Q1 2020 Earnings Call
Ladies and gentlemen, this is the operator for today's conference is scheduled to begin momentarily until that time or line. So again be placed on musicals. Thank you for your patience.
[music].
Good morning, and welcome to Apollo Global management's first quarter Twentytwenty earnings Conference call.
During today's presentation, all callers will be placed any 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 or performance.
Please refer to Apollo's, most recent FCC filings, including the 8-K Apollo filed this morning for risk factors related to these statements.
Apollo will be discussing certain non-GAAP measures on this call, which management believes are relevant and assessing the financial performance of the business.
These non-GAAP measures are reconciled to GAAP figures and Apollo's earnings presentation, which is available on the company's website.
Also note that nothing on this call constitutes an offer to sell or solicitation of an offer to purchase any interest in Apollo fund.
I would now like to turn the call over to Gary Stein head of Investor Relations.
Great. Thanks, operator, good morning, and welcome everyone to our first quarter 2020 earnings call. We hope you on your families are staying safe and these challenging times.
Joining me this morning, our Leon Black Chairman and Chief Executive Officer, Josh Harris, Co founder and senior managing Director and Martin Kelly, Chief Financial Officer, and co Chief operating Officer.
Our co President Jim Zelter is also on the line and will be available during the Q1 day session.
Earlier. This morning, we reported distributable earnings of 37 cents per common share pretax fee related earnings of 52 cents per share.
Cash dividend of 42 cents per share for the first quarter.
With that I'll turn the call or what are we on black.
Good morning.
Thanks, Gary and thank you all for joining us.
I'd like to focus my comments. This morning on the unprecedented circumstances, we were collectively facing in light of to covert 19 pandemic.
What began as a virus has become a global health and economic crisis of enormous proportions.
I would first and foremost like to extend their thanks to all of the health care professionals and frontline workers for their extraordinary dedication through these difficult times I would also like to thank our Apollo employees for their continued hard work and commitment to the fight over the past couple of months.
The enduring strength of our business is a testament to all of their individual contributions and I'd be happy with the management team we extend our appreciation.
As the crisis began to unfold a couple of months ago. Our first order business was to ensure the safety health and wellness of our employees and their families and we continue to monitor their wellbeing and provide ongoing support.
We then quickly turned our attention to preserving business continuity across the firm.
Apollo is rapidly adjusted to working remotely further embracing technology to ensure a relatively seamless transition to work from home environment across the firm's 15 offices around the world.
Additionally over the past couple of but we've spent a great deal time with the portfolio companies in the various funds. We manage in early March we created a portfolio crisis response team, which has been meeting daily and remains in constant communication with the management of our funds portfolio companies.
Ensuring best practices are shared across areas, such as health care business operations and capital management.
With respect to the S.P.A. is paycheck protection program or PPP, none of the company is controlled by Apollo or the funds, we manage will be utilizing this program.
Similarly, although we're still reviewing the guidance recently announced by the Federal Reserve, we do not anticipate the main street lending program will provide any relief for financial assistance to companies controlled by us or our funds.
We've been able to leverage the knowledge across the Apollo platform to provide advice and support to these businesses.
It's Josh will discuss in greater detail shortly the investment portfolios remain in good shape due to our consistent focus on value pricing discipline conservative underwriting and use of less leverage than the industry.
In considering the tremendous pressure that cobot is placed on our society is we night to fight. This pandemic. We have also places an emphasis on identifying how we can support and empower the communities around us.
You mean Apollo encouraged portfolio companies are shared efforts amounts over $50 million in relief effort contributions globally today.
Various portfolio companies have also stepped up to provide aid in other ways. As an example, diamond resorts is providing free lodging to healthcare workers in first responders well Lifepoint has partnered with authorities to set up a temporary hospital and its participated in drive by Kobe testing.
It's Mcgraw Hill education is offering free access to online higher Ed coursework and training professors and students to transition to digital learning platforms, and Shutterfly and I missed sema, among others secured funded and donated items such as masks ventilators and huh.
Little supplies.
These are just a handful examples out of Manny and I could not be more proud of our employees and those that are funds portfolio companies, who have assisted in champion. These efforts.
Amid these challenging circumstances, we've been able to demonstrate the resiliency of the Apollo model now more than ever Apollo is well positioned to preserve and drive exceptional value to our investors which include pension funds representing teachers fire fighters.
Police officers and government workers among many others.
Some of which are on the front lines of the pandemic.
We take our fiduciary responsibility to them extremely seriously.
Core do Apollo's investment philosophy is our ability to both preserve capital and create value for our investors across cycles, especially during economic uncertainty.
Apollo founders have been through five cycles over the past 30 years and each downtrend presents unique opportunities as we navigate the dislocation and identify mispriced risk.
Our platform is resilient, our fr reuse durable and growing and we are playing offense utilizing our decades of experience in times of dislocation.
In fact, one of the hallmarks of the Apollo brand has been to perform at extraordinary levels in times of market and economic volatility.
Our investments had been positions defensively and their funds portfolio companies remain in good shape offensively, we have been investing opportunistically and during the quarter gross purchases were $40 billion across the platform with another approximate $10 billion in April.
We have successfully created value through prior market dislocations by playing both defense and offense and as Josh will describe in greater detail shortly and we expect to continue to do so through the challenging economic environment.
We see ahead with that I'd like to turn the call over to Josh to provide an overview of our business operations for the first quarter.
Thanks, Thanks Leon.
First I'd like to express my heartfelt wishes to everyone listening. This fine you in your family's health and safe.
Over the last few months, we've seen our global workforce come together seamlessly as as Lynn mentioned.
Sure that are people on portfolio companies are supported through rapidly changing environment.
I'm incredibly impressed with the way everyone has risen to the occasion.
Thank you to all of our boys you've done a great job.
Turning to the business I'm going to spend some time discussing how we reacted to the significant market volatility that began in late February.
First let's discuss several critical objectives that weve been accomplishing.
Paul is growth remains a continued focus of management and notwithstanding the difficult first quarter mark to market adjustment.
We still feel highly confident that we will grow fee related revenue.
I'm sorry.
And you and 2020.
Notably.
As we presented in Investor Day last fall.
We believe that effort me and stable Jeffrey margins.
Have durability that are stable at par in every margins have durability in adverse market environment.
Certainly 2020 is proving this out.
Our robust jefferies' supported by locked up and long duration assets, that's over 90% of Ray you.
He is in permanent capital vehicles, whereas a contractual life of five years or more from inception in.
