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MarketScreener Homepage  >  Equities  >  Nyse  >  Apollo Global Management LLC    

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APOLLO GLOBAL MANAGEMENT LLC : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q)

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08/06/2019 | 04:31pm EDT
The following discussion should be read in conjunction with Apollo Global
Management, LLC's condensed consolidated financial statements and the related
notes included within this Quarterly Report on Form 10-Q. This discussion
contains forward-looking statements that are subject to known and unknown risks
and uncertainties. Actual results and the timing of events may differ
significantly from those expressed or implied in such forward-looking statements
due to a number of factors, including those included in the section entitled
"Risk Factors" in the 2018 Annual Report. The highlights listed below have had
significant effects on many items within our condensed consolidated financial
statements and affect the comparison of the current period's activity with those
of prior periods.
General
Our Businesses
Founded in 1990, Apollo is a leading global alternative investment manager. We
are a contrarian, value-oriented investment manager in credit, private equity
and real assets with significant distressed expertise and a flexible mandate in
the majority of our funds which enables our funds to invest opportunistically
across a company's capital structure. We raise, invest and manage funds on
behalf of some of the world's most prominent pension, endowment and sovereign
wealth funds as well as other institutional and individual investors. Apollo is
led by our Managing Partners, Leon Black, Joshua Harris and Marc Rowan, who have
worked together for more than 33 years and lead a team of 1,268 employees,
including 423 investment professionals, as of June 30, 2019.
Apollo conducts its business primarily in the United States and substantially
all of its revenues are generated domestically. These businesses are conducted
through the following three reportable segments:
(i)                      Credit-primarily invests in non-control corporate and
                         structured debt instruments including performing,
                         stressed and distressed instruments across the capital
                         structure;


(ii)                     Private equity-primarily invests in control equity and
                         related debt instruments, convertible securities and
                         distressed debt instruments; and


(iii)                    Real assets-primarily invests in (i) real estate equity
                         and infrastructure equity for the acquisition and
                         recapitalization of real estate and infrastructure
                         assets, portfolios, platforms and operating companies,
                         (ii) real estate and infrastructure debt including first
                         mortgage and mezzanine loans, preferred equity and
                         commercial mortgage backed securities and (iii) European
                         performing and non-performing loans, and unsecured
                         consumer loans.


These business segments are differentiated based on the varying investment
strategies. The performance is measured by management on an unconsolidated basis
because management makes operating decisions and assesses the performance of
each of Apollo's business segments based on financial and operating metrics and
data that exclude the effects of consolidation of any of the managed funds.
Our financial results vary since performance fees, which generally constitute a
large portion of the income we receive from the funds that we manage, as well as
the transaction and advisory fees that we receive, can vary significantly from
quarter to quarter and year to year. As a result, we emphasize long-term
financial growth and profitability to manage our business.
In addition, the growth in our Fee-Generating AUM during the last year has
primarily been in our credit segment. The average management fee rate for these
new credit products is at market rates for such products and in certain cases is
below our historical rates. Also, due to the complexity of these new product
offerings, the Company has incurred and will continue to incur additional costs
associated with managing these products. To date, these additional costs have
been offset by realized economies of scale and ongoing cost management.
As of June 30, 2019, we had total AUM of $311.9 billion across all of our
businesses. More than 90% of our total AUM was in funds with a contractual life
at inception of seven years or more, and 49% of such AUM was in permanent
capital vehicles.
As of December 31, 2017, Fund IX held its final closing, raising a total of
$23.5 billion in third-party capital and approximately $1.2 billion of
additional capital from Apollo and affiliated investors for total commitments of
$24.7 billion. On December 31, 2013, Fund VIII held a final closing raising a
total of $17.5 billion in third-party capital and approximately $880 million of
additional capital from Apollo and affiliated investors, and as of June 30,
2019, Fund VIII had $3.1 billion of uncalled commitments remaining.
Additionally, Fund VII held a final closing in December 2008, raising a total of
$14.7 billion, and as of

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June 30, 2019, Fund VII had $1.8 billion of uncalled commitments remaining. We
have consistently produced attractive long-term investment returns in our
traditional private equity funds, generating a 39% gross IRR and a 25% net IRR
on a compound annual basis from inception through June 30, 2019. Apollo's
private equity fund appreciation was 2.5% and 7.2% for the three and six months
ended June 30, 2019, respectively.
For our real assets segment, total gross return was 0.3% and 4.4% for the three
and six months ended June 30, 2019, respectively. The gross return represents
gross return for U.S. Real Estate Fund I and U.S. Real Estate Fund II including
co-investment capital, Asia Real Estate Fund including co-investment capital,
the European Principal Finance funds, and infrastructure equity funds.
For further detail related to fund performance metrics across all of our
businesses, see "-The Historical Investment Performance of Our Funds."
Subsequent to December 31, 2018, the Company determined to change the business
segment in which it reports certain funds and accounts to align its segment
reporting with the manner in which such funds and accounts were
managed. Effective January 1, 2019, the European Principal Finance Fund series,
which has been historically reported in the credit segment, moved to the real
assets segment. Several funds and accounts that generally invest in illiquid
opportunistic investments and the latest fund in the Credit Opportunity Fund
series, which have been historically reported in the credit segment, moved to
the private equity segment. Certain commercial real estate mortgage loan assets,
previously reported in the credit segment, moved to the real assets segment.
These changes affected the composition, but not the determination, of Apollo's
reporting segments.
Holding Company Structure
The diagram below depicts our current organizational
structure:[[Image Removed: structurechart8119.jpg]]
Note: The organizational structure chart above depicts a simplified version of
the Apollo structure. It does not include all legal entities in the structure.
Ownership percentages are as of August 1, 2019.
(1) Based on a Form 13F for the quarter ended March 31, 2019 filed with the SEC

on May 3, 2019 by the Strategic Investor, the Strategic Investor holds 7.7%

of the Class A shares outstanding and 3.9% of the economic interests in the

Apollo Operating Group. The Class A shares held by investors other than the

Strategic Investor represent 47.8% of the total voting power of our shares

entitled to vote and 45.9% of the economic interests in the Apollo Operating

Group. Class A shares held by the Strategic Investor do not have voting

rights. However, such Class A shares will become entitled to vote upon

transfers by the Strategic Investor in accordance with the agreements entered

    into in connection with the investments made by the Strategic Investor.



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(2) Our Managing Partners own BRH Holdings GP, Ltd., which in turn holds our only

outstanding Class B share. The Class B share represents 52.2% of the total

voting power of our shares entitled to vote but no economic interest in

Apollo Global Management, LLC. Our Managing Partners' economic interests are

instead represented by their indirect beneficial ownership, through Holdings,

of 45.6% of the limited partner interests in the Apollo Operating Group.

(3) Through BRH Holdings, L.P., our Managing Partners indirectly beneficially own

through estate planning vehicles, limited partner interests in Holdings.

(4) Holdings owns 50.2% of the limited partner interests in each Apollo Operating

Group entity. The AOG Units held by Holdings are exchangeable for Class A

shares. Our Managing Partners, through their interests in BRH and Holdings,

beneficially own 45.6% of the AOG Units. Our Contributing Partners, through

their ownership interests in Holdings, beneficially own 4.6% of the AOG

Units.

(5) BRH Holdings GP, Ltd. is the sole member of AGM Management, LLC, our manager.

The management of Apollo Global Management, LLC is vested in our manager as

provided in our operating agreement.

(6) Represents 49.8% of the limited partner interests in each Apollo Operating

Group entity, held through the intermediate holding companies. Apollo Global

Management, LLC, also indirectly owns 100% of the general partner interests

in each Apollo Operating Group entity.

Each of the Apollo Operating Group entities holds interests in different businesses or entities organized in different jurisdictions. Our structure is designed to accomplish a number of objectives, the most important of which are as follows: •

                   We are a holding company that is qualified as a 

partnership

                    for U.S. federal income tax purposes. Our intermediate
                    holding companies enable us to maintain our partnership
                    status and to meet the qualifying income exception.


•                   We have historically used multiple management

companies to

                    segregate operations for business, financial and other
                    reasons. Going forward, we may increase or decrease the
                    number of our management companies, partnerships or other
                    entities within the Apollo Operating Group based on our views
                    regarding the appropriate balance between (a)

administrative

                    convenience and (b) continued business, financial, tax and
                    other optimization.


Conversion to a C Corporation
On May 2, 2019, the Company announced plans to convert from a publicly traded
partnership to a C corporation. The conversion is expected to be effective
during the third quarter of 2019. The details of the conversion remain subject
to the approval of the conflicts committee of Apollo Global Management, LLC's
board of directors and certain required regulatory approvals.
Business Environment
As a global investment manager, we are affected by numerous factors, including
the condition of financial markets and the economy. Price fluctuations within
equity, credit, commodity, foreign exchange markets, as well as interest rates,
which may be volatile and mixed across geographies, can significantly impact the
valuation of our funds' portfolio companies and related income we may recognize.
In the U.S., the S&P 500 Index increased by 3.8% in the second quarter of 2019,
following an increase of 13.1% in the first quarter of 2019. Outside the U.S.,
global equity markets appreciated during the quarter, with the MSCI All Country
World ex USA Index increasing 4.1% following an increase of 10.6% in the first
quarter of 2019.
Conditions in the credit markets also have a significant impact on our business.
Credit markets were positive in the second quarter of 2019, with the BofAML HY
Master II Index increasing 2.6%, while the S&P/LSTA Leveraged Loan Index
increased 1.7%. The U.S. 10-year Treasury yield fell slightly in the quarter to
2.0%. On July 31, 2019, The Federal Reserve reduced the benchmark interest rate,
lowering it by a quarter point to a target range of 2.00% to 2.25%.
Foreign exchange rates can materially impact the valuations of our investments
and those of our funds that are denominated in currencies other than the U.S.
dollar. Relative to the U.S. dollar, the Euro appreciated 1.4% in the second
quarter of 2019, after depreciating by 2.2% in the first quarter of 2019, while
the British pound depreciated 2.6% in the second quarter of 2019, after
appreciating 2.2% in the first quarter of 2019. Commodities generally decreased
in the second quarter of 2019, with copper, natural gas, and sugar depreciating,
while gold appreciated. The price of crude oil depreciated by 2.8% during the
quarter ended June 30, 2019.
In terms of economic conditions in the U.S., the Bureau of Economic Analysis
reported real GDP increased at an annual rate of 2.1% in the second quarter of
2019, following an increase of 3.1% in the first quarter of 2019. As of July
2019, The International Monetary Fund estimated that the U.S. economy will
expand by 2.6% in 2019 and 1.9% in 2020. Additionally, the U.S. unemployment
rate stood at 3.7% as of June 30, 2019, slightly lower than in the previous
quarter.

