usually is so curious how much that as a function of market environment and.

Prices does not at the at the place where do you normally play, but just curious on how you're looking at that.

Yes, I know, we've just been through a review of our entire portfolio I think that.

The last nine months performance is up 17.

And then that funded is up 17.

And you know you've had its one an AFE act, it's about three and a half years old on average and so.

What you've seen as a dispersion between growth and value.

And so we feel I mean, we bought that portfolio that.

Six and a half times.

It's multiple is about that in terms of our mark.

And kind of.

We feel pretty good about.

Where the port heading.

And we're starting to see we there.

Portfolios acquired at about a five multiple point discount to the.

Average multiple paid for larger transactions and.

And I think that your where the mark on that portfolio as a little bit caught up in.

Okay. This dispersion as well as maybe a little bit of the downdraft in energy, which is kind of behind us now.

So we feel very good about where that portfolios heading and you're starting to see it in our.

Our accrued carry and I think you'll see some real presuming that the market's hold out.

Over the next 12 months, you're going to start to see the pickup in realizations, there's that portfolio matures.

Our next question comes from the line of Ken Worthington of JP Morgan.

Hey, good morning.

Just reflecting on the announcement for theme it seemed like it Dean investors were more enthusiastic about the impact for theme that Apollo investors were so as you reflect can you probably have fielded no more questions about the transactions since your call. Other elements that you think Apollo investors are sort of underappreciating in that.

And Jackson.

I think that the scene transaction.

We took a very long term point of view in terms of economically aligning.

Our ownership of it being in their ownership of Apollo They now participate with us.

We now have a larger ownership of a scene and we got rid of the super vote and increased our economic ownership, which we think is more highly sustainable I mean, what we said that you know on the call.

Was that.

Because it scene has a tremendous amount of earnings.

And in you know, but it doesn't pay dividends. So from an effort point of view and I think this is maybe.

One of the things that people are reacting to you know, it's it's about 7% dilutive even even though.

Some of the parts, it's neutral and if you were to include the economic.

Ownership of a scenes earnings it would be you know.

Greater than 40% accretive and so.

We obviously are going to discuss a lot more of this on in Investor day, but.

I think it's just going to take awhile for us to get that message out so I don't I think where.

And I think maybe that focus a little bit on this short term F. R E dilution is.

I think theres, a tremendous amount of benefit to it and we bought a great.

We made an investment in a great company and it was very strategic for us, but there might be little too much focused on the immediate F. R E delusion versus some of the longer term benefits and we're going to talk about and the earnings power, we're going to talk about all that more and our investor day.

Okay, great. Thank you very much.

Thanks.

Our next question comes from the line of Robert Lee of KBW.

Great.

Thanks for taking my questions actually mourn can you I just want to make sure I understood. It.

Your comment about that realization expectations not so much.

All right here.

Next.

Year.

Similar to this year last year right, so make sure I understood. It.

No not so so this year depends it depends on when foresee a closes so if proceeded as not close this side of your end than this years net Carey will be inline with last year.

If it does close this side of your end we more.

And then as we look into next year, we expect a significant uptick in that carry in 20 relative to 90.

Our next question comes from line as Patrick Swayze Autonomous research.

Hey, Thank you another follow up on the realization guide is it only flat to up versus 2018 because of this $50 million payout is on top of the normal payout. So the gross realized revenue was actually up year over year, if not the right way to think about it.

That number is similar year on year, it's just it's just.

We don't have the realizations and we're not going to make that payment.

And so as early as the realizations this year.

Backended.

With we're expecting to take a charge associated with that also on the back end devices for the the amount of the the incentive full year to year is is very similar.

So the percentage of gross should be similar yes.

Yes, okay. Thank you.

Our next question comes from a lot of Gerry O'hara of Jefferies.

Thanks, Good morning, maybe picking up on the on the aviation lending business for a moment BC kind of noting here that there was the deal done in the quarter, but also some.

Sounds like you know if I heard correctly at dedicated first time fun, perhaps you could give a little sense on where you see the opportunity set in that market and potential growth. It also looks like it's somewhat delineated between the credit platform and they've seen platform. So any any any color there would be helpful. Thank you.

Sure.

As Martin reference we've been the aviation business for a while it's really been on the credit side, where we are.

I would like less or are we started.

Under the BDC, we started a company called Merx aviation over the last seven eight years now they have successfully deployed.

Several billion dollars of capital purchase couple of hundred leases and today in that and note that portfolio has returned.