In April a thora closed on the acquisition of a VAT, adding an incremental 45 billion of assets under management.
And bringing pro forma assets under management at March 31st.
To 360 billion.
In addition, during Investor day, we announced a minimum dividend of 40 cents per quarter.
Which we exceeded this quarter and expect to continue to meet or exceed in subsequent quarters.
Ported Foley.
Highly durable after he bed.
Lastly, I performance fees.
These will be realized over a cycle.
Well, we can't predict timing, we are still very confident in the quality of our investment portfolios.
And the returns today will generate over time.
That said due to market due to the market environment the portfolios experience.
Unrealized mark to market volatility during the quarter, which Martin will discuss a bit later however.
These portfolios remain in good shape, and we don't expect much in a way of impairments overtime.
Well in near term delay and realized performance fees is to be expected as a result at the volatility.
We still believe that there will be significant performance fees generated over time.
In the meantime, affray will continue to underpin cash generation and drive our dividends.
Given our value orientation heading into this market dislocation our portfolios were invested in a defensive manner with the expectation of an economic downturn following a decade long pole market.
For example in private equity fund eight portfolio companies were acquired.
At a six naptime enterprise value to EBITDA multiple on average excluding any cost savings.
And they they had only 3.6 times debt to EBITDA or leverage on average.
Well below industry levels.
We invested with an emphasis on durable business models with strong free cash flow and despite the challenging economic environment. We may <unk>, we remain confident fun day will perform well overtime.
We recently created a watch list that includes companies in stress situations.
As of March 31st these companies represented less than 5%.
The card value of fun date.
We continue to work with these companies to support their operations and preserve value.
Looking back to the last crisis to provide some context at their lowest point <unk> six and find seven.
Our 2006 and 2009 vintage funds.
Were marked at <unk> 0.6 times, and 0.5 times as a multiple of net committed capital respectively at their low points.
Which reflected sharply negative, but temporary unreal, but temporary.
I underscore temporary unrealized marks on existing investments and also created a market environment in which we were able to deploy a lot of new capital at very attractive rates of return.
Through March 33, 30, Onest 2020 on that same basis, we've achieved multiples on both of those funds of greater than two times.
As of the ended the first quarter Friday was marked at 1.81 0.3 times multiple.
Despite the negative unrealized mark to market adjustments in the first quarter.
As we previously discussed with respect to credit.
As the credit cycle was aging we had positioned the portfolio towards higher quality senior secured credit.
We had also proactively decreased our exposure to energy in retail.
He's allocation decisions were particularly beneficial during the first quarter as our credit business meaningfully outperformed the broader credit indices down 9% in aggregate compared to negative 13% performance.
The S&P leveraged loan index and the Bank of America Merrill Lynch High yield index.
Of note.
Credit strategies are multi billion dollar credit hedge fund was up nearly was up nearly 10% year to date through Wednesday.
Deployment [noise].
Since the portfolios, we manage were defensively position.
We were able to quickly pivot talk that's in the first quarter.
During the during the quarter, we were extremely active as Lynn mentioned, we had to grows to purchases or approximately $40 billion or roughly double that of a typical quarter.
The majority in March.
This is a testament to the strength of our global integrated platform and our broad investment expertise across markets and capital structures.
Roughly two thirds of these gross purchases were concentrated in performing credit mandate.
With the remaining one third in opportunistic vehicles.
Both of those strategies, providing liquidity.
To the broader markets and certain individual companies.
We remain very active in April.
Approximately $10 billion of gross purchases.
Aggregating roughly $50 billion of purchases over the last four months.
We continue to moderate very very strong pipeline of opportunities across private equity credit and real assets as the market environment continues to evolve.
Our deployment activity during the quarter was indicative of the market backdrop as the fed move quickly to enact various.
Monetary and and the and the and the fiscal <unk>, that's already stimulus programs just to support market liquidity and functionality market stabilized across the board.
And our view some portions of the market moved above fundamental value.
As pricing in high grade credit markets recovered, we reduced exposure locking in substantial gains for our clients.
And are currently repositioning that capital into more idiosyncratic opportunities.
<unk> to capture a very attractive risk return opportunities for our clients.
In general.
Well, we believe that the broad markets are ahead of fundamentals.
There are still lot a large number of companies there are over levered and they need a restructuring or additional capital notwithstanding the supportive efforts of the government.
But the worlds largest alternative credit platform Apollo is uniquely positioned at the intersection of investors seeking yield.
Companies looking to borrow funds.
We're now increasingly focused on dislocation direct origination and providing capital solutions for franchise assets.
For example.
Last week, we announced two capital solutions transactions for our hybrid value fund.
Including a $1.2 billion preferred equity financing led by Paul for Expedia.
Leading travel platform and a $300 million secured note for Cimpress, a leading global ecommerce provider of customized print signage merchandise and other marketing products.
These investments highlight.
We believe is a true advantage of apollo's integrated platform.
Combining origination capital markets and deep industry expertise from across the firm.
Liver attractive risk return opportunities to investors during volatile times.
Fund raising.
Moving to fund raising apollo's investment capabilities during challenging market conditions.
Well recognized by global our global Investor base.
To address pockets of market dislocation, we are increasing the target size for certain funds.
Accelerating the timeline for other fund raises and lodging these strategies.
$2 billion fund raising across several strategies targeting dislocation origination and capital solutions.
The number of incoming calls for receiving from investors.
It's increasing rapidly.
As an example in the last month, our third Accord fund, which focuses primarily on dislocated corporate credit.
Called capital became fully invested within seven business day.
And we swiftly launch and have already closed on.
I knew what an hour billion dollars for a keyboard three b.
We expect fund raising for a court for <unk> will follow shortly.
In addition, our hybrid value franchise has been highly active in providing capital for great businesses.
We expect to large hybrid value fun to later this year.
Finally, we remain in the market for real assets related strategies, such as infrastructure equity and U.S. and age or real estate, all of which are seeing attractive opportunities emerge.
In distressed stressed and capital solutions.
To conclude.
Since our founding 30 years ago Apollo built its reputation on navigating all market environments, but particularly challenging once it's very successfully on behalf of its investors.
Our first priority has been.
It continues to be the well being of the Apollo community and the world at large.
We also remain keenly focused on delivering attractive risk return opportunities for our investors.
And on delivering earnings growth and attractive dividends for our shareholders.
With that I'll hand, the call over to Martin to cover some financial highlights of the quarter in greater detail.
Thank you.