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Regardless of the market or economic environment at any given time, Apollo
relies on its contrarian, value-oriented approach to consistently invest capital
on behalf of its fund investors by focusing on opportunities that management
believes are often overlooked by other investors. As such, Apollo's global
integrated investment platform deployed $5.2 billion and $9.5 billion of capital
through the funds it manages during the three and six months ended June 30,
2019, respectively. We believe Apollo's expertise in credit and its focus on
nine core industry sectors, combined with more than 29 years of investment
experience, has allowed Apollo to respond quickly to changing environments.
Apollo's core industry sectors include chemicals, manufacturing and industrial,
natural resources, consumer and retail, consumer services, business services,
financial services, leisure, and media/telecom/technology. Apollo believes that
these attributes have contributed to the success of its private equity funds
investing in buyouts and credit opportunities during both expansionary and
recessionary economic periods.
In general, institutional investors continue to allocate capital towards
alternative investment managers for more attractive risk-adjusted returns in a
low interest rate environment, and we believe the business environment remains
generally accommodative to raise larger successor funds, launch new products,
and pursue attractive strategic growth opportunities, such as continuing to grow
the assets of our permanent capital vehicles. As such, Apollo had $12.2 billion
and $37.1 billion of capital inflows during the three and six months ended
June 30, 2019, respectively. While Apollo continues to attract capital inflows,
it also continues to generate realizations for fund investors. Apollo returned
$2.2 billion and $3.9 billion of capital and realized gains to the investors in
the funds it manages during the three and six months ended June 30, 2019,
respectively.
Managing Business Performance
We believe that the presentation of Segment Distributable Earnings, or "Segment
DE", supplements a reader's understanding of the economic operating performance
of each of our segments.
Segment Distributable Earnings and Distributable Earnings
Segment Distributable Earnings is the key performance measure used by management
in evaluating the performance of Apollo's credit, private equity and real assets
segments. See note 16 to the condensed consolidated financial statements for
more details regarding the components of Segment DE. Distributable Earnings
("DE") represents Segment DE less estimated current corporate, local and
non-U.S. taxes as well as the current payable under Apollo's tax receivable
agreement. DE is net of preferred distributions, if any, to the Series A and
Series B Preferred shareholders. DE excludes the impacts of the remeasurement of
deferred tax assets and liabilities which arises from changes in estimated
future tax rates. The economic assumptions and methodologies that impact the
implied income tax provision are similar to those methodologies and certain
assumptions used in calculating the income tax provision for Apollo's condensed
consolidated statements of operations under U.S. GAAP. Management believes that
excluding the remeasurement of the tax receivable agreement and deferred taxes
from Segment DE and DE, respectively, is meaningful as it increases
comparability between periods. Remeasurement of the tax receivable agreement and
deferred taxes are estimates that may change due to changes in the
interpretation of tax law.
We believe that Segment DE is helpful for an understanding of our business and
that investors should review the same supplemental financial measure that
management uses to analyze our segment performance. This measure supplements and
should be considered in addition to and not in lieu of the results of operations
discussed below in "-Overview of Results of Operations" that have been prepared
in accordance with U.S. GAAP. See note 16 to the condensed consolidated
financial statements for more details regarding management's consideration of
Segment DE.
Fee Related Earnings and Fee Related EBITDA
Fee Related Earnings is derived from our segment reported results and refers to
a component of Segment DE that is used as a supplemental performance measure.
See note 16 to the condensed consolidated financial statements for more details
regarding the components of FRE.
Fee related EBITDA is a non-U.S. GAAP measure derived from our segment reported
results and is used to assess the performance of our operations as well as our
ability to service current and future borrowings. Fee related EBITDA represents
FRE plus amounts for depreciation and amortization. "Fee related EBITDA +100% of
net realized performance fees" represents Fee related EBITDA plus realized
performance fees less realized profit sharing expense.
We use Segment DE, DE, FRE and Fee related EBITDA as measures of operating
performance, not as measures of liquidity. These measures should not be
considered in isolation or as a substitute for net income or other income data
prepared in accordance with U.S. GAAP. The use of these measures without
consideration of their related U.S. GAAP measures is not adequate due to the
adjustments described above.

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Segment Strategies
Apollo determined to change the business segment in which it reports certain
funds and accounts to align its segment reporting with the manner in which such
funds and accounts were managed. Effective January 1, 2019, the European
Principal Finance Fund series, which has been historically reported in the
credit segment, moved to the real assets segment. Several funds and accounts
that generally invest in illiquid opportunistic investments and the latest fund
in the Credit Opportunity Fund series, which have been historically reported in
the credit segment, moved to the private equity segment. Certain commercial real
estate mortgage loan assets, previously reported in the credit segment, moved to
the real assets segment. These changes affected the composition, but not the
determination, of Apollo's reporting segments.
In order to better reflect the grouping of synergistic credit strategies across
the funds, accounts and permanent capital vehicles managed within our credit
segment, Apollo has re-aligned its credit segment around four main strategies:
corporate credit, structured credit, direct origination and advisory and other.
The underlying assets managed within, and strategies employed by, Apollo's
credit segment have not changed as a result of this re-alignment.
Apollo has re-aligned its private equity segment around three strategies:
traditional private equity, hybrid capital and natural resources. Hybrid capital
includes our recently launched hybrid value strategy, other funds and accounts
that generally invest in illiquid opportunistic investments and the latest fund
in the Credit Opportunity Fund series.
Apollo has re-aligned its real assets segment around three strategies: real
estate, principal finance and infrastructure. Real estate includes the
commercial real estate mortgage loan assets discussed above, among other types
of real estate assets. Principal finance includes our European Principal Finance
Fund series.
Operating Metrics
We monitor certain operating metrics that are common to the alternative
investment management industry. These operating metrics include Assets Under
Management, capital deployed and uncalled commitments.
Assets Under Management
The tables below present Fee-Generating and Non-Fee-Generating AUM by segment:
                                                  As of June 30, 2019
                                Credit      Private Equity     Real Assets       Total
                                                     (in millions)
Fee-Generating                $ 163,089$        47,082$      25,965$ 236,136
Non-Fee-Generating               38,127             30,066            7,533       75,726

Total Assets Under Management $ 201,216$ 77,148$ 33,498

   $ 311,862


                                                  As of June 30, 2018
                                Credit      Private Equity     Real Assets       Total
                                                     (in millions)
Fee-Generating                $ 132,602$        47,835$      21,798$ 202,235
Non-Fee-Generating               30,620             31,032            5,565       67,217

Total Assets Under Management $ 163,222$ 78,867$ 27,363

   $ 269,452


                                                As of December 31, 2018
                                Credit      Private Equity     Real Assets       Total
                                                     (in millions)
Fee-Generating                $ 144,071$        46,633$      23,663$ 214,367
Non-Fee-Generating               30,307             28,453            7,132       65,892

Total Assets Under Management $ 174,378$ 75,086$ 30,795

   $ 280,259



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The table below presents AUM with Future Management Fee Potential, which is a component of Non-Fee-Generating AUM, for each of Apollo's three segments.

                                          As of               As of                 As of
                                      June 30, 2019       June 30, 2018       December 31, 2018
                                                           (in millions)
Credit                              $         7,860     $         7,398     $             8,725
Private Equity                                9,570              10,036                  10,555
Real Assets                                   2,159               1,309                   2,097

Total AUM with Future Management $ 19,589$ 18,743 $

            21,377

Fee Potential

The following tables present the components of Performance Fee-Eligible AUM for each of Apollo's three segments:

                                                            As of June 30, 2019
                                        Credit       Private Equity       Real Assets        Total
                                                               (in millions)

Performance Fee-Generating AUM(1) $ 35,601$ 23,827 $

     2,792     $   62,220
AUM Not Currently Generating
Performance Fees                         13,418               6,263             2,624         22,305
Uninvested Performance Fee-Eligible
AUM                                       7,581              32,257             4,309         44,147
Total Performance Fee-Eligible AUM   $   56,600$        62,347$       9,725$  128,672


                                                            As of June 30, 2018
                                        Credit       Private Equity       Real Assets        Total
                                                               (in millions)

Performance Fee-Generating AUM(1) $ 27,254$ 26,510 $

     2,218     $   55,982
AUM Not Currently Generating
Performance Fees                         12,463               3,745             1,043         17,251
Uninvested Performance Fee-Eligible
AUM                                       6,774              34,914             5,402         47,090
Total Performance Fee-Eligible AUM   $   46,491$        65,169$       8,663$  120,323


                                                          As of December 31, 2018
                                        Credit       Private Equity       Real Assets        Total
                                                               (in millions)

Performance Fee-Generating AUM(1) $ 23,574$ 22,974 $

     2,019     $   48,567
AUM Not Currently Generating
Performance Fees                         17,857               3,850             2,662         24,369
Uninvested Performance Fee-Eligible
AUM                                       8,483              35,749             4,659         48,891
Total Performance Fee-Eligible AUM   $   49,914$        62,573     $   

9,340 $ 121,827

(1) Performance Fee-Generating AUM of $2.2 billion, $2.5 billion and $0.2 billion

as of June 30, 2019, June 30, 2018 and December 31, 2018, respectively, are

above the applicable hurdle rates or preferred returns, but in accordance

with the adoption of the revenue recognition standard effective January 1,

2018, recognition of performance fees associated with such Performance

Fee-Generating AUM have been deferred to future periods when the fees are

    probable to not be significantly reversed.



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The following table presents AUM Not Currently Generating Performance Fees for
funds that have invested capital for more than 24 months as of June 30, 2019 and
the corresponding appreciation required to reach the preferred return or high
watermark in order to generate performance fees:
                                                                                  Appreciation
                                                                                  Required to
                                Invested AUM Not                                    Achieve
                              Currently Generating   Investment Period Active     Performance
Strategy / Fund                 Performance Fees           > 24 Months              Fees(1)
                                               (in millions)
Credit:
Corporate Credit              $            5,538     $                5,538            3%
Structured Credit                          1,236                        808           12%
Direct Origination                           136                          -           N/A
Advisory and Other                         6,508                          -           N/A
Total Credit                              13,418                      6,346            4%
Private Equity:
ANRP I                                       381                        381           67%
Hybrid Capital                             2,328                      1,950           81%
Other PE                                   3,554                        146           118%
Total Private Equity                       6,263                      2,477           81%
Real Assets:
Total Real Assets                          2,624                        434             > 250bps
Total                         $           22,305     $                9,257

(1) All investors in a given fund are considered in aggregate when calculating

the appreciation required to achieve performance fees presented above.

