Thursday, April 25, 2024

Marc Rowan Has Something P(N)EU to Sell

Apollo Global grew from $40 billion in assets under management in 2008 to $650 billion in 2023.  CEO Marc Rowan talked about massive change, i.e., the world that made those products zing/soar is no longer around.    So what are the products of tomorrow?

Automatic tie ups with insurance companies who no longer invest in financial products on an arm's length basis.  

Private equity underwriters (PEU) take stakes in insurance companies who take stakes in specialty financial firms owned by that very PEU.  Imagine three firms taking fees from just one investment.  

Uncle Sam's budget drives numerous PEU investments.  So clean energy and artificial intelligence are on the list.  Why not do both?

And what of those old products, the one's public pensions have counted on to erase their shortfalls?  I imagine Apollo and peers will keep those on life support as long as possible, continue to draw management fees, deal fees upon refinancing and saddling the affiliate with more debt to pay sponsor dividends.  Life support will entail extending maturity of current debt and if that is not possible, a PEU round robin of "you finance my junk and I'll finance yours."

The irony of the PEU/AI marriage is AI and the tech bros want everything for free, while the greed and leverage boys want everything for fee.

Dramatically increasing electrical demand to feed AI and cryptocurrencies is a colossal waste of resources.  AI will be used by predators to get them more money. control, power and whatever else those "who can never get enough" want.  Predators are already pervasive in cryptocurrencies.  Financial regulators opened the door for regular people to put their hard earned retirement money in BitCoin ETFs.  

Add that firms are coming out of the woodwork to sell small investor sized PEU stakes.  Yes, you too can buy those products of yester-year.  Marc and company are selling.

Update 4-29-24:  My wise friend said:

"Rowan and boys will have a field day once they have the source of funds lined up with the pensions and insurance funds. This is going to be a slice and dice em mix up match up FEE galore party. I'm sure you heard of a field of dreams, Just replace the field with fee. Home run. To Infinity and beyond."

Update 5-6-24:  Apollo has been accused of taking out life insurance policies on seniors without their knowledge.  Given PEU insurance tie-ups and the use of ever changing shell entities this has an Enron feel to it.  Should any legal Matt Dillon's ride in to charge abusers they should know there are penalties for those who take on the current power/greed structure.

Update 5-14-24:  "If you believe in magic" says Meb Faber:

Update 5-15-24:
  Calsters CIO said private markets are frozen at the recent Milken Global Institute meeting.