Great. Thanks, Josh a as lay on and Josh mentioned, we've seen a tremendous response from all of their employees through this challenging environment.
We quickly moved towards a fully remote what construct to ensure the health and safety.
Well, our employees leaning heavily on that technology platform and.
And robust operational processes.
We've been very pleased with the seamless transition of a workforce to this new model of working from home.
Which coincided with one of the most actually active investing environment said Apollo has ever seen.
We announced a dividend of 42 cents per shift for the quarter, which is fully supported by our after tax if I'm sorry.
During the first quarter, we generated fee related earnings of 52 cents per share on a pretax basis.
As Josh mentioned this quarter underscored the strength and stability of our fee related revenues.
Management fees declined by just $5 billion or 1.4% during the quarter as realization activity in private equity lowered the fee paying AUM base.
The modest impact to management fees, resulting from credit unrealized mark to market adjustments was offset by capital deployment.
The run rate impact on management fees of the widening credit spreads in March is consistent with the impacts we outlined at our Investor day in November.
Costs remain well controlled which in conjunction with durable management fees helped support our efforts in lodging, a 54% inline with the prior quarter.
Notably over the last 12 months F already totaled $2.21 on a per ship basis.
I grew by 8.5% on a dollar basis, driven by 10.6% growth in management face.
Turning to the incentive business, notwithstanding the $68 million of gross realized performance fees.
Pre tax incentive earnings were negative for the quarter.
In addition to the traditional costs associated with direct profit share interests in realized carry.
And financing cost associated with debt and preferred securities.
We could onetime costs to wind down a managed account arrangement.
We funded our incentive pool with a portion of the realized performance fees.
I am declined by 5% quarter over quarter to $316 billion, a results of unrealized mark to market adjustments on that portfolio offset in part by fundraising.
The impact to fee generating AUM during the quarter was more modest a 2% declined to $242 billion.
As a management fee base is largely insulated from unrealized mark to market movements.
Having said this on April one store closed on the acquisition of thought.
Adding an incremental $45 billion of assets under management for the second quarter.
And bringing pro forma U M at March 31 to approximately $360 billion.
Oh this permanent capital vehicles amounts are more than $200 billion, well, 57% of that total pro form or a U M.
During the quarter of organic inflows continued to be healthy and in line with previous years at $7 billion, particularly in a quarter without an opportunistic flagship fund raise or a strategic platform acquisition.
So I was included capital raised by a sore us to fund its acquisition of thought.
Organic rice said, a scene and positive flows across a number of credit funds and managed accounts.
Gross redemptions were just 0.1% of beginning of period, a U M, reflecting the largely long dated nature of our funds capital.
These redemptions were more than offset by inflows into those same strategies.
Turning to investment performance for the quarter in private equity price declines of 21.6% were in line with declines in the broad equity markets.
Oh energy exposure in private equity remains modest that just 4% of invested assets.
In credit and real assets, our overall returns of minus 9% and minus 6.5% outperformed their respective market indices as a result of sector allocation decisions and careful security selection.
Our balance sheet was impacted by unrealized negative marks in two respects during the quarter.
First we continue to lock our investment in a thing to market, including the additional shares accumulated during the quarter.
Under the equity swap transaction between Apollo and the thing.
Since the shares are subject to sale restriction for three years, we take a further discounts or the quoted market price to reflect this lock up.
The aggregate impact on our balance sheet. These components was approximately $3 per share.
Second price declines in our investment powerful portfolio has reduced down net carry receivable and created a mark to market obligation George on carry a $1.31 cents per share.
Ultimately, we believe this obligation is temporary and well lumpy realized as we remain confident in funded and more broadly now platform's ability to generate meaningful realized returns overtime.
Fund eight would require an approximate 11% appreciation in value from much study once removed this obligation approximately equal to changes in the broad equity markets in April.
Before I conclude my prepared remarks, I'd like to make a few comments regarding liquidity across the firm.
And our expectations for index inclusion.
The polar remains in a very strong liquidity position was approximately $1.5 billion of liquidity available on our balance sheet.
In addition, a dry powder position was robust at the ended the quarter.
$41 billion and it's Josh discussed, we see opportunities to raise incremental capital for numerous strategies.
Finally, as it relates to index inclusion, we have amended the company's charter and bylaws to reflect a change in the voting rights of that class a shareholders.
We believe these changes should make is eligible for inclusion in the Russell indices as part of their upcoming churn rebalance.
With that we'll now turn the call back to the operator, let's open the line for any of your questions.
Thank you at this time I would like to inform everyone. If you would like to ask your question. Please press Star then the number one on your telephone keypad. If your question has been answered and you wish to remove yourself from Nick you press the pound key our first question comes from the line of Craig Siegenthaler of Credit Suisse.
Thanks, Good morning, everyone.
Good morning.
First just starting with every stability can you walk us through the sources of potential future every downside, if fannie and I'm thinking about marks on NAV based vehicles siloed matches sees and performance revenues.
And just help us think about if there could be any downside from these sources over the next few quarters.
George <unk>, Yeah, I'll take that so Ah Hey, Craig So as I mentioned in the comments. The you know the sensitivity that we outlined at Investor day too. It's a downward marks a as sort of proven out to be a de minimis number.
Part of that's reflected in the Q1 numbers only talk because it it could.
Half way through the quarter, but as I mentioned, you know a deployment and inflows of has mitigated that downdraft. So I I'd use I use the frame of reference and assumptions that you want to make around where the markets go from here.
To sit I mentioned, what the impact on management fees looks like but it's it's a it's a it's entirely consistent with what are what we laid out.
On on C. lows.
The structure of El Ceibillo vehicles is such that we're not.
Most of that fees are protected ER and in it up in base management fees. We don't have a lot of variability to so performance fees in the event of downgrades on CLS.
So I would sort of I mentioned that is as low single digits.
Billion dollar range for the balance of the year, even assuming there's this downgrades ahead of us.
ER and then in terms of performance revenues.
Its low right now and so you know I would sort of a shame.
The current run rate is ER is appropriate for the for the foreseeable future.
Your next question comes the line of Patrick Cabot Autonomous research.
Hey, good morning, sorry, Josh or when you were kind of going through the view that you'd be raising bigger funds and accelerating funds. Your line I think cut out for everyone right. When you gave the number I'm in terms of the U.M. could you.
Could you go through that again.
Yeah, I mean, I think where you look I mean, we're looking at lodging strategies that are we expect you know will accumulate $20 billion you know over the next year.
And.
