NEW YORK—Apollo Global Management LLC sees an opportunity to step in and fill gaps caused by dislocation in the financial markets, the company’s co-founder and senior managing director said last week.
Speaking during the 2012 Citi Financial Services Conference, Marc Rowan said the company intends to take advantage of the stress on the financial system.
Citing Federal Reserve statistics, Rowan said bank commercial and industrial loans declined by 16% between 2008 and 2011 to $1.33 billion last year.
“There is an opportunity to go in and be completely opportunistic,” he said during his presentation at the conference, which was webcast.
Rowan added there is an ongoing shrinking of the global financial system and a shortage of illiquid capital. “The whole world seems to have gone short and liquid,” he said.
There also are plenty of distressed assets available for Apollo to peruse, he said. “Smart people always find something to do, dancing between the rain drops,” Rowan said.
Still, companies such as Apollo need to be disciplined when pursuing a distressed assets strategy, he cautioned.
“Distress exists as a market opportunity,” he said, “not because we raise a fund and want it to be there.”
Apollo does not disclose the size of its hotel real-estate holdings. Apollo has $8 billion of real-estate holdings under management and total assets under management of $75 billion.
Subsequent to the webcast, an affiliate of Apollo on 13 March announced its intention to acquire Great Wolf Resorts for $703 million, including debt.
“Buying assets is easy. Collecting them is difficult,” he said during the webcast.
Real estate, however, is a growth area for Apollo, he noted. “The reward for good performance is more assets,” Rowan said.
The company is now trying to figure out ways to boost its profile in the securitization market, where Rowan said volume is “way down.”
“There’s a real shortage of capital in this market,” he said.
Outlook
Though his forward-looking view of Apollo’s outlook is largely positive, Rowan said a slew of macroeconomic risks exist. Among them: ongoing economic volatility, geopolitical risks, Europe’s financial crisis and this year’s U.S. presidential election.
It could be folly to get overly optimistic, he said.
“We live in a time of above average uncertainty, so let’s not be too cocky of our view of the future,” Rowan said.