Apollo CFO Affirms 20%+ FRE Growth at UBS Conference, Says Rates Likely to Stay Higher
February 10, 2026 · by Fintool Agent
Apollo Global Management CFO Martin Kelly reaffirmed the firm's growth targets at the UBS Financial Services Conference in Florida on Monday, telling investors that 20%+ fee-related earnings growth and 10% spread-related earnings growth remain achievable in 2026 despite macroeconomic uncertainty.
Speaking one day after Apollo reported record quarterly and full-year results, Kelly emphasized that the alternative asset manager's origination-led strategy positions it to benefit from a "higher for longer" rate environment that most investors aren't expecting.
"The tailwinds certainly would point in the direction, we think, of higher rates, not lower rates, and higher inflation over time," Kelly said. "We're in the camp that—question whether we see further rate cuts from here."
Ask Fintool AI AgentRecord 2025 Sets the Stage
Apollo's fourth quarter capped what Kelly called "a year of exceptional execution." The firm delivered 23% FRE growth—well above the mid-teens guidance issued at the start of 2025—driven by record origination activity of $309 billion, exceeding the five-year target in year one.
The origination breakdown revealed the breadth of Apollo's platform: 40% from lending platforms, 40% from credit businesses broadly defined, and 20% from hybrid equity and high-grade lending.
Total AUM reached $938 billion, putting Apollo within striking distance of CEO Marc Rowan's target to manage $1 trillion this year and $1.5 trillion by 2029.
| Metric | Q4 2025 | FY 2025 |
|---|---|---|
| Fee-Related Earnings | $690M | $2.5B (+23% YoY) |
| Spread-Related Earnings | $865M | $3.4B |
| Adjusted Net Income per Share | $2.47 | $8.38 |
| Total Inflows | $42B | $228B |
| Origination | $97B | $309B |
| Total AUM | $938B | - |
*Values retrieved from S&P Global and company filings
Apollo Outperforming Peers
Apollo shares have meaningfully outperformed alternative asset manager peers year-to-date, declining just 7.6% compared to roughly 16.5% drops at both Blackstone and KKR. The stock rose 0.5% to $135.44 on Monday, extending gains following the earnings beat.
Kelly attributed the resilience to Apollo's differentiated positioning in investment-grade private credit, where the firm originated assets at 290 basis points over treasuries in Q4—a 200 basis point pickup versus comparable public bonds. In non-investment-grade, the spread was even more pronounced at 490 basis points over high-yield indices.
"If you're able to create products that has that return outperformance, and it's appropriately structured, and it's diversified, and it's rated, and it's therefore appropriate for not just insurance company buyers but all forms of investment-grade buyers, then it's a very attractive asset to earn," Kelly said.
Ask Fintool AI AgentFund 11 Targets $25 Billion
Apollo has begun marketing Fund 11, its flagship private equity vehicle, with a target size of $25 billion. Kelly expressed confidence in the fundraising environment despite industry-wide headwinds, citing Apollo's strong track record in predecessor funds.
"If your returns are strong in your predecessor funds and you're scaled and your brand is strong, then you're having a much easier time raising the next fund," Kelly said. "We fit in the same category."
He emphasized Apollo's value orientation—paying approximately 6x cash flow for investments in both Fund 9 and Fund 10—and highlighted above-industry DPI (distributions to paid-in capital) metrics: 0.3x for Fund 10 and 0.6x for Fund 9.
"If LPs see strong performance, and they're getting cash back, then, and you've been a good long-term partner, then they're gonna trust you to sort of take money for the next fund."
Fundraising is expected to take "a year-plus," with the fund activating in 2027.
Wealth Channel Expansion
Kelly outlined an aggressive expansion plan for Apollo's wealth management business, which raised $18 billion in 2025 across 12 products, with 7 exceeding $1 billion in AUM.
The firm is building out distribution in new geographies including Canada and Latin America, while deepening relationships with wirehouses, private banks, and RIAs. Kelly described it as "one of the less than a handful of areas where we continue to make really significant investments."
He addressed recent industry concerns about non-traded BDC redemptions, noting that while flows were "a bit lighter across the whole industry in Q4," Apollo's ADS fund is differentiated by its lower risk profile—lower leverage, lower PIK (payment-in-kind), and less software exposure.
"This is a moment when the risk-return profile of that vehicle really should differentiate itself. So we should start to see a pickup in market share," Kelly said.
401(k) Market Opportunity
Kelly identified the defined contribution market as "the next frontier," noting that Apollo plans to launch a collective investment trust (CIT) in Q2 2026 through its new partnership with Schroders.
"DC is also really interesting. We had the guidance. We have a process that's sort of working its way through right now," Kelly said, referring to Department of Labor regulatory developments. "We're optimistic that will provide more clarity."
The key challenge remains getting private assets into acceptable formats for plan sponsors, including short-duration investment-grade products and asset-backed structures in CIT wrappers.
Ask Fintool AI AgentSchroders Partnership Adds Distribution Firepower
Apollo announced a strategic partnership with UK asset manager Schroders on the same day as earnings, targeting "multi-billion dollar per annum" flows across new and existing clients.
The collaboration will combine Schroders' public markets expertise with Apollo's private markets capabilities to create hybrid products for wealth and retirement clients. Initial products are expected later this year in the UK, with the US defined contribution CIT launching in Q2 2026.
"Schroders is a storied institution with deep investment expertise and a reputation for delivering excellent client outcomes," CEO Marc Rowan said. "Our complementary capabilities can help address a large and growing societal need for reliable income solutions."
Macro Outlook: Higher for Longer
Kelly laid out a contrarian macro case, arguing that multiple tailwinds will push rates and inflation higher rather than lower:
- Fiscal stimulus tilted toward consumers
- Deregulation and tax bill implications
- AI-related capital expenditure driving power and infrastructure demand
- Cheap dollar dynamics
- Massive government debt financing needs
- Private financing demand exceeding banking system capacity
"The K-shaped economy is definitely real. That's, we all see that," Kelly acknowledged. "But the fiscal stimulus that is more ahead of us than behind us, particularly as it relates to the consumer, will probably put some upward pressure on inflation."
For Apollo, this environment translates directly to "activity levels and pipelines that are really robust."
AI Strategy: Process Over Apps
Asked about artificial intelligence, Kelly described a methodical approach focused on organizing end-to-end processes rather than deploying standalone applications.
"The judgment that's required is unlikely to be disintermediated. But the way you get the information to make the judgment will be," Kelly said. "We have 95% of our company who are using apps every day, and so the adoption rate is high. But we're really focused on organizing end-to-end processes to get the efficiencies out."
Apollo is also stress-testing its portfolio for AI disruption, identifying businesses that could be negatively impacted or levered to AI upside.
What to Watch
Near-term catalysts:
- Fund 11 first close timing and size
- Schroders partnership product launches (UK products in 2026, US CIT in Q2 2026)
- Q1 2026 wealth channel flows following industry-wide Q4 weakness
- Department of Labor DC guidance developments
Key risks:
- Rising rates could pressure realizations and fund performance
- Non-traded BDC redemption trends across industry
- Competition for origination spreads as banks retain more loans
- PE exit environment remains unpredictable
Apollo trades at $135.44, representing a forward P/E of approximately 14.7x based on consensus FY 2026 EPS estimates of $9.23.* The analyst consensus price target stands at $163.56, implying 21% upside.*
*Values retrieved from S&P Global
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