Well I think the other thing I was saying is that now that I was talking about them being broadly across many many credit credit strategies everything from a capital solutions hybrid value.
To a market dislocation strategies such as cord.
Stressed and distressed strategies and so that's that's what I would I'd said and.
And then number of other origination strategies and even though.
Obviously, the that the sad had stabilized the markets and broadly the markets I think what I said work.
Maybe ahead of fundamentals you know on <unk> and that they started <unk>. There's a lot of lot of opportunities in a lot of great companies that need capital.
And so we're we're there across the board with the broadest alternative credit platform.
Got you you cut out just on the number on the number was 20 billion.
Yes.
Your next question comes from the line of Alex Blostein of Goldman Sachs.
Thanks, Hey, good morning, everybody. So wanted to ask you guys I'm on the interplay between deployment and fund raising I did a cycle relative to the financial crisis and really thinking about what's the same what's different where do you see a bigger opportunity, perhaps today for deployment versus the financial.
Crisis, and then zoning and specifically for fun nine I think that fund is over a third or commit are deployed what are your expectation specifically for fun nine deployment over the next I'll call. It 12 to 18 months at which point, maybe we'll start thinking about the successor funds. Thanks.
Yes, we've seen let's start with the the.
The the last part of it like fund nine are obviously.
You know shifted almost entirely into credit you know kind of distressed for control.
Distressed investing and we've seen.
The pace of that fine go up significantly in the last a month and a half and that's continuing to into April and so we would exact <unk>, except expect acceleration of the pace of fun nine and we would expect the shift.
From traditional private equity to add more distressed for control private equity as we as we how you don't allow for our investors to achieve greater risk return in this market environment.
In terms of the investors the investor is actually from our point of view and I think this makes us unique.
I was just on the phone with their private equity team [noise].
Before that said, we're getting a tremendous amount of most people are playing defense.
And we're getting a tremendous amount of incoming from our investors who have identified us.
As being uniquely positioned in this environment.
If you take advantage of risk return that exists in the marketplace and so.
We're getting a lot of being coming and unlike the financial crisis, where.
People were generally focused on you know everyone. The industry I'll talk industry wide not calling capital at least in our case, we're not seeing that at all and maybe with the learning of the financial crisis, but we're seeing people.
Actually calling us up in saying you know what new funds are you.
Thinking about do you have any coinvest opportunities.
In terms of the evolution of our platform.
And the industry from the financial crisis, I would say.
On the industry side, the financial crisis was just a massive mart market dislocation in a break down in the markets and then followed by a recession.
But there were many the you know many many securities where.
Broad markets, where mis priced because of a lack of liquidity in the markets in this particular crisis.
You know with the the appropriate actions of the federal reserve in the government, there's a lot of liquidity in the marketplace.
But the economic you know destruction, that's occurring because of the unfortunate virus is likely to lead to a longer economic cycle.
More of an l. a than a V.
And so there are many many companies in many many situations where.
The leverage just isn't appropriate or they need capital and so we're seeing much more idiosyncratic opportunities to invest on a security by security company by company asset by asset basis and that exists probably it's good it's gonna be required patients and take some time and very very deep <unk> detailed and deep into.
Street and company and asset expertise.
Jim do you want to add anything or.
No I think I I, just had the evolution of the markets and capital markets and the role. We play is just broader and broader and it's Josh mentioned earlier, our fundraising is gonna be I'd dislocation strategies capital solutions and distressed he hit the distressed.
But certainly I would say in terms of we've been saying for a few years is the biggest risk out there was the market structure and hence the activity to be put to work on our accord and our other drawdown vehicles in the order that were triggered base and also as we think about our large cap origination potential platform.
And the success of hybrid value those are relatively newer strategies will be developed over the last five or seven years. So we have a lot more tools in our tool box from which to be a very active participant.
In the markets today.
Okay just mentioned.
Yeah, so at least to underscore what would what Josh and and.
Just said and give you a little historical perspective.
We have now been through for at this is our fifth down cycle in 30 years, and I think one of the unique things about Apollo and basically.
Setting up the for 30 years ago was quoted a from a falling for all seasons.
It is able to play a cycles, whether they're going up down or or or or level and you know if you put in perspective right. After the <unk>.
The market dislocation 13 years ago.
It was our funds seven in private equity that's fun was two thirds invested in distress.
Fund eight.
Subsequently was less than 5%.
The stress so that is the the bandwidth.
Vis-a-vis distress for control that can come out of the the private equity funds and it's Josh It said, our our expectation.
It is is that over the next.
Two years, a they're going to be a lot more distressed opportunities.
But but also to echo what Jim said.
A very different from then we were in the first few market dislocations and you know our credit platform and the alternative credit platform. Just in the last 13 years has grown from 20 billion, there's something like 240 billion and private equity is now about a quarter or.
The from does.
So so both the distressed opportunities in private equity, but even as importantly, if not more importantly, what Jim is saying in terms of the the opportunities in the alternative credit platform side.
We think are gonna be massive.
Given the the global economic environment.
Importantly, 80% of our credit platform is performing.
So even though we you know where our brand you know we've always been known as a distressed or stress from 80% of what we're doing credit is it's not that it's capital solutions providing.
Capital to Great company.
Helping them, helping them either deal with the stressful situation or grow.
Your next question comes from the lineup they'll caps that city grants.
Okay. Thank you very much for taking the questions and all the detailed disclosure.
Just sticking with the elevated piece of deployment that you cited a Q help me understand the waterfall between that incremental pick up and how that might be who fee paying AUM were asset gathering I'm just trying to understand.
How the economics would then sort of play through to earnings.
Weren't you enjoy yeah, Phil I'll take that I'm sure. So so let me just frame a few numbers might might help so yeah. We've used this.
Gross foetuses gross buys a data this quarter.
In view of the environment, the where we're in and also just to demonstrate the scale on the breadth of stuff to the platform Oh and how actively within this you know I view this as a supplementary disclosure this quarter to out typical deployment, which you can see in the and the documents which is around five plan for the <unk>.
Order and that's sort of run right with the with with what in Spain, and that and that that low number is.
Is that as a narrow definition at specific to opportunistic drawdown funds that the flagships. So.
You know off the 40 around a third of that as Josh mentioned is a isn't funds that are pursuing high return targets most of that was done.
After the dislocation started to so infectious submits mid February on a and the other two thirds or was it was in ER was in performing vehicles, which which supports the market through through a volatile period.
You know you can see you can see the impact of all the activity in the ending FY Jan you Wham. So that's the best thing to point.