Nice.

Low to mid double digit returns.

Very successfully through.

Through and through the knowledge of that and through the insight of the aircraft space in our asset management skills, which have grown.

As Martin discussed, we we with conjunction with Dean.

Purchased PK aviation finance, which was the debt provider at GE capital.

That was a business that it from our perspective, the institutional knowledge was transferable.

And from our perspective, that's a business that really is a debt provider for commercial aviation.

Business, that's got to 30, plus year track record of very very very low default.

And as part of doing that you know in conjunction with the theme.

And our affiliates basically what dean's able to do which create investment grade debt securities.

It is very very comparable in rating, but is very.

Greater in yield on investment grade basis.

And in doing so it's a it's a real win for Athene in terms of their alternatives Baskin on the equity on their investment grade debt holdings.

So the PK aviation and navigator finance, our separate entities and separate activities.

But in terms of the institutional knowledge.

They are certainly the part of the beneficiary of our of our integrated platform.

It's also a huge area there is a huge need for capital.

And we see it as an area that is going to grow over time.

So we do think that you'll continue to hear more about us expanding that business and we think we have unique capability and it's again. It's just another example of US building. These origination platforms that go off the Ron and out of the public markets and and by doing that we're able to offer our clients, including at the end, but also al.

Hey clients.

Extruder return per unit of risk and so that's it's a hallmark of what we do and it's an exact another example of what we're doing.

And just to clarify the transaction was announced in August we expected to close in a couple of phases across Q4 and Q1.

Our next question comes from loan as Devin Ryan of JMP Securities.

Hi, Thanks. This is Brian accounted for Devon. So just a quick modeling question for me. The payout ratio has been just north of 90% year to date is that a good level moving forward and then if I look at the walk up.

The percent the common ratio ticked up to 56% in the quarter. So I'm just.

I'm trying to figure out where that you'd be kind of going forward.

Looks like it's up a little bit from the prior quarters.

Sure. So we'll we'll talk.

We will talk more about the dividend.

Policy at the Investor Day next week.

The.

I think the short the short version of that is the policy remains unchanged, we expect to continue to payout.

The majority of though.

As as a dividend.

And.

We May Institute, some minimum related to.

Sorry.

And then on the percentage.

Allocation to wait to cost side that actually reflects.

Some changes that were done in conjunction with the conversion to a C Corp, where certain unit holders may.

My charitable exchanges.

Of units for shares.

So there's there's been a.

Redistribution between.

This is Andrew units in the in that ratio sort of 56 to 44.

Thank you.

Sure.

Our next question comes from line of Chris Harris of Wells Fargo.

Thanks, guys.

You mentioned 13 million shares of Apollo stock was purchased by then guard as a result being added to Chris indices.

Any sense on as to how much more stock can be bought based on the other indexes you guys potentially can be additive.

Yes, I think it look I think this will play out now over the next.

Close to a year, there's a handful of other indices that we expect to be included in.

And they will each had a percentage point on sue to the.

So the ownership.

And.

And then around that we expect.

Continue to increase by by long only investors and other funds at sort of.

In fact, the index in some way so I think the collection of all three of those shows momentum in the stock.

In terms of ownership in long on the off or passive hands.

In.

In the last couple of months, we've seen we're saying that ratio jump from 35% of the ownership to almost 55% as Josh as Josh mentioned, so I'd expect to see that continue to play out over.

Okay, and I think what we said in my remarks is that when you look at other similar peers that have converted before we did.

Yeah that sort of ownership kits to more than 70% of their public float. So you could see another 15 or 20% of outflow. If you just use that analogy moving into more stable like more deep half.

Our next question comes from one of Michael Cyprus of Morgan Stanley .

Hey, good morning, Thanks for taking the question I'm, just hoping to circle back to mid cap you guys had mentioned the acquisition from B and C of the franchise finance loan portfolio. So just hoping one you could just.

Yes, a sense of the opportunity set that you see there maybe a little bit of an update on the mid cap platform build out and maybe just more broadly how you're thinking about.

The broader opportunities for these sort of tuck in acquisitions for expanding the origination opportunities.

Great.

So for US mid cap a lot of talk about about private debt financing in the markets and private capital and we find that most of our peers focused really on the middle market sponsor business and it's been a hallmark of mid cap in the last several years to have a variety of.

Incremental activities around.

You know revolvers, and Els and life Sciences.

And this was a small tuck in acquisition from from PNC in terms of a franchise finance business, one where there's a.