Appreciation required to achieve performance fees may vary by individual

investor. Funds with an investment period less than 24 months are "N/A".

The components of Fee-Generating AUM by segment are presented below:

                                                         As of June 30, 2019
                                                      Private             Real
                                        Credit         Equity            Assets         Total
                                                            (in millions)
Fee-Generating AUM based on capital
commitments                          $    3,284$   26,849$    5,405$   35,538
Fee-Generating AUM based on invested
capital                                   1,249         19,101             1,837         22,187
Fee-Generating AUM based on
gross/adjusted assets                   136,378            700            17,832        154,910
Fee-Generating AUM based on NAV          22,178            432               891         23,501
Total Fee-Generating AUM             $  163,089$   47,082   (1)  $   25,965$  236,136

(1) The weighted average remaining life of the traditional private equity funds

as of June 30, 2019 was 83 months.


                                                         As of June 30, 2018
                                                      Private             Real
                                        Credit         Equity            Assets         Total
                                                            (in millions)
Fee-Generating AUM based on capital
commitments                          $    3,403$   27,805$    5,451$   36,659
Fee-Generating AUM based on invested
capital                                   1,106         18,677             5,946         25,729
Fee-Generating AUM based on
gross/adjusted assets                   109,695            807            10,336        120,838
Fee-Generating AUM based on NAV          18,398            546                65         19,009
Total Fee-Generating AUM             $  132,602$   47,835   (1)  $   21,798$  202,235

(1) The weighted average remaining life of the traditional private equity funds

    as of June 30, 2018 was 92 months.



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                                                         As of December 31, 2018
                                                      Private
                                        Credit         Equity           Real Assets        Total
                                                              (in millions)
Fee-Generating AUM based on capital
commitments                          $    3,403$   26,849$       5,419$   35,671
Fee-Generating AUM based on invested
capital                                   1,020         18,601                6,659         26,280
Fee-Generating AUM based on
gross/adjusted assets                   119,525            776               11,435        131,736
Fee-Generating AUM based on NAV          20,123            407                  150         20,680
Total Fee-Generating AUM             $  144,071$   46,633   (1)  $      23,663$  214,367

(1) The weighted average remaining life of the traditional private equity funds

as of December 31, 2018 was 89 months.

The following table presents total AUM and Fee-Generating AUM amounts for our credit segment by category type:

                                      Total AUM                                  Fee-Generating AUM
                               As of                  As of                   As of                  As of
                             June 30,              December 31,             June 30,              December 31,
                        2019          2018             2018            2019          2018             2018
                                                            (in millions)

Corporate Credit $ 105,513$ 89,533$ 98,188$ 88,927$ 77,702$ 82,812 Structured Credit 49,662 39,358

             42,693        43,651        34,417             37,932
Direct Origination      18,190        14,636             16,715        16,277        13,460             14,395
Advisory and Other      27,851        19,695             16,782        14,234         7,023              8,932
Total                $ 201,216$ 163,222$      174,378     $ 

163,089 $ 132,602$ 144,071



Investment Management Agreement - AAM
Apollo, through its consolidated subsidiary, AAM, provides asset management
services to Athene with respect to assets in the Athene Accounts, including
asset allocation services, direct asset management services, asset and liability
matching management, mergers and acquisitions, asset diligence, hedging and
other asset management services and receives management fees for providing these
services. The Company, through AAM, also provides sub-allocation services with
respect to a portion of the assets in the Athene Accounts. See note 14 to the
condensed consolidated financial statements for more details regarding the fee
rates of the investment management and sub-allocation fee arrangements with
respect to the assets in the Athene Accounts.
The following table presents the aggregate Athene Sub-Allocated Total AUM by
asset class:
                                           As of June 30, 2019
                                              (in millions)
Core Assets                               $              31,052
Core Plus Assets                                         30,102
Yield Assets                                             44,457
High Alpha                                                4,238
Cash, Treasuries, Equity and Alternatives                 9,181
Total                                     $             119,030


Investment Advisory and Sub-Advisory Agreements - AAME
Apollo, through AAME, sub-advises the Athora Accounts and broadly refers to
"Athora Sub-Advised" assets as those assets in the Athora Accounts which the
Company explicitly sub-advises as well as those assets in the Athora Accounts
which are invested directly in funds and investment vehicles Apollo manages. The
Company refers to the portion of the Athora AUM that is not Athora Sub-Advised
AUM as "Athora Non-Sub Advised" AUM. See note 14 to the condensed consolidated
financial statements for more details regarding the fee arrangements with
respect to the assets in the Athora Accounts.

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The following table presents Athora Sub-Advised and Athora Non-Sub-Advised AUM:
                           As of               As of
                          June 30,          December 31,
                      2019        2018          2018
                                (in millions)

Sub-Advised AUM $ 3,596$ 1,818$ 3,032 Non-Sub-Advised AUM 10,080 6,340

            4,952
Total AUM           $ 13,676$ 8,158$       7,984


The following table presents total AUM and Fee-Generating AUM amounts for our
private equity segment:
                                    Total AUM                            Fee-Generating AUM
                             As of                As of                As of                As of
                           June 30,           December 31,           June 30,           December 31,
                       2019        2018           2018           2019        2018           2018
                                                       (in millions)
Private Equity Funds $ 61,771$ 64,970$       60,680$ 39,578$ 40,117$       39,519
Hybrid Capital          9,217       9,083             8,886       3,405       3,622             3,025
Natural Resources       6,160       4,814             5,520       4,099       4,096             4,089
Total                $ 77,148$ 78,867$       75,086$ 47,082$ 47,835$       46,633


The following table presents total AUM and Fee-Generating AUM amounts for our
real assets segment:
                                 Total AUM                            Fee-Generating AUM
                          As of                As of                As of                As of
                        June 30,           December 31,           June 30,           December 31,
                    2019        2018           2018           2019        2018           2018
                                                    (in millions)
Real Estate       $ 24,441$ 19,394$       21,971$ 19,035$ 15,375$       16,873
Principal Finance    6,996       7,398             7,050       5,207       5,852             5,468
Infrastructure       2,061         571             1,774       1,723         571             1,322
Total             $ 33,498$ 27,363$       30,795$ 25,965$ 21,798$       23,663

The following tables summarize changes in total AUM for each of Apollo's three segments:

                                                                     For 

the Three Months Ended June 30,

                                                    2019                                                            2018
                          Credit       Private Equity     Real Assets        Total        Credit       Private Equity     Real Assets        Total

Change in Total AUM(1): Beginning of Period $ 193,669$ 77,325$ 32,000$ 302,994$ 146,636$ 76,852$ 23,928$ 247,416 Inflows

                     9,664                751            1,790        12,205        23,278              2,774            4,324        30,376
Outflows(2)                (2,917 )             (101 )           (173 )      (3,191 )      (5,189 )              (16 )              -        (5,205 )
Net Flows                   6,747                650            1,617         9,014        18,089              2,758            4,324        25,171
Realizations                 (486 )           (1,381 )           (333 )      (2,200 )        (468 )           (1,578 )           (848 )      (2,894 )
Market Activity(3)          1,286                554              214         2,054        (1,035 )              835              (41 )        (241 )
End of Period           $ 201,216$       77,148$     33,498     $ 

311,862 $ 163,222$ 78,867$ 27,363$ 269,452

(1) At the individual segment level, inflows include new subscriptions,

commitments, capital raised, other increases in available capital, purchases,

acquisitions, and portfolio company appreciation. Outflows represent

redemptions, other decreases in available capital and portfolio company

depreciation. Realizations represent fund distributions of realized proceeds.

Market activity represents gains (losses), the impact of foreign exchange

    rate fluctuations and other income.



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(2) Outflows for Total AUM include redemptions of $1.6 billion and $148.6 million

during the three months ended June 30, 2019 and 2018, respectively.

(3) Includes foreign exchange impacts of $321.4 million, $15.4 million and $62.9

million for credit, private equity and real assets, respectively, during the

three months ended June 30, 2019, and foreign exchange impacts of $(1.5)

billion, $(108.0) million and $(130.5) million for credit, private equity and

real assets, respectively, during the three months ended June 30, 2018.



                                                                      For 

the Six Months Ended June 30,

                                                    2019                                                            2018
                          Credit       Private Equity     Real Assets        Total        Credit       Private Equity     Real Assets        Total
                                                                                (in millions)
Change in Total AUM(1):
Beginning of Period     $ 174,378$       75,086$     30,795$ 280,259$ 144,807$       80,694$     23,427$ 248,928
Inflows                    30,901              2,844            3,396        37,141        26,567              3,269            5,203        35,039
Outflows(2)                (5,279 )             (140 )           (399 )      (5,818 )      (6,585 )             (159 )              -        (6,744 )
Net Flows                  25,622              2,704            2,997        31,323        19,982              3,110            5,203        28,295
Realizations                 (720 )           (2,552 )           (668 )      (3,940 )      (1,887 )           (3,607 )         (1,469 )      (6,963 )
Market Activity(3)          1,936              1,910              374         4,220           320             (1,330 )            202          (808 )
End of Period           $ 201,216$       77,148$     33,498     $ 

311,862 $ 163,222$ 78,867$ 27,363$ 269,452

(1) At the individual segment level, inflows include new subscriptions,

commitments, capital raised, other increases in available capital, purchases,

acquisitions and portfolio company appreciation. Outflows represent

redemptions, other decreases in available capital and portfolio company

depreciation. Realizations represent fund distributions of realized proceeds.

Market activity represents gains (losses), the impact of foreign exchange

rate fluctuations and other income.

(2) Outflows for Total AUM include redemptions of $2.0 billion and $332.8 million

during the six months ended June 30, 2019 and 2018, respectively.

(3) Includes foreign exchange impacts of $(48.8) million, $(27.8) million and

$22.5 million for credit, private equity and real assets, respectively,

during the six months ended June 30, 2019, and foreign exchange impacts of

$(750.8) million, $(46.9) million and $(42.1) million for credit, private

equity and real assets, respectively, during the six months ended June 30,

2018.