To look at a and you could also sort of triangulate that with.
How a dry powder has changed.
Relative to inflows of over the quarter, but I will you know I would say the 40 Diane.
It represents some repositioning there's there's some sales in there some of its on leverage but at old. So translates itself into what you can see is the C. Vice a in the island tables.
But most of the 40 billion right or a lot of it would be on behalf of our big insurance clients or in our performing credit vehicles.
Right, which it would not be into 5 billion and generally.
You know that that obviously would not.
Ultimately.
You know effect fee paying fee generating a you.
For the most part it so you're going have to pick up incremental capital in those performing credit vehicles to generate fee paying a U M.
And you're going after she asset growth in the insurance entities, but on an underlying basis, we feel like.
That was enormously productive enormously so just because it's not translating into.
Fee generating a U.M. its translating into what it's going to translate into much stronger performance for all those vehicles relative to peers and therefore ultimately into fund raising which is where you come back around to the 20 billion dollar number.
Ultimately the opportunity for our insurance platforms to grow.
Your next question comes from the line of Glenn Schorr Evercore.
Hi, Thanks, very much a two quick ones one PE one insurance.
On the on the P. side, you I'm going to aggregate a bunch of comments, he said, but portfolio strong low entry multiples low leverage reducing energy reduced retail and you defined less than 5% I stress.
I'm sure it's that the mark on the quarter, obviously was almost 22% I'm curious what you think the mark where the market overreacted to and then.
If you could talk about April improvement because it was good bumps in the market I just saw Athena.
On T., obviously got better, but just curious if you get some that all together for us.
Yeah, I mean, our our marks are basically a function our short term merger function to a large extent.
Our driven by like Mark you know market volatility and so obviously, we have many many different ways of island companies, but certainly where a prisoner to how the market looks at things on a very short term basis in the short term relative to unrealized mark.
You know going forward. So it so that that's really the some of it I mean, it's not that the underlying companies.
All right.
Like I said I believe our portfolios in very very good shape and the underlying companies themselves.
At the 5% numbers meant to note how we really feel that we don't really feel like we have a lot of issues and as I look as we look at.
No and we listen to our investors and you know try to assess what's going on out there in the world away from US. We think we're in very very good shape and we're spending a lot of time I mean.
Working on new investments and obviously, we're not ignoring our portfolio, but the truth and matters. The marks are for the most of her driven by the public markets and a variety of industries and that's not something we can control in the short term.
I'd say going for you know the 11% that Martin throughout of at the S&P rise would get us to.
We would get rid of the Clawback and you can look at our public companies, you'll see it's ahead of the S&P.
And so you get the same reversion on the upside as you do on the downside and that's just unfortunately, how the accounting work.
But I don't think it's really that consistent in a short run with how you know the positive nature of how we see you know our portfolio doing.
Yeah, and I just on school Yeah, we we we use public comps extensively yeah. Most of that book is is comped against <unk> public data on the disposition in the marks this quarter.
Was really wide <unk>, depending on what a you know what sector what industry vertical portfolio companies set and shut in so you know very volatile period.
You know, we Didnt March 31 didn't catch it at the laws, but you know it was certainly a lot lower than it is today and so.
Yeah, we'd expect that to translate into ups. Obviously, you know probably the books when we go through that process.
At the end of this quarter.
As its as its coming through the publishing.
Yeah as of March 31st there was a real lack of differentiation in the stock market everything just came down and things you know you know you're you're a prisoner to that in terms of how you Mark Your your Blockier. Your you that's how you market two large extent.
Your next question comes from the line of Jeremy Campbell of Barclays.
Hey, Thanks, guys I just wanted to clarify one thing on that that market question. Martin when you said, 11% to remove the impairment on Sunday re talking about quarter end and with the S&P up about 11%, we're kind of already there and then Josh I know you mentioned just now.
But that your book you think is ahead. So I'm just trying to triangulate that so where we might be sitting today on a on the marks and and the paramount level.
Yes, so I think the the Clawback will then that the negative carry if you like is a mark to market concepts.
And you know it will it will reverse and eliminate with an uplift in evaluations and so across the whole portfolio with Nate 11% you know it so happens that the broad equity markets or are also up by the same number or you know as a guide or as a proxy a up and as Josh mentioned that public so a public.
Physician so.
Our up by more.
And we'll see where the privates end up for the quarter. Once we go through that process, but you know 11% is what's needed to take take the call back back to zero.
And that's it that's like said issue if the too.
I'd also like to just add act Suddenlink, Josh said about the market not differentiating look you know they've been many roads to roam like home in terms of our industry.
Taking a much more conservative.
Great then many of our peers there is a real difference and playing growth and paying an average of 11.
12 times EBITDA on levering it seven times versus what we have done in our model, which is to buy companies at six and a half times.
Never them at three and a half times.
You know.
We we just haven't played a the same levered growth model as many others in our industry and win.
A sharp correction comes like this.
You have to.
Hey, <unk> almost in into it and then obviously you have to look at it on a case by case method, which is what we do but that's why when we look at our portfolio a there's only 5%.
The names that quote we've put our watch list that portfolio is in very good shape.
[noise], rather we clearly have a very you know on a detailed basis company by company industry by industry, we have a very different view of the valuation of our portfolio over time than the markets currently reflecting as of March 31st.
Your next question comes from the line of Ken Worthington JP Morgan.
Hi, good morning, a form for hit on Wednesday night on insider selling a bit over $20 million worth of stock I know this is just a drop in the bucket in terms of management ownership, but can you talk about how the tenbfive plans work intense yes. She is getting so much more attention. These days how much control in.
Siders have in terms of selling stock and the days immediately preceding an earnings release.
Yeah, I'll comment on that that was a it was a tenbfive one that was filed last year and with.
With different price points embedded within the the grid and so it it to it it a it took effect.
In the in the into lost weight based on where prices were.
So it was all it was all pre pre determined and submitted and sometime back.
Yeah, I would just add to the Apollo founders have restricted liquidity.
Given the a than notification information tax and other requirements that are a put upon them as best as part of this process. So as Martin said the sales were actually initiated last November and then were put into a tenbfive, one which plays out over a long time based on on a you know price and volume considerations that are sat.
Well well well in advance.
Your next question comes from the line of Robert Lee of KBW.
Great. Thanks for taking my questions and I hope, everyone, so doing well.
Can you just remind us on the but no the 45 billion Oh, yes, the fee impact economic impact and then also.
Looking at the scene and Laura.
