Apollo Global Management LLC brushed off concerns associated with its energy-related investments, despite heightened volatility in global commodities markets.
The value of Apollo's private equity fund increased 1.9% in the second quarter, slower than the 3.1% increase recorded a year earlier, largely due to declines in commodity prices. Excluding Apollo's energy-related investments from the company's private equity funds, the funds would have appreciated 5.2% on the quarter, according to Apollo Senior Managing Director Josh Harris.
Despite energy's drag on the portfolio in the second quarter, Harris expressed optimism that those funds will deliver value over time. While Apollo has about 7% energy exposure across its private equity platform, approximately half of it is concentrated in the lowest-cost basin in North America, Harris said. A push by energy companies in North America to enhance their own technology has made the industry more competitive with the lowest-cost producers worldwide, leading to stronger opportunities for energy investors, he added.
In addition to reporting second-quarter results, the company also declared a quarterly cash distribution of 52 cents per class A share, up from the previous payout of 49 cents per class A share. CFO Martin Kelly pointed to several factors contributing to the dividend hike, including the relative cash flow stability and growth of the company's fee-related earnings, as well as realized carry in private equity and credit.