Total AUM was $311.9 billion at June 30, 2019, an increase of $8.9 billion, or
2.9%, compared to $303.0 billion at March 31, 2019. The net increase was
primarily due to:
Net flows of $9.0 billion primarily related to:
•      a $6.7 billion increase related to funds we manage in the credit segment
       primarily consisting of an increase in AUM relating to Athene of $5.5
       billion driven by portfolio company activity and subscriptions of $2.8

billion across our corporate credit funds; these increases were partially

       offset by redemptions of $1.3 billion and net segment transfers of $1.1
       billion;

• a $1.6 billion increase related to funds we manage in the real assets

segment primarily consisting of net segment transfers of $1.1 billion and

subscriptions of $0.3 billion; and

• a $0.7 billion increase related to funds we manage in the private equity

segment primarily consisting of subscriptions of $0.6 billion primarily

relating to certain hybrid capital funds.



Market activity of $2.1 billion primarily related to $1.3 billion and $0.6
billion of appreciation in the funds we manage in the credit and private equity
segments, respectively.
Offsetting these increases were:
Realizations of $2.2 billion primarily related to:
•      $1.4 billion related to funds we manage in the private equity segment

primarily consisting of distributions from Fund VI and other traditional

private equity funds of $0.7 billion and $0.3 billion, respectively;

$0.5 billion related to funds we manage in the credit segment primarily

consisting of distributions throughout the platform; and

$0.3 billion related to funds we manage in the real assets segment.



Total AUM was $311.9 billion at June 30, 2019, an increase of $31.6 billion, or
11.3%, compared to $280.3 billion at December 31, 2018. The net increase was
primarily due to:

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Net flows of $31.3 billion primarily related to: • a $25.6 billion increase related to funds we manage in the credit segment

primarily consisting of (i) an increase in AUM relating to Athene of $9.5

billion as a result of portfolio company activity, (ii) an increase in AUM

in the advisory and other category as a result of the acquisition of Aspen

Insurance Holdings Limited and Athora's acquisition of Generali Belgium,

which added approximately $7.5 billion and $6.5 billion of AUM,

respectively, and (iii) subscriptions of $4.0 billion across our corporate

credit funds; these increases were offset by net segment transfers of $2.6

billion;

• a $3.0 billion increase related to funds we manage in the real assets

segment primarily consisting of net segment transfers of $2.6 billion; and

• a $2.7 billion increase related to funds we manage in the private equity

segment consisting of subscriptions of $2.6 billion primarily related to

certain traditional private equity fund co-investments and certain hybrid

capital funds of $1.4 billion and $0.8 billion, respectively.



Market activity of $4.2 billion primarily related to $1.9 billion and $1.9
billion of appreciation in the funds we manage in the credit and private equity
segments, respectively.
Offsetting these increases were:
Realizations of $3.9 billion primarily related to:
•      $2.6 billion related to funds we manage in the private equity segment

primarily consisting of distributions of $1.1 billion, $0.6 billion and

$0.4 billion from Fund VI, Fund VIII and certain hybrid capital funds,

respectively;

$0.7 billion related to funds we manage in the credit segment primarily

       consisting of distributions from our direct origination funds; and


•      $0.7 billion related to funds we manage in the real assets segment

primarily consisting of distributions from our principal finance funds.



The following tables summarize changes in Fee-Generating AUM for each of
Apollo's three segments:
                                                                    For the Three Months Ended June 30,
                                                    2019                                                            2018
                          Credit       Private Equity     Real Assets        Total        Credit       Private Equity     Real Assets        Total

Change in Fee-Generating AUM(1): Beginning of Period $ 156,860$ 46,372$ 25,033$ 228,265$ 116,722$ 47,519$ 18,226$ 182,467 Inflows

                     9,184              1,190            1,467        11,841        21,721              1,118            4,242        27,081
Outflows(2)                (3,548 )             (206 )           (473 )      (4,227 )      (5,203 )             (362 )              -        (5,565 )
Net Flows                   5,636                984              994         7,614        16,518                756            4,242        21,516
Realizations                 (177 )             (317 )           (164 )        (658 )        (242 )             (438 )           (586 )      (1,266 )
Market Activity(3)            770                 43              102           915          (396 )               (2 )            (84 )        (482 )

End of Period $ 163,089$ 47,082$ 25,965$ 236,136$ 132,602$ 47,835$ 21,798$ 202,235

(1) At the individual segment level, inflows include new subscriptions,

commitments, capital raised, other increases in available capital, purchases,

acquisitions and portfolio company appreciation. Outflows represent

redemptions, other decreases in available capital and portfolio company

depreciation. Realizations represent fund distributions of realized proceeds.

Market activity represents gains (losses), the impact of foreign exchange

rate fluctuations and other income.

(2) Outflows for Fee-Generating AUM include redemptions of $1.5 billion and

$135.2 million during the three months ended June 30, 2019 and 2018,

respectively.

(3) Includes foreign exchange impacts of $96.8 million, $(2.4) million and $27.4

million for credit, private equity and real assets, respectively, during the

three months ended June 30, 2019, and foreign exchange impacts of $(730.4)

million, $(19.6) million and $(138.3) million for credit, private equity and

    real assets, respectively, during the three months ended June 30, 2018.



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                                                                     For the Six Months Ended June 30,
                                                    2019                                                            2018
                          Credit       Private Equity     Real Assets        Total        Credit       Private Equity     Real Assets        Total
                                                                               (in millions)
Change in Fee-Generating AUM(1):
Beginning of Period    $  144,071$       46,633$     23,663$ 214,367$ 116,352$       34,063$     18,550$ 168,965
Inflows                    23,529              1,323            2,947        27,799        24,738             24,647            4,243        53,628
Outflows(2)                (5,752 )             (433 )           (483 )      (6,668 )      (7,545 )          (10,443 )              -       (17,988 )
Net Flows                  17,777                890            2,464        21,131        17,193             14,204            4,243        35,640
Realizations                 (279 )             (511 )           (285 )      (1,075 )      (1,130 )             (455 )         (1,031 )      (2,616 )
Market Activity(3)          1,520                 70              123         1,713           187                 23               36           246

End of Period $ 163,089$ 47,082$ 25,965$ 236,136$ 132,602$ 47,835$ 21,798$ 202,235

(1) At the individual segment level, inflows include new subscriptions,

commitments, capital raised, other increases in available capital, purchases,

acquisitions and portfolio company appreciation. Outflows represent

redemptions, other decreases in available capital and portfolio company

depreciation. Realizations represent fund distributions of realized proceeds.

Market activity represents gains (losses), the impact of foreign exchange

rate fluctuations and other income.

(2) Outflows for Fee-Generating AUM include redemptions of $2.0 billion and

$307.3 million during the six months ended June 30, 2019 and 2018,

respectively.

(3) Includes foreign exchange impacts of $(46.1) million, $(2.4) million and

$(5.2) million for credit, private equity and real assets, respectively,

during the six months ended June 30, 2019, and foreign exchange impacts of

$(374.1) million, $(8.2) million and $(52.5) million for credit, private

equity and real assets, respectively, during the six months ended June 30,

2018.



Total Fee-Generating AUM was $236.1 billion at June 30, 2019, an increase of
$7.9 billion or 3.5%, compared to $228.3 billion at March 31, 2019. The net
increase was primarily due to:
Net flows of $7.6 billion primarily related to:
•      a $5.6 billion increase related to funds we manage in the credit segment

primarily consisting of an increase in AUM relating to Athene of $5.5

billion driven by portfolio company activity and an increase relating to

       fee-generating capital deployment of $1.5 billion; these increases were
       partially offset by net segment transfers of $0.9 billion and
       fee-generating capital reduction of $0.9 billion;

• a $1.0 billion increase related to funds we manage in the real assets

segment primarily consisting of $1.0 billion of net segment transfers; and

• a $1.0 billion increase related to funds we manage in the private equity

       segment primarily consisting of fee-generating capital deployment of $1.2
       billion.


Market activity of $0.9 billion primarily related to $0.8 billion of
appreciation in the funds we manage in the credit segment.
Total Fee-Generating AUM was $236.1 billion at June 30, 2019, an increase of
$21.8 billion or 10.2%, compared to $214.4 billion at December 31, 2018. The net
increase was primarily due to:
Net flows of $21.1 billion primarily related to:
•      a $17.8 billion increase related to funds we manage in the credit segment

primarily consisting of (i) an increase in AUM relating to Athene of $9.5

billion as a result of portfolio company activity, (ii) an increase in AUM

in advisory and other as a result of Athora's acquisition of Generali

Belgium, which added approximately $6.5 billion of AUM and (iii) an

increase relating to fee-generating capital deployment of $2.6 billion;

these increases were partially offset by fee-generating capital reduction

of $1.5 billion;

• a $2.5 billion increase related to funds we manage in the real assets

segment primarily consisting of net segment transfers of $2.1 billion and

$0.5 billion of fee-generating deployment primarily related to certain

infrastructure funds; and

• a $0.9 billion increase related to funds we manage in the private equity

       segment primarily consisting of fee-generating capital deployment of $1.3
       billion, offset by fee-generating capital reduction of $0.3 billion.

Market activity of $1.7 billion primarily related to: • a $1.5 billion increase related to funds we manage in the credit segment

       as a result of appreciation across our corporate credit funds.



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Capital Deployed and Uncalled Commitments
Capital deployed is the aggregate amount of capital that has been invested
during a given period by our commitment-based funds, SIAs that have a defined
maturity date and funds and SIAs in our real estate debt strategy. Uncalled
commitments, by contrast, represents unfunded capital commitments that certain
of Apollo's funds and SIAs have received from fund investors to fund future or
current fund investments and expenses.
Capital deployed and uncalled commitments are indicative of the pace and
magnitude of fund capital that is deployed or will be deployed, and which
therefore could result in future revenues that include management fees,
transaction fees and performance fees to the extent they are fee-generating.
Capital deployed and uncalled commitments can also give rise to future costs
that are related to the hiring of additional resources to manage and account for
the additional capital that is deployed or will be deployed. Management uses
capital deployed and uncalled commitments as key operating metrics since we
believe the results measure our fund's investment activities.
Capital Deployed
The following table summarizes the capital deployed for funds and SIAs with a
defined maturity date by segment:
                         For the Three Months Ended June 30,       For the Six Months Ended June 30,
                               2019                 2018                2019                 2018
                                    (in millions)                            (in millions)
Credit                 $            1,837     $          897     $           2,746     $        1,501
Private Equity                      2,540              1,746                 5,655              3,168
Real Assets                           821                783                 1,076                973
Total capital deployed $            5,198     $        3,426     $           9,477     $        5,642


Uncalled Commitments
The following table summarizes the uncalled commitments by segment:
                                   As of                As of
                               June 30, 2019      December 31, 2018
                                           (in millions)
Credit                        $         8,317    $             8,066
Private Equity                         38,798                 41,585
Real Assets                             5,388                  5,980
Total uncalled commitments(1) $        52,503    $            55,631


(1) As of June 30, 2019 and December 31, 2018, $44.4 billion and $48.5 billion,

respectively, represented the amount of capital available for investment or

reinvestment subject to the provisions of the applicable limited partnership

agreements or other governing agreements of the funds, partnerships and

accounts we manage. These amounts exclude uncalled commitments which can only

be called for fund fees and expenses.