I would certainly you expect this environment should create opportunities eventually, but then you just a minus in there.
They are kind of capacity for transactions, I mean, a year or so that won't happen.
Sure. So all robotic the first one of them, Josh maybe take the second one.
So so it sort of the thought to close into us or on April one a $45 million. So.
So that fee that all of those assets a fee paying from that died the the fee construct for.
Thor is similar to how would that it has paid with the scene.
In the sense that there's a base management fee.
Which is lower than it was that at a saying given the the the flexibility on the lower flexibility on on on managing assets in a European regulatory context, a and then this is sub advisory component to it and so that the some of the two are important to the overall economics.
The this the sub sub advisory a will be low and it will grow overtime and so really so over time over a period of years I would expect that the economics will approximate thought of as seen on Oh, you know on a dollar for dollar basis, but the speed at which said.
I could just really dependent on on how quickly or sub advised that should place grows and what else are cautious.
Right, but when you go out two or three years, we would expect it to be similar to a scene.
You know once it ramp on an eight you.
Profitability per acre land basis, so that maybe at least gives you a flavor.
Gonna take a little while to get there depending on our sub advised to go on your first question look the insurance industry right is it's been a very good area in terms of acquisitions for us and for our platforms.
And that's just to remind everyone. That's because there's been a lot of regulatory pressure on capital and so a big insurance companies have been selling books of business.
And and <unk> and kinda rightsizing their own businesses and there's been a tremendous pressure on people's ability to generate yield.
And when I look at this environment and pressure on capital. So when I look at this environment I think there's environment will enhance and magnify all those trends.
Thor I'd just closed on providing that used up all its capital, but I will say that it closed in a really unique position.
Have you know that entity closing, a really unique position, having a pristine balance sheet and so it's a very well positioned to create yield and our investors have been very supportive of providing more capital to the extent opportunities arise and I think there won't be more opportunities I think it's dean has been going back to you know when we were talking a lot about.
We raised the aided fun to invest side by side with the scene.
And you know we week, we were talking about a number of about $70 billion.
And impossible dry powder there.
And and so are we do see or the ability to we think that the industry pressures are going to magnify and we think that will.
You know, we will have opportunities overtime I think in a period of volatility like this.
Usually takes people.
Some period of time, a quarter or two quarters, or however, long to sort out like the volatility and you know <unk> rethink their strategies and so in short run you might see a little flow down, but like we do think long run that's going to continue to be really get area for our platforms and Ross.
And I'd, just say I saw a raise additional capital in the first quarter wish you can see in the in the numbers and so part of that was to fund a complete the fund funding necessary for the thought but there's still about a billion euros of excess capital a that that's a that's been committed to us or a for for other acquisitions over time.
Your next question comes from the line of Devin Ryan of JMP Securities.
Great. Good morning, everyone. It was my question is really about kind of the shifting tied to your more broadly in the landscape. It sounds like there's going to be a lot to do across the organization, but you know and these moments you there can be kind of a new structural opportunities that can get created like a theme coming out of the last crisis.
And so I'm just thinking about maybe what's some of those could look like your real estate has been a difficult area for the firm to scale up at that landscape is shifting potentially some distressed opportunities coming out of this moment I'm curious kind of where real estate fits today is an opportunity to but potentially substantially scale.
Or require a platform and it may be same question on infrastructure or anything else im not thinking about but it would just seem that you guys typically are pretty smart in these moments when do you have pretty extreme dislocation and so maybe there's some things.
That could be bigger structural opportunities.
Sorry, now turn it over to Jim I mean, I'd say, Oh, probably across the board whether it be infrastructure, whether it be real estate.
You know, we do I mean, obviously when the opportunity you know turns from you know.
More of a growth and value weight high valuation growth environment to a more opportunistic credit driven environment.
We tend to scale, our platforms or whether it be.
On yield where we've been doing really well on real estate anyway or even in the more opportunistic funds. You know we tend to shift the dial up from buying equities in the traditional way to doing more so called a distressed for control or stressed and so across the board were going to see opportunity.
And all of our platforms are gonna scale.
The positive way relative to you know kind of the other environment, but Jim why do you get into more specifics.
On on Yeah, I I mean.
Yeah, I I would say that you know, it's our view that like we saw a weight changing evolution what makes our business interesting as we can obviously invest in assets and we can also be a rescue wore a variety of capital solution for a company. So to your point there are opportunities.
<unk> for us to play both sides of that and I would suspect in real estate. We are we have a large business in the debt side lots from the equity side, so that ability to originate whether it's broadly more than triple net leased space or other areas and real estate I think you'll see us expand we.
Alex you put our <unk> in the ground about 24 months ago with the purchase of the infrastructure platform from GE. That's been very well received in the performance has been terrific. So I think where you're going to see it run strategically expanding now is our robust model tells us that origination in a variety of various whether its credit real estate infrastructure.
I'm sure. We can continue to expand on and I do think that there are some things I'll give you one little bucket to think about there certainly is gonna be an impact in this yellow market with what's going on with Triple C. Baskets, there's going to be a limitation on yellows being a solution provider and therefore, we think there.
Breadth of the 20 billion, the Josh and we haven't talked about our ability to have vehicles. They can can build those cracks and all those opportunities really critical to our business. So yes whenever whenever there's a period like this one dislocation the seasons of origination change the sensor platforms change.
And I suspect will be.
Not only providing solutions for companies I'm pools of assets, but also holistically, which will endure or to the nor to the benefit of baby always the platform.
Your next question comes small enough, Brian the dollar to each of bank.
Great. Thanks, Good morning folks I'm just a couple of clarification to then a question for Josh I'm, just I'm words on the caught back is that it's simply mathematical would.
You would reverse that it's the returns I got to book the hurdle or when would you use a lower allocation read and be more conservative against future downturns and then.
Just on.
On the timing of the 20 billion fund raising trash if you either the timeframe on that.
I missed that or not and but the broader question. Josh is on the the 40 billion a really 50 billion of groups purchases seeking opportunities in this environment on the performing credit have helped you compare this to the environment and one Q 16, where we also have that dislocation, albeit that was quite reap the see more effort.
The reason this environment. We're just you know that that credit backstop sort of.
Awesome week this more of a short lived performing credit opportunity.
So I mean on the second one I think it's me much longer lead because at the end of the day the economy itself isn't really really hurting and when the federal reserve steps in obviously that.
Creates great market functionality, but what do you can't do as he can't fro, there's a lot of companies that have no revenue.