Longstanding history in the sector of.

You know granular risk, but very very low losses in very very low default. So a nice business. It fits in very well with movement caps doing you know midcaps running it.

Mid teens are are we the last 24 months and we're steadily very very.

Comfortable with the growth, but I think you'll see more of the small tuck in acquisitions, where it can be accretive to mid cap.

It's a it's really a specialty lending vertical and then the changing regulatory landscape. These opportunities are still afforded to us and.

Again these are the ways that we want to we want to stay senior we want to have industry expertise, we won't have a longstanding experience of low losses on and if there are loss is very very high recoveries and that's really the theme that Josh in Martin and we've all been mentioning about really adding value on the balance sheet in.

So the asset side.

Because of these types of investment activity, so things are going well with with mid cap I would suspect you know this and we're in a high valuation environment. So we do things that really are accretive to book value. This was something that was done at a level that was accretive to us.

But mid cap continues to March along and you'll hear more about that next week.

Our next question as a follow up from the line of Bill Katz of Citi.

Okay. Thanks, just two things like to clarify Josh in your in your prepared comments, you mentioned something about the leadership I sort of wondering you might be able to expand a little bit on it obviously they could go to more next week, but just curious of of your phraseology with that and then Martin you sort of mentioned that you might think some of the dividend to F. ARIA is wanting to you.

Give us a couple alliance or how you're thinking about that.

Yeah look I mean, I think that we continue to broaden our franchise and make it less dependent on small number of people and more much more of a broad management team.

I think where obviously we promoted.

Jim and Scott to co presidents couple of years ago.

We could promoted Anthony and Martin to co COO as a year or so ago, and now were and we've announced numerous promotions internally in PE and an opportunistic.

Natural resources.

And then we've added you know deal infill on the infrastructure side, and you know infrastructure investing side, but what we're going to talk about next week is there were also doing a lot.

On the what we call Enterprise solutions, which is you know enforce the infrastructure of Apollo It's now re renamed Enterprise solutions.

Hey, we're going to add to head of communications.

I don't think we'll hit next week, but were investing and very focused on technology and data and so.

A series of senior hires in that area, which is very exciting for that both the from and the funds.

And and then you know on the yield side, we have two or three major senior hires so I think that.

And so we're going to go into all that in Investor day, but really it's broadly across the firm. We're now you know our management Committee is about 14 people and then we have you have a leadership advisory a forum, which is more than 40 senior leaders and increasingly.

We're getting a lot of depth and a lot of bench strength and.

And we have really great people so increasingly.

We want them to do more and drives affirming they are doing more in driving the front.

Thanks.

Hi.

Yes, I'll just quickly on the second point so bill.

The I wouldn't read anything into it in terms of a.

Substantive change other than we would plan to underscore a minimum.

Distribution that could be paid in any quarter, we've been hearing from investors that setting a minimum.

Could be beneficial and clearly.

RF Ari.

Is highly predictable and durable.

Through a cycle and growing.

So I think that it's an easy thing for us to do and we're likely to do it.

You know and then if and particularly we don't.

And hopefully that I have some positive impact on.

People.

You know, believing that it's terrible and positively impacting get we'll get a little more credit for the stock.

Our next question is a follow up from the line of Robert Lee of KBW.

Great. Thanks for taking my question.

I tried to two parter first on the seen a transaction I'm just curious I mean your own 35%.

By another five.

Down the road plus I'm, assuming you're not going up or paid in their buybacks are there and is there any kind of rugged regulatory.

Limit to ownership that.

You wouldn't want to or be able to go above and then im just no you could give us the fee rate on dry powder.

The fee rate on dry powder.

Without us.

The dry powder related management fees is concentrated in credit credits average fee rate is sort of 60 570 basis points. So that's probably a good products. It is.

Our final question will come from the line of Patrick disease of Autonomous research.

Hi, Thanks, a follow up you mentioned in the release.

That threeq was mostly driven by tranquility, Dod, which I thought still needed regulatory approval was that some sort of pre distribution and there's still kind of the final closing to come.

Yes.

Sorry to be Sussex.

And that concludes the Q and a portion of today's call I'll now return for over to Gary Stein for any additional or closing remarks.

Thanks, operator, thanks, everyone for joining us. This morning, we look forward to connecting with the next week at Investor Day.

Thank you ladies and gentlemen, this does conclude today's third quarter 2019 earnings Conference call. You may now disconnect and have a great day.

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