The Historical Investment Performance of Our Funds
Below we present information relating to the historical performance of our
funds, including certain legacy Apollo funds that do not have a meaningful
amount of unrealized investments, and in respect of which the general partner
interest has not been contributed to us.
When considering the data presented below, you should note that the historical
results of our funds are not indicative of the future results that you should
expect from such funds, from any future funds we may raise or from your
investment in our Class A shares.
An investment in our Class A shares is not an investment in any of the Apollo
funds, and the assets and revenues of our funds are not directly available to
us. The historical and potential future returns of the funds we manage are not
directly linked to returns on our Class A shares. Therefore, you should not
conclude that continued positive performance of the funds we manage will
necessarily result in positive returns on an investment in our Class A shares.
However, poor performance of the funds that we manage would cause a decline in
our revenue from such funds, and would therefore have a negative effect on our
performance and in all likelihood the value of our Class A shares.

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Moreover, the historical returns of our funds should not be considered
indicative of the future results you should expect from such funds or from any
future funds we may raise. There can be no assurance that any Apollo fund will
continue to achieve the same results in the future.
Finally, our private equity IRRs have historically varied greatly from fund to
fund. For example, Fund IV generated a 12% gross IRR and a 9% net IRR since its
inception through June 30, 2019, while Fund V generated a 61% gross IRR and a
44% net IRR since its inception through June 30, 2019. Accordingly, the IRR
going forward for any current or future fund may vary considerably from the
historical IRR generated by any particular fund, or for our private equity funds
as a whole. Future returns will also be affected by the applicable risks,
including risks of the industries and businesses in which a particular fund
invests. See "Item 1A. Risk Factors-Risks Related to Our Businesses-The
historical returns attributable to our funds should not be considered as
indicative of the future results of our funds or of our future results or of any
returns expected on an investment in our Class A shares and our Preferred
shares" in the 2018 Annual Report.
Investment Record
The following table summarizes the investment record by segment of Apollo's
significant commitment-based funds that have a defined maturity date in which
investors make a commitment to provide capital at the formation of such funds
and deliver capital when called as investment opportunities become available.
The funds included in the investment record table below have greater than $500
million of AUM and/or form part of a flagship series of funds.
All amounts are as of June 30, 2019, unless otherwise noted:
                                                                       Total
                         Vintage                     Committed       Invested        Realized                                                                      Gross        Net
($ in millions)           Year       Total AUM        Capital         Capital          Value        Remaining Cost        Unrealized Value        Total Value       IRR         IRR
Private Equity:
Fund IX                   2018     $    24,522$    24,729$     2,081      $       -      $         2,081      $            2,182      $       2,182        NM   (1)    NM   (1)
Fund VIII                 2013          20,499          18,377          15,760          5,859               12,827                  17,025             22,884        17 %        12 %
Fund VII                  2008           4,162          14,677          16,461         31,087                2,912                   2,162             33,249        33          25
Fund VI                   2006             640          10,136          12,457         21,102                  405                      28             21,130        12           9
Fund V                    2001             261           3,742           5,192         12,715                  120                       6             12,721        61          44
Fund I, II, III, IV &
MIA(2)                   Various            13           7,320           8,753         17,400                    -                       -             17,400        39          26
Traditional Private
Equity Funds(3)                    $    50,097$    78,981$    60,704$  88,163$        18,345      $           21,403      $     109,566        39 %        25 %
ANRP II                   2016           3,450           3,454           2,128            849                1,754                   2,113              2,962        29          16
ANRP I                    2012             637           1,323           1,144            968                  655                     411              1,379         6           2
AION                      2013             779             826             668            288                  471                     638                926        19           9
Hybrid Value Fund         2019           3,230           3,238             530              7                  530                     534                541        NM   (1)    NM   (1)
Total Private Equity               $    58,193$    87,822$    65,174$  90,275$        21,755      $           25,099      $     115,374
Credit:
Structured Credit Funds
FCI III                   2017     $     2,628$     1,906$     2,265$     781      $         1,888      $            2,031      $       2,812        NM   (1)    NM   (1)
FCI II                    2013           2,248           1,555           2,643          1,572                1,718                   1,640              3,212         9 %         5 %
FCI I                     2012             403             559           1,516          1,968                    -                       -              1,968        11           9
SCRF IV (6)               2017           2,928           2,502           2,795          1,087                1,955                   2,021              3,108        NM   (1)    NM   (1)
SCRF III                  2015               -           1,238           2,110          2,428                    -                       -              2,428        18          14
SCRF II                   2012               -             104             467            528                    -                       -                528        15          12
SCRF I                    2008               -             118             240            357                    -                       -                357        33          26
Total Credit                       $     8,207$     7,982$    12,036$   8,721      $         5,561      $            5,692      $      14,413
Real Assets:
European Principal
Finance Funds
EPF III(4)                2017     $     4,575$     4,531$     2,040$      22      $         2,018      $            2,171      $       2,193        NM   (1)    NM   (1)
EPF II(4)                 2012           1,822           3,454           3,486          4,070                  870                     978              5,048        16 %         9 %
EPF I(4)                  2007             240           1,473           1,936          3,251                    -                      10              3,261        23          17
U.S. RE Fund II(5)        2016           1,206           1,233             806            371                  588                     706              1,077        17          14
U.S. RE Fund I(5)         2012             348             650             633            693                  232                     256                949        14          11
Asia RE Fund(5)           2017             642             709             338            200                  184                     236                436        20          14
Infrastructure Equity
Fund                      2018             944             897             768             80                  713                     750                830        NM   (1)    NM   (1)
Total Real Assets                  $     9,777$    12,947$    10,007$   8,687      $         4,605      $            5,107      $      13,794

(1) Data has not been presented as the fund commenced investing capital less than

24 months prior to the period indicated and such information was deemed not

    meaningful.



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(2) The general partners and managers of Funds I, II and MIA, as well as the

general partner of Fund III, were excluded assets in connection with the 2007

Reorganization. As a result, Apollo did not receive the economics associated

with these entities. The investment performance of these funds, combined with

Fund IV, is presented to illustrate fund performance associated with Apollo's

Managing Partners and other investment professionals.

(3) Total IRR is calculated based on total cash flows for all funds presented.

(4) Funds are denominated in Euros and historical figures are translated into

U.S. dollars at an exchange rate of €1.00 to $1.14 as of June 30, 2019.

(5) U.S. RE Fund I, U.S. RE Fund II and Asia RE Fund had $154 million, $761

million and $366 million of co-investment commitments as of June 30, 2019,

respectively, which are included in the figures in the table. A co-invest

entity within U.S. RE Fund I is denominated in pound sterling and translated

into U.S. dollars at an exchange rate of £1.00 to $1.27 as of June 30, 2019.

(6) Remaining cost for certain of our credit funds may include physical cash

called, invested or reserved for certain levered investments.



Private Equity
The following table summarizes the investment record for distressed investments
made in our traditional private equity fund portfolios, since the Company's
inception. All amounts are as of June 30, 2019:
                                               Total Invested
                                                   Capital           Total Value       Gross IRR
                                                         (in millions)
Distressed for Control                       $           7,915     $      19,109             29 %
Non-Control Distressed                                   5,416             8,460             71
Total                                                   13,331            27,569             49
Corporate Carve-outs, Opportunistic Buyouts
and Other Credit(1)                                     47,373            81,997             21
Total                                        $          60,704     $     109,566             39 %


(1) Other Credit is defined as investments in debt securities of issuers other

than portfolio companies that are not considered to be distressed.



The following tables provide additional detail on the composition of the Fund
VIII, Fund VII and Fund VI private equity portfolios based on investment
strategy. Amounts for Fund I, II, III, IV, V and IX are included in the table
above but not presented below as their remaining value is less than $100
million, the fund has been liquidated or the fund commenced investing capital
less than 24 months prior to June 30, 2019 and such information was deemed not
meaningful. All amounts are as of June 30, 2019:
Fund VIII(1)
                       Total Invested Capital      Total Value
                                    (in millions)
Corporate Carve-outs  $                  2,673    $       5,225
Opportunistic Buyouts                   12,543           16,810
Distressed                                 544              849
Total                 $                 15,760    $      22,884


Fund VII(1)
                            Total Invested Capital      Total Value
                                         (in millions)
Corporate Carve-outs       $                  2,540    $       3,906
Opportunistic Buyouts                         4,338           10,642
Distressed/Other Credit(2)                    9,583           18,701
Total                      $                 16,461    $      33,249



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Fund VI
                            Total Invested Capital      Total Value
                                         (in millions)
Corporate Carve-outs       $                  3,397    $       5,900
Opportunistic Buyouts                         6,374           10,254
Distressed/Other Credit(2)                    2,686            4,976
Total                      $                 12,457    $      21,130

(1) Committed capital less unfunded capital commitments for Fund VIII and Fund

VII $15.5 billion and $14.4 billion, respectively, which represents capital

commitments from limited partners to invest in such funds less capital that

is available for investment or reinvestment subject to the provisions of the

applicable limited partnership agreement or other governing agreements.

(2) The distressed investment strategy includes distressed for control,

non-control distressed and other credit.