You know the you know the consent you know where I'm you know it's looking at the consensus.
GDP estimates for the second quarter down you know, 30% no one knows but the you out when you take all that all the average is you know you're talking a down 30% and so.
And then how fast and we don't really see we like I said it in some of my other comments I think this is going to take a while consumer behavior is going to change.
Thank you know as the opening itself will take awhile and be very staged they'll be ups and downs to it and unfortunately, we're gonna go through in a difficult economy for a for a decent a longer term period of time and so ultimately a lot of the leverage that existed in the system is too high.
Our cash flows that.
Don't exist over a medium term and therefore, it's gonna have to be I said, there's gonna have to be a de leveraging of the system, where capital is key and providing liquidity is key.
I think it'll be a much longer situation and you saw in 16, which was pretty much of a v. and sort of more sentiment best.
In terms of the 20 go ahead, Jim or you I'm sorry go ahead sorry.
No. Its <unk> billion, we said, we're going to we expect to its over the next year.
Is what we said.
And I was getting anything you know it's Josh. Its 16 15 16 was about oil and Chinese growth. This is much longer lasting and I think this theme that we had been talking about in addressing our platform is yes. The I GE market is open for the best companies, whether its Boeing yesterday massive liquidity.
Because of the fed programs in the I'd marketplace, what im a broad economy, the asset backed businesses franchise finance you know SMB lending those industries and those funding vehicles are still I don't want to stay there are broken, but they're sand in the years and years underlying economic.
I'm a concern so you know when we think about the breadth of our platform and what's going on in the headlines in the last few weeks very interesting bed and independent Treasury and the government has done a great job, but it's Josh and I'm talking about it is the the extensive impact you can shut the economy down in a few days it takes.
Weeks months in quarters to restarted and it's that hybrid environment, we will be active in the breadth of Barclays.
Your next question comes mine up Gerry O'hara of Jefferies.
Great. Thanks for squeezing me in perhaps just one on kind of the insurance business and sort of the impact of of this sort of low rate environment I see that are growing I guess.
Again, it basis or and then if memory serves the liquidity discount that was a they decided this quarter with respect to.
The thing is that sort of it comes down overtime.
Yes, I'm recalling that correctly, but perhaps you could kind of refresh or refresh us on how that works.
I wish perspective going forward. Thank you.
You want to grab that yeah. That's the so Gerry just a quick ones. So yes, it's it's a the discount it's just it's owned by.
The time of the lock up in the volatility in the stock. So it's just formulaic, it's like an option pricing model it burns off with time.
Ah subject away if all goes from from here. So you you look you know if he was flat for if like they fall was flat you'd expect to see a straight line drop off but it'll do whatever they told us up between now and three years from now.
I mean, I mean, generally I would say in the insurance companies. You know continue to grow organically you can look at the first quarter and see that.
I think you know a lot of but the the low rates you know really should pressure you know create a lot of.
More strategic transactions Ah sales of books of business.
Sales a businesses.
The ability to buy large chunks of liabilities as.
You know some of the other trends that I talked about earlier start to impact the industry at large and so those people that have capital.
Those people that have the ability to invest add a little bit of a higher return in a risk in an appropriate risk adjusted way those.
Companies and we count our platforms amongst those companies.
We'll be there too you know to happen to be helpful and supportive of the industry.
In terms of you know how to the industry itself is going to restructure.
Your next question comes from the line of Chris Harris of Wells Fargo.
Thanks, Hey, guys.
If we're if we're sitting here six months from now and Cove, it's still around.
And there are no meetings are limited travel.
How might that impact your ability to fund raise a going forward in particular wondering about the successor to fund nine.
Yeah. So I mean, we've I've been actually amazed I mean I've been on you know just many many zoom calls with Asia or with a state.
With other geographies around the globe and.
There've been a number of annual meeting a that have been over video over zoom or other services and you know like I said, we've been closing capital.
Investors other people have been you know, what where they have to fund raising and process and continuing to you know close and so the a industry at large has moved very quickly.
Online and so I mean, I'd say it hasn't really missed a beat which is surprising to say that but at least that's my observation so far and like I said are there also.
Unlike the financial crisis, where we did have you know I small number even for us, but there was a broader number for others.
Of LP is that said look up goes we don't if you don't have to make a capital call don't make a capital call and we're not open for business, we really haven't seen that.
Certainly from our point of view, we're seeing you know like people go the other way I'd say you have co invest you know what new funds or you're raising like and you know I mentioned, the accord freebie fun, where we literally in a month.
Three weeks.
After we had sabbatical a coordthree much more quickly we thought closed.
Closed a billion five and that was a lot of incoming and but that was way ahead of when we started it we had penciled it in to take another 30 or 60 days longer and people were just moving much more quickly. So we haven't seen the concern that you're raising has not manifested itself and we I know if anything I see it sort of.
Slightly going the other way.
I would amplify on that I mean, why do institutions give us money they give us money one for performance and two they give us money because we've created a chemistry.
Of trust and the relationship over time, you know we've been asked this 30 years now we have a AAA.
Group of institutional investors.
And and as long as we keep performing a the world's I mean, the last few years has broken up to the haves and have not the large private equity funds that have been in business and have created this chemistry.
I have garnered.
Outsized.
Percentages of the money that's out there and there's a lot of capital out there in the in ultra low interest rate environment.
There is a lot of cash.
Still around looking for yield looking for research and and so I.
I would agree with Josh if anything a this will continue to play to our benefit as long as we perform because we already do have 30 year relationships.
With the large pools of capital that exist more specifically to fund nine.
Again.
We are buoyed look we.
I've been able to perform in good times and bad.
But but clearly distressed environments.
Played in our favor historically.
Over the last 30 years with five down cycles.
But in fun nine.
About a third invested a that was at 25 billion dollar fun.
So even with the outsized.
Opportunities, that's probably is gonna be at least 18 to 24 months.
Before we are out.
Fund raising again there.
Right and I've heard just to underscore lids point like I've heard from a lot of investors that the bigger branded players in general.
The trusted players like for it's much harder now if you don't know so when you're trying to raise the first time find and you're trying to do the first meeting I presume or the second and third of the fifth.
It's much harder, but for someone you've been in business with for many years that they you. That's the we're getting were benefiting and the large branded funds are benefiting from that that trend.
Your next question comes from the line of Michael Cypress of Morgan Stanley.