During the recovery and expansionary periods of 1994 through 2000 and late 2003
through the first half of 2007, our private equity funds invested or committed
to invest approximately $13.7 billion primarily in traditional and corporate
partner buyouts. During the recessionary periods of 1990 through 1993, 2001
through late 2003 and the recessionary and post recessionary periods (beginning
the second half of 2007 through June 30, 2019), our private equity funds have
invested $53.4 billion, of which $19.7 billion was in distressed buyouts and
debt investments when the debt securities of quality companies traded at deep
discounts to par value. Our average entry multiple for Fund VIII, VII and VI was
5.7x, 6.1x and 7.7x, respectively, as of June 30, 2019. Our average entry
multiple for a private equity fund is the average of the total enterprise value
over an applicable adjusted earnings before interest, taxes, depreciation and
amortization which may incorporate certain adjustments based on the investment
team's estimate and we believe captures the true economics of our funds'
investments in portfolio companies. The average entry multiple of actively
investing funds may include committed investments not yet closed.
Credit
The following table presents the gross and net returns for Apollo's credit
segment by category type:
                                     Gross Returns                     Net Returns
                             For the Three    For the Six    For the Three     For the Six
                             Months Ended    Months Ended     Months Ended     Months Ended
Category                     June 30, 2019   June 30, 2019   June 30, 2019    June 30, 2019
Corporate Credit                     2.3 %           6.4 %            2.1 %            5.8 %
Structured Credit                    4.0             8.4              3.3              6.9
Direct Origination                   3.3             6.3              2.6              4.8


Permanent Capital
The following table summarizes the investment record for our permanent capital
vehicles by segment, excluding Athene-related and Athora-related assets managed
or advised by Athene Asset Management and AAME:
                                                                          Total Returns(1)
                                                   For the Three       For the Six    For the Three     For the Six
                                                 Months Ended June   

Months Ended Months Ended Months Ended

              IPO Year(2)       Total AUM            30, 2019         June 30, 2019   June 30, 2018    June 30, 2018
Credit:                       (in millions)
MidCap(3)         N/A       $         9,064                  5 %               8 %             5  %             9 %
AIF              2013                   376                  3                12               1                3
AFT              2011                   404                  3                 8              (1 )              4
AINV/Other(4)    2004                 5,304                  7                35              10                4
Real Assets:
ARI              2009                 5,662                  4  %             16 %             4   %            4 %
Total                       $        20,810

(1) Total returns are based on the change in closing trading prices during the

respective periods presented taking into account dividends and distributions,

if any, as if they were reinvested without regard to commission.

(2) An IPO year represents the year in which the vehicle commenced trading on a

    national securities exchange.



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(3) MidCap is not a publicly traded vehicle and therefore IPO year is not

applicable. The returns presented are a gross return based on NAV. The net

returns based on NAV were 3% and 3% for the three months ended June 30, 2019

and 2018, respectively, and 6% and 6% for the six months ended June 30, 2019

and June 30, 2018, respectively.

(4) Included within Total AUM of AINV/Other is $1.9 billion of AUM related to a

non-traded business development company from which Apollo earns

investment-related service fees, but for which Apollo does not provide

management or advisory services. Net returns exclude performance related to

    this AUM.


SIAs

As of June 30, 2019, Apollo managed approximately $26 billion of total AUM in
SIAs, which include capital deployed from certain SIAs across Apollo's credit,
private equity and real assets funds.
Overview of Results of Operations
Revenues
Advisory and Transaction Fees, Net. As a result of providing advisory services
with respect to actual and potential credit, private equity, and real assets
investments, we are entitled to receive fees for transactions related to the
acquisition and, in certain instances, disposition of portfolio companies as
well as fees for ongoing monitoring of portfolio company operations and
directors' fees. We also receive advisory fees for advisory services provided to
certain credit funds. In addition, monitoring fees are generated on certain
structured portfolio company investments. Under the terms of the limited
partnership agreements for certain funds, the management fee payable by the
funds may be subject to a reduction based on a certain percentage of such
advisory and transaction fees, net of applicable broken deal costs ("Management
Fee Offset"). Such amounts are presented as a reduction to advisory and
transaction fees, net, in the condensed consolidated statements of operations
(see note 2 to our condensed consolidated financial statements for more detail
on advisory and transaction fees, net).
The Management Fee Offsets are calculated for each fund as follows:
•                        65%-100% for certain credit funds, gross advisory,
                         transaction and other special fees;


•                        65%-100% for private equity funds, gross advisory,
                         transaction and other special fees; and


•                        65%-100% for certain real assets funds, gross advisory,
                         transaction and other special fees.


Management Fees. The significant growth of the assets we manage has had a
positive effect on our revenues. Management fees are typically calculated based
upon any of "net asset value," "gross assets," "adjusted par asset value,"
"adjusted costs of all unrealized portfolio investments," "capital commitments,"
"invested capital," "adjusted assets," "capital contributions," or
"stockholders' equity," each as defined in the applicable limited partnership
agreement and/or management agreement of the unconsolidated funds.
Performance Fees. The general partners of our funds are entitled to an incentive
return of normally up to 20% of the total returns of a fund's capital, depending
upon performance of the underlying funds and subject to preferred returns and
high water marks, as applicable. Performance fees, categorized as performance
allocations, are accounted for as an equity method investment, and effectively,
the performance fees for any period are based upon an assumed liquidation of the
funds' assets at the reporting date, and distribution of the net proceeds in
accordance with the funds' allocation provisions. Performance fees categorized
as incentive fees, which are not accounted as an equity method investment, are
deferred until fees are probable to not be significantly reversed. Prior to the
adoption of the new revenue recognition guidance, incentive fees were recognized
on an assumed liquidation basis. The majority of performance fees are comprised
of performance allocations.
As of June 30, 2019, approximately 53% of the value of our funds' investments on
a gross basis was determined using market-based valuation methods (i.e.,
reliance on broker or listed exchange quotes) and the remaining 47% was
determined primarily by comparable company and industry multiples or discounted
cash flow models. For our credit, private equity and real assets segments, the
percentage determined using market-based valuation methods as of June 30, 2019
was 75%, 19% and 17%, respectively. See "Item 1A. Risk Factors-Risks Related to
Our Businesses-Our funds' performance, and our performance, may be adversely
affected by the financial performance of our funds' portfolio companies and the
industries in which our funds invest" in the 2018 Annual Report for a discussion
regarding certain industry-specific risks that could affect the fair value of
our private equity funds' portfolio company investments.
In our private equity funds, the Company does not earn performance fees until
the investors in the fund have achieved cumulative investment returns on
invested capital (including management fees and expenses) in excess of an 8%
hurdle rate. Additionally, certain of our credit and real assets funds have
various performance fee rates and hurdle rates. Certain of our credit and real
assets funds allocate performance fees to the general partner in a similar
manner as the private equity funds. In our private

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equity, certain credit and real assets funds, so long as the investors achieve
their priority returns, there is a catch-up formula whereby the Company earns a
priority return for a portion of the return until the Company's performance fees
equate to its incentive fee rate for that fund; thereafter, the Company
participates in returns from the fund at the performance fee rate. Performance
fees, categorized as performance allocations, are subject to reversal to the
extent that the performance fees distributed exceed the amount due to the
general partner based on a fund's cumulative investment returns. The Company
recognizes potential repayment of previously received performance fees as a
general partner obligation representing all amounts previously distributed to
the general partner that would need to be repaid to the Apollo funds if these
funds were to be liquidated based on the current fair value of the underlying
funds' investments as of the reporting date. The actual general partner
obligation, however, would not become payable or realized until the end of a
fund's life or as otherwise set forth in the respective limited partnership
agreement of the fund.
The table below presents an analysis of Apollo's (i) performance fees receivable
on an unconsolidated basis and (ii) realized and unrealized performance fees for
Apollo's combined segments:
                             As of
                         June 30, 2019                For the Three Months Ended June 30, 2019                       For the Six Months Ended June 30, 2019
                        Performance Fees
                        Receivable on an                                                       Total                                                       Total
                         Unconsolidated         Unrealized              Realized            Performance         Unrealized             Realized         Performance
                             Basis           Performance Fees       Performance Fees           Fees          Performance Fees      Performance Fees        Fees
                                                                                       (in thousands)
Credit:

Corporate Credit(1) $ 57,797 $ 20,823$ 4,139$ 24,962$ 51,079$ 7,466 $

58,545

Structured Credit               175,512             13,974                 16,882                30,856             36,516                 16,536      

53,052

Direct Origination               96,093              6,578                  6,270                12,848             13,459                  7,277       

20,736

Total Credit           $        329,402$       41,375$       27,291$      68,666$      101,054$       31,279$     132,333
Total Credit, net of
profit sharing expense           96,189             23,476                 19,414                42,890             56,479                 19,884            76,363
Private Equity:
Fund VIII(2)           $        622,949$      113,408$       10,054$     123,462$      181,754$       67,533$     249,287
Fund VII(1)(2)                      224            (43,653 )                  743               (42,910 )          (23,237 )                1,477           (21,760 )
Fund VI(2)                       14,695              7,408                    965                 8,373             27,473                  1,919            29,392
Fund IV and V(1)                      -               (655 )                    -                  (655 )           (1,253 )                    -            (1,253 )
ANRP I and II(1)(2)              53,876             12,885                    330                13,215             19,703                    655            20,358
Other(1)(3)                      70,497              4,124                    139                 4,263             17,626                  1,103            18,729
Total Private Equity   $        762,241$       93,517$       12,231$     105,748$      222,066$       72,687$     294,753
Total Private Equity,
net of profit sharing
expense                         461,157             68,159                  8,142                76,301            145,351                 30,871           176,222
Real Assets:
Principal Finance      $        106,963$       (9,101 )$        1,742$      (7,359 )$      (15,217 )$        1,760$     (13,457 )
U.S. RE Fund I & II              13,383             (1,679 )                1,446                  (233 )           (3,291 )                1,645            (1,646 )
Infrastructure Equity
Fund                              5,077              2,393                      -                 2,393              5,077                      -             5,077
Other(3)                         15,717              3,174                   (114 )               3,060              4,373                   (325 )           4,048
Total Real Assets      $        141,140$       (5,213 )$        3,074$      (2,139 )$       (9,058 )$        3,080$      (5,978 )
Total Real Assets, net
of profit sharing
expense                          79,483             (2,755 )                1,734                (1,021 )           (4,329 )                1,846            (2,483 )
Total                  $      1,232,783$      129,679$       42,596$     172,275$      314,062$      107,046$     421,108
Total, net of profit
sharing expense(4)     $        636,829$       88,880$       29,290$     118,170$      197,501$       52,601$     250,102

(1) As of June 30, 2019, certain credit funds, private equity funds and real

assets funds had $0.3 million, $147.1 million and $0.5 million, respectively,

in general partner obligations to return previously distributed performance

fees. The fair value gain on investments and income at the fund level needed

to reverse the general partner obligations for certain credit funds, private

equity funds and real assets funds was $1.6 million, $1,182.1 million and

$2.0 million respectively, as of June 30, 2019.