Hey, good morning, Thanks for squeezing me in here just a bigger picture question curious your your views perspectives, what's sort of changes, we could see to consumer and corporate behavior on the other side of this crisis and also given the growing deficits and concerns around state and local budget shortfalls and Central Bank actions I guess, what sort of implications do you see for.
For inflation tax rates in the investing landscape.
Well I started maybe generally and can pile on I say.
That you know certainly consumer behavior, I mean consumers represent 70% of the U.S. GDP and clearly or you know everything from.
Oh, all types of services, certainly restaurants certainly event.
You know people you know you know Disney is talking about the capacity of their parks being being lower.
So kind of restaurants events a meeting.
All of that they'll be significant changes in consumer behavior in terms of you know people's willingness to interact with others for some period of time unless there's a.
Vaccination or cure found a which I think is.
Is it more hopeful but it continues to be unclear, whether that's going to happen. So you're going to see a lot of that you're going to see an acceleration of.
What people do online obviously.
And and so those would be some of the considerations that I would talk about terms inflation. There just there's really no ahead of inflation right now there's just a massive lack of demand because.
You know <unk> consumers are just not you know buying what they were buying and so even though you would expect that when a there's this massive influx of money.
And massive fiscal stimulus there might be inflation. It's just it's pretty it's it's it's went well below.
The targets that have been laid out there by the federal reserve in others, and so and there's a lot of slack in the global economy in a lot of slack in the U.S. economy, and so you might see it selectively but it's just not it's not showing up right now and you can just look at the price of oil and commodities right and see it certainly that part of it which tends to.
Correlate is way down so I don't know Jim are they on if you have any any other comments.
I think you hit them, Josh I'm I think the idea of higher rates anytime soon its a.
This for this decade, we're gonna be in in a very low rate environment and just give me governments are pipe piling on a lot of death, but I think Josh released at the two most important points.
Your next question comes from the line of my carrier Bank of America.
Hi, good morning, and thanks for taking the question.
The question on the private versus public so in a public markets you did about sat in certain areas in <unk>.
Reopening.
The economic outlook in private company fundamentals.
Like a different outlook. It looks like you were able to take you know the age and create value.
The public side March and April maybe you can buy some more color.
What we can try to <unk>.
Bridge the gap until the economy returns like a new normal, including how much capitals in reserve the funds.
Yeah. The Gastar broadly and then Martin you know I don't know how much of those numbers that we released but I'd say that you know look we came into this with very low leverage and a lot of liquidity and very very few covenants.
And very low maturities or amortization, and so and a lot of flexibility in our credit document. So we we sort of did you know a lot of the planning in advance. We we've been you know I think publicly.
Sang for a while that we foresaw that's something we didn't know what put that we're worried about volatility and you know an economic downturns and something could happen then.
And so our portfolio today from liquidity and from a in amortization standpoint isn't very good shape and you know the fact that we bought it very low multiples is serving us very well and its you know the the cashless themselves are not uniformly but.
But hanging in there pretty significantly and we don't have we're underweight energy were underway retail and a lot of the sectors. You know that have been hit the hardest.
You know travel and all that and things like that we just didnt have a lot of that leisure hotels.
And so like where we're very well positioned right now from for most have been obviously, what what what you would do and we should do is think about.
You know how do you preserve liquidity a what can you do to do that and I raising capital in you know a marketplace that we think is technically driven and ahead of itself and so we're looking at opportunities to do that.
I mean were not enough you want to add on you know the funding what do we have ample liquidity I mean, we spend a lot of time on this I don't know what's really is but.
Very focused on fine date liquidity.
There's ample liquidity, we have we have more than enough liquidity for.
Any sort of issues and it and what we're now is spending a lot of timeline enormous time on is like how do we spend the access liquidity and fun day on and off that.
And and and so that's that's how we're spending our time I don't think we I don't know for at least the numbers but.
Yes, I think I was.
And if I could just add I think that question, Josh obviously adjusted for us, but it's the other started that Corning to gets us being very thoughtful and optimistic about our.
Landscape because many other firms investors companies out there are probably a bit more levered.
And whether it's the solutions, we brought to Expedia or Cimpress. This past week. Many many many tools we have will allow us to be that provider of solution capital. So again, well it may not be is relevant to Apollo because of our discipline and value. It's certainly relevant for many many other swaps with the economy.
Yeah, and we're obviously I had a because I'm playing so my job ads for looking across the landscape and we have 40 G.
Just in private equity alone and Jim can speak to credit we have 40 open to buys.
Oh, we view reviewed hundreds and hundreds of company in companies and not everyone was thinking the way we're thinking.
And so that provides you know we're gonna have opportunities and not just private equity based companies public companies. It was really hard to predict.
The you know the fact that the I mean, no one predicted the kind of revenue loss that has existed and you know basically and many many industries. You know when you have no revenues and you have fix cost like there's a need for cash to get over the hump at a minimum and so were where there's we have a very large funnel.
Opportunities take advantage of.
[noise], where next question comes from the line of Chris Kotowski of Oppenheimer.
Hi, good morning, Thanks I.
I just wanted to go back to slide 12 in the Clawback liability because last quarter you had the realized loss in can stylists and then you said you know okay. The next whatever it was hundred million dollars are so oh realized gains would need to be.
That would be dedicated there and and years ago take care I had this concept of a netting the whole loves a mark to market positions I could only be refilled with realized gains, but what you're saying is this dollarsthirty one of clawback liability that just goes away.
Even with unrealized.
Appreciation and and you know so if you had 11% or more appreciation and then had realized gains.
Did you that that would generate distributable earnings then yes, Chris for sure. So it's a it's a it's a point in time mark to market. Its the same on the negative side on the call back over the payable side as it is on the.
On the upside and so we determine what we think are the appropriate evaluations for all the companies in the in the fund in the portfolio.
And then we impute.
Carry off that now and this this arises because fun day. It has made prior distributions of carry a and so you know at at a point in time at March 31, using those unrealized marks that would be the imputed repayment, but it it reverses itself.
With with with unrealized appreciation.
The same why is it the carry normal carry is sort of created and booked with that was appreciation. So it's it's symmetrical.
Thank you that was our final question why this morning, I will now we're trying to call to Gary Stein for any additional or closing comments.
Great. Thanks, operator, and thanks, everyone.
Appreciate a spending time with us this morning, and we look forward to speaking with you.
Again, shortly if you have any questions. Please feel free to reach out to a me or and thanks.
Hey healthy.
Thank you I guess, the painting and the Apollo Global management first quarter 2020 earnings Conference call. You May now disconnect your lines that have a wonderful day.
[noise].