(2) As of June 30, 2019, the remaining investments and escrow cash of Fund VIII

were valued at 125% of the fund's unreturned capital, which was above the

required escrow ratio of 115%. As of June 30, 2019, the remaining investments

and escrow cash of Fund VII, Fund VI, ANRP I and ANRP II were valued at 73%,

37%, 62% and 112% of the fund's unreturned capital, respectively, which were

below the required escrow ratio of 115%. As a result, these funds are

required to place in escrow current and future performance fee distributions

to the general partner until the specified return ratio of 115% is met (at

the time of a future distribution) or upon liquidation. As of June 30, 2019,

Fund VII had $128.5 million of gross performance fees, or $73.1 million net

of profit sharing, in escrow. As of June 30, 2019, Fund VI had $167.6 million

of gross performance fees, or $112.4 million net of profit sharing, in

escrow. As of June 30, 2019, ANRP I had $40.2 million of gross performance

fees, or $25.2 million net of profit sharing, in escrow. As of June 30, 2019,

ANRP II had $18.4 million of gross performance fees, or $12.5 million net of

profit sharing, in escrow. With respect to Fund VII, Fund VI, ANRP II and

ANRP I, realized performance fees currently distributed to the general

partner are limited to potential tax distributions and interest on escrow

balances per the funds' partnership agreements. Performance fees receivable

as of June 30, 2019 and realized performance fees include interest earned on

escrow balances that is not subject to contingent repayment.

(3) Other includes certain SIAs.

(4) There was a corresponding profit sharing payable of $596.0 million as of

June 30, 2019, including profit sharing payable related to amounts in escrow

    and contingent consideration obligations of $93.2 million.



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The general partners of certain of our credit funds accrue performance fees,
categorized as performance allocations, when the fair value of investments
exceeds the cost basis of the individual investors' investments in the fund,
including any allocable share of expenses incurred in connection with such
investments, which we refer to as "high water marks." These high water marks are
applied on an individual investor basis. Certain of our credit funds have
investors with various high water marks, the achievement of which is subject to
market conditions and investment performance.
Performance fees from our private equity funds and certain credit and real
assets funds are subject to contingent repayment by the general partner in the
event of future losses to the extent that the cumulative performance fees
distributed from inception to date exceeds the amount computed as due to the
general partner at the final distribution. These general partner obligations, if
applicable, are included in due to related parties on the condensed consolidated
statements of financial condition.
The following table summarizes our performance fees since inception for our
combined segments through June 30, 2019:
                                                                 

Performance Fees Since Inception(1)

                                                                                                                              Maximum
                                                                                                                          Performance Fees
                                                                          Total Undistributed and                            Subject to
                             Undistributed by      Distributed by Fund    

Distributed by Fund and General Partner Potential

                           Fund and Recognized      and Recognized(2)          Recognized(3)           Obligation(3)        Reversal(4)
                                                                            (in millions)
Credit:
Corporate Credit           $             57.8     $           1,079.6     $             1,137.4     $             0.3     $         77.3
Structured Credit                       175.5                   143.5                     319.0                     -              141.7
Direct Origination                       96.1                    10.0                     106.1                     -               88.1
Total Credit                            329.4                 1,233.1                   1,562.5                   0.3              307.1
Private Equity:
Fund VIII                               622.9                   498.1                   1,121.0                     -              918.9
Fund VII                                  0.2                 3,130.2                   3,130.4                  61.8              421.6
Fund VI                                  14.7                 1,663.9                   1,678.6                     -                5.6
Fund IV and V                               -                 2,053.1                   2,053.1                  30.5                1.3
ANRP I and II                            53.9                    91.0                     144.9                  12.0               71.8
Other                                    70.5                   707.4                     777.9                  42.8              100.8
Total Private Equity                    762.2                 8,143.7                   8,905.9                 147.1            1,520.0
Real Assets:
Principal Finance                       107.0                   375.5                     482.5                     -              236.9
U.S. RE Fund I and II                    13.4                    27.8                      41.2                   0.5               35.1
Infrastructure Equity Fund                5.1                       -                       5.1                     -                5.1
Other(5)                                 15.7                    30.7                      46.4                     -               24.5
Total Real Assets                       141.2                   434.0                     575.2                   0.5              301.6
Total                      $          1,232.8     $           9,810.8     $            11,043.6     $           147.9     $      2,128.7

(1) Certain funds are denominated in Euros and historical figures are translated

into U.S. dollars at an exchange rate of €1.00 to $1.14 as of June 30, 2019.

Certain funds are denominated in pound sterling and translated into U.S.

dollars at an exchange rate of £1.00 to $1.27 as of June 30, 2019.

(2) Amounts in "Distributed by Fund and Recognized" for the CPI, Gulf Stream

Asset Management, LLC ("Gulf Stream") and Stone Tower funds and SIAs are

presented for activity subsequent to the respective acquisition dates.

(3) Amounts were computed based on the fair value of fund investments on June 30,

2019. Performance fees have been allocated to and recognized by the general

partner. Based on the amount allocated, a portion is subject to potential

reversal or, to the extent applicable, has been reduced by the general

partner obligation to return previously distributed performance fees at

June 30, 2019. The actual determination and any required payment of any such

general partner obligation would not take place until the final disposition

of the fund's investments based on contractual termination of the fund.

(4) Represents the amount of performance fees that would be reversed if remaining

fund investments became worthless on June 30, 2019. Amounts subject to

potential reversal of performance fees include amounts undistributed by a

fund (i.e., the performance fees receivable), as well as a portion of the

amounts that have been distributed by a fund, net of taxes not subject to a

general partner obligation to return previously distributed performance fees,

except for those funds that are gross of taxes as defined in the respective

funds' governing documents.

(5) Other includes certain SIAs.

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Expenses

Compensation and Benefits. Our most significant expense is compensation and
benefits expense. This consists of fixed salary, discretionary and
non-discretionary bonuses, profit sharing expense associated with the
performance fees earned from credit, private equity, and real assets funds and
compensation expense associated with the vesting of non-cash equity-based
awards.
Our compensation arrangements with certain partners and employees contain a
significant performance-based incentive component. Therefore, as our net
revenues increase, our compensation costs rise. Our compensation costs also
reflect the increased investment in people as we expand geographically and
create new funds.
In addition, certain professionals and selected other individuals have a profit
sharing interest in the performance fees earned in relation to our private
equity, certain credit and real assets funds in order to better align their
interests with our own and with those of the investors in these funds. Profit
sharing expense is part of our compensation and benefits expense and is
generally based upon a fixed percentage of credit, private equity and real
assets performance fees. Profit sharing expense can reverse during periods when
there is a decline in performance fees that were previously recognized. Profit
sharing amounts are normally distributed to employees after the corresponding
investment gains have been realized and generally before preferred returns are
achieved for the investors. Therefore, changes in our unrealized performance
fees have the same effect on our profit sharing expense. Profit sharing expense
increases when unrealized performance fees increases. Realizations only impact
profit sharing expense to the extent that the effects on investments have not
been recognized previously. If losses on other investments within a fund are
subsequently realized, the profit sharing amounts previously distributed are
normally subject to a general partner obligation to return performance fees
previously distributed back to the funds. This general partner obligation due to
the funds would be realized only when the fund is liquidated, which generally
occurs at the end of the fund's term. However, indemnification obligations also
exist for realized gains with respect to Fund IV, Fund V and Fund VI, which,
although our Managing Partners and Contributing Partners would remain personally
liable, may indemnify our Managing Partners and Contributing Partners for 17.5%
to 100% of the previously distributed profits regardless of the fund's future
performance. See note 14 to our condensed consolidated financial statements for
further information regarding the Company's indemnification liability.
Each Managing Partner receives $100,000 per year in base salary for services
rendered to us. Additionally, our Managing Partners can receive other forms of
compensation. In addition, AHL Awards (as defined in note 12 to our condensed
consolidated financial statements) and other equity-based compensation awards
have been granted to the Company and certain employees, which amortize over the
respective vesting periods. The Company grants equity awards to certain
employees, including RSUs, restricted Class A shares and options, that generally
vest and become exercisable in quarterly installments or annual installments
depending on the contract terms over a period of three to six years. In some
instances, vesting of an RSU is also subject to the Company's receipt of
performance fees, within prescribed periods, sufficient to cover the associated
equity-based compensation expense. See note 12 to our condensed consolidated
financial statements for further discussion of equity-based compensation.
Other Expenses. The balance of our other expenses includes interest, placement
fees, and general, administrative and other operating expenses. Interest expense
consists primarily of interest related to the 2013 AMH Credit Facilities, the
2018 AMH Credit Facility, the 2024 Senior Notes, the 2026 Senior Notes, the 2029
Senior Notes, the 2039 Senior Secured Guaranteed Notes and the 2048 Senior Notes
as discussed in note 10 to our condensed consolidated financial statements.
Placement fees are incurred in connection with our capital raising activities.
General, administrative and other expenses includes occupancy expense,
depreciation and amortization, professional fees and costs related to travel,
information technology and administration. Occupancy expense represents charges
related to office leases and associated expenses, such as utilities and
maintenance fees. Depreciation and amortization of fixed assets is normally
calculated using the straight-line method over their estimated useful lives,
ranging from two to sixteen years, taking into consideration any residual value.
Leasehold improvements are amortized over the shorter of the useful life of the
asset or the expected term of the lease. Intangible assets are amortized based
on the future cash flows over the expected useful lives of the assets.
Other Income (Loss)
Net Gains (Losses) from Investment Activities. Net gains (losses) from
investment activities include both realized gains and losses and the change in
unrealized gains and losses in our investment portfolio between the opening
reporting date and the closing reporting date. Net unrealized gains (losses) are
a result of changes in the fair value of unrealized investments and reversal of
unrealized gains (losses) due to dispositions of investments during the
reporting period. Significant judgment and estimation goes into the assumptions
that drive these models and the actual values realized with respect to
investments could be materially different from values obtained based on the use
of those models. The valuation methodologies applied impact the reported value
of investment company holdings and their underlying portfolios in our condensed
consolidated financial statements.

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Net Gains (Losses) from Investment Activities of Consolidated Variable Interest
Entities. Changes in the fair value of the consolidated VIEs' assets and
liabilities and related interest, dividend and other income and expenses
subsequent to consolidation are presented within net gains (losses) from
investment activities of consolidated variable interest entities and are
attributable to Non-Controlling Interests in the condensed consolidated
statements of operations.
Other Income (Losses), Net. Other income (losses), net includes gains (losses)
arising from the remeasurement of foreign currency denominated assets and
liabilities, remeasurement of the tax receivable agreement liability and other
miscellaneous non-operating income and expenses.
Income Taxes. The Apollo Operating Group and its subsidiaries generally operate
as partnerships for U.S. federal income tax purposes. As a result, except as
described below, the Apollo Operating Group has not been subject to U.S. income
taxes. However, the U.S. entities, in some cases, are subject to New York City
unincorporated business tax ("NYC UBT"), and non-U.S. entities, in some cases,
are subject to non-U.S. corporate income taxes. In addition, certain
consolidated entities are, or are treated as, corporations for U.S. and non-U.S.
tax purposes and therefore subject to federal, state, local and foreign
corporate income tax. The Company's provision for income taxes is accounted for
in accordance with U.S. GAAP.
Significant judgment is required in determining the provision for income taxes
and in evaluating income tax positions, including evaluating uncertainties. We
recognize the income tax benefits of uncertain tax positions only where the
position is "more likely than not" to be sustained upon examination, including
resolutions of any related appeals or litigation, based on the technical merits
of the positions. The tax benefit is measured as the largest amount of benefit
that has a greater than 50% likelihood of being realized upon ultimate
settlement. If a tax position is not considered more likely than not to be
sustained, then no benefits of the position are recognized. The Company's income
tax positions are reviewed and evaluated quarterly to determine whether or not
we have uncertain tax positions that require financial statement recognition or
de-recognition.
Deferred tax assets and liabilities are recognized for the expected future tax
consequences, using currently enacted tax rates, of differences between the
carrying amount of assets and liabilities and their respective tax basis. The
effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period when the change is enacted. Deferred tax
assets are reduced by a valuation allowance when it is more likely than not that
some portion or all of the deferred tax assets will not be realized.
Non-Controlling Interests
For entities that are consolidated, but not 100% owned, a portion of the income
or loss and corresponding equity is allocated to owners other than Apollo. The
aggregate of the income or loss and corresponding equity that is not owned by
the Company is included in Non-Controlling Interests in the condensed
consolidated financial statements. The Non-Controlling Interests relating to
Apollo Global Management, LLC primarily include the 50.2% and 50.1% ownership
interest in the Apollo Operating Group held by the Managing Partners and
Contributing Partners through their limited partner interests in Holdings as of
June 30, 2019 and 2018, respectively. Non-Controlling Interests also include
limited partner interests in certain consolidated funds and VIEs.
The authoritative guidance for Non-Controlling Interests in the condensed
consolidated financial statements requires reporting entities to present
Non-Controlling Interest as equity and provides guidance on the accounting for
transactions between an entity and Non-Controlling Interests. According to the
guidance, (1) Non-Controlling Interests are presented as a separate component of
shareholders' equity on the Company's condensed consolidated statements of
financial condition, (2) net income (loss) includes the net income (loss)
attributable to the Non-Controlling Interest holders on the Company's condensed
consolidated statements of operations, (3) the primary components of
Non-Controlling Interest are separately presented in the Company's condensed
consolidated statements of changes in shareholders' equity to clearly
distinguish the interests in the Apollo Operating Group and other ownership
interests in the consolidated entities and (4) profits and losses are allocated
to Non-Controlling Interests in proportion to their ownership interests
regardless of their basis.

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Results of Operations
Below is a discussion of our condensed consolidated results of operations for
the three and six months ended June 30, 2019 and 2018. For additional analysis
of the factors that affected our results at the segment level, see "-Segment
Analysis" below:
                              For the Three Months Ended                                  For the Six Months Ended June
                                       June 30,                 Amount      Percentage                 30,                  Amount      Percentage
                                 2019              2018         Change        Change          2019             2018         Change        Change
Revenues:                                  (in thousands)                                               (in thousands)
Management fees            $     388,215$  341,626$  46,589         13.6  %   $  768,241$  628,352$ 139,889         22.3  %
Advisory and transaction
fees, net                         31,124           15,440        15,684        101.6          50,693           28,991        21,702         74.9
Investment income:
Performance allocations          176,862          129,085        47,777         37.0         428,359            4,920       423,439           NM
Principal investment
income                            39,602           22,175        17,427         78.6          65,627            9,181        56,446           NM
Total investment income          216,464          151,260        65,204         43.1         493,986           14,101       479,885           NM
Incentive fees                       776           14,990       (14,214 )      (94.8 )         1,436           18,775       (17,339 )      (92.4 )
Total Revenues                   636,579          523,316       113,263         21.6       1,314,356          690,219       624,137         90.4
Expenses:
Compensation and benefits:
Salary, bonus and benefits       123,669          115,075         8,594          7.5         242,832          230,901        11,931          5.2
Equity-based compensation         44,662           37,784         6,878         18.2          89,739           73,309        16,430         22.4
Profit sharing expense            68,278           70,545        (2,267 )       (3.2 )       191,725           58,268       133,457        229.0
Total compensation and
benefits                         236,609          223,404        13,205          5.9         524,296          362,478       161,818         44.6
Interest expense                  23,302           15,162         8,140         53.7          42,410           28,959        13,451         46.4
General, administrative
and other                         81,839           62,517        19,322         30.9         153,501          124,194        29,307         23.6
Placement fees                       775              311           464        149.2             335              638          (303 )      (47.5 )
Total Expenses                   342,525          301,394        41,131         13.6         720,542          516,269       204,273         39.6
Other Income:
Net gains (losses) from
investment activities             45,060          (67,505 )     112,565           NM          63,889         (134,638 )     198,527           NM
Net gains from investment
activities of consolidated
variable interest entities         4,631            9,213        (4,582 )      (49.7 )        14,097           15,745        (1,648 )      (10.5 )
Interest income                    8,710            4,547         4,163         91.6          15,786            8,106         7,680         94.7
Other income (loss), net           6,603           (5,443 )      12,046           NM           6,693           (1,197 )       7,890           NM
Total Other Income (Loss)         65,004          (59,188 )     124,192           NM         100,465         (111,984 )     212,449           NM
Income before income tax
provision                        359,058          162,734       196,324        120.6         694,279           61,966       632,313           NM
Income tax provision             (16,897 )        (18,924 )       2,027        (10.7 )       (36,551 )        (27,504 )      (9,047 )       32.9
Net Income                       342,161          143,810       198,351        137.9         657,728           34,462       623,266           NM
Net income attributable to
Non-Controlling Interests       (177,338 )        (80,200 )     (97,138 )      121.1        (343,848 )        (29,114 )    (314,734 )         NM
Net Income Attributable to
Apollo Global Management,
LLC                              164,823           63,610       101,213        159.1         313,880            5,348       308,532           NM
Net income attributable to
Series A Preferred
Shareholders                      (4,383 )         (4,383 )           -            -          (8,766 )         (8,766 )           -            -
Net income attributable to
Series B Preferred
Shareholders                      (4,781 )         (4,569 )        (212 )        4.6          (9,562 )         (4,569 )      (4,993 )      109.3
Net Income (Loss)
Attributable to AGM Class
A Shareholders             $     155,659$   54,658$ 101,001        184.8  %   $  295,552$   (7,987 )$ 303,539           NM

Note: "NM" denotes not meaningful. Changes from negative to positive amounts and

positive to negative amounts are not considered meaningful. Increases or

decreases from zero and changes greater than 500% are also not considered

      meaningful.


Revenues

Our revenues and other income include fixed components that result from measures
of capital and asset valuations and variable components that result from
realized and unrealized investment performance, as well as the value of
successfully completed transactions.
Three Months Ended June 30, 2019 Compared to Three Months Ended June 30, 2018
Management fees increased by $46.6 million for the three months ended June 30,
2019 as compared to the three months ended June 30, 2018. This change was
primarily attributable to an increase in management fees earned from Athene,
Fund VIII and Apollo Structured Credit Recovery Master Fund IV, L.P. ("SCRF IV")
of $32.6 million, $2.2 million and $2.1 million,

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respectively, during the three months ended June 30, 2019 as compared to the
same period in 2018. For additional details regarding changes in management fees
in each segment, see "-Segment Analysis" below.
Advisory and transaction fees, net, increased by $15.7 million for the three
months ended June 30, 2019 as compared to the three months ended June 30, 2018.
This change was primarily attributable to a increase in net advisory and
transaction fees earned with respect to Hybrid Value Fund's portfolio companies
and Apollo European Principal Finance Fund III, L.P. ("EPF III") of $11.1
million and $3.8 million during the three months ended June 30, 2019 as compared
to the same period in 2018.
Performance allocations increased by $47.8 million for the three months ended
June 30, 2019 as compared to the three months ended June 30, 2018. The increase
in performance allocations was primarily attributable to increased performance
allocations earned from Fund VIII, Fund VI and ANRP II of $61.9 million, $31.4
million and $13.1 million, respectively, partially offset by a decrease in
performance allocations earned from Fund VII of $63.5 million.
The increase in performance allocations from Fund VIII was primarily driven by
lower depreciation of the fund's public portfolio companies primarily in the
business services sector, and greater appreciation of the fund's portfolio
companies primarily in the leisure, consumer services and natural resources
sectors, during the three months ended June 30, 2019 as compared to the same
period during 2018. The increase in performance fees from Fund VI was primarily
driven by appreciation of the fund's public portfolio companies primarily in the
leisure sector, as well as appreciation of the fund's private portfolio
companies primarily in the business services and chemicals sectors, during the
three months ended June 30, 2019 as compared to the same period during 2018. The
increase in performance allocations from ANRP II was primarily driven by
appreciation of the fund's private portfolio companies in the natural resources
sector during the three months ended June 30, 2019 as compared to the same
period during 2018. The decrease in performance allocations from Fund VII was
primarily attributable to decreased appreciation of the fund's public portfolio
companies primarily in the natural resources sector during the three months
ended June 30, 2019 as compared to the same period during 2018.
Principal investment income increased by $17.4 million for the three months
ended June 30, 2019, as compared to the three months ended June 30, 2018. This
change was primarily driven by increases in the value of investments held by
certain Apollo funds and other entities in which the Company has a direct
interest, mainly with respect to VA Capital Company, L.P. ("VA Capital") and
Fund VIII of $10.0 million and $7.7 million, respectively, during the three
months ended June 30, 2019 as compared to the same period in 2018.
Incentive fees decreased by $14.2 million for the three months ended June 30,
2019 as compared to the three months ended June 30, 2018. This change was
primarily attributable to a decrease in incentive fees earned from a strategic
investment account and AINV of $8.8 million and $5.8 million, respectively,
during the three months ended June 30, 2018 as compared to the three months
ended June 30, 2018. The decrease in incentive fees from a strategic investment
account were driven by incentive fees that crystallized during the three months
ended June 30, 2018, which did not recur during the three months ended June 30,
2019. The decrease in incentive fees earned from AINV was a result of the
amended and restated investment management agreement with AINV, as described in
note 14 to our condensed consolidated financial statements. The fee arrangement
with AINV was revised to be on a total return measure and the total return
hurdle rate was not achieved as of June 30, 2019.
Six Months Ended June 30, 2019 Compared to Six Months Ended June 30, 2018
Management fees increased by $139.9 million for the six months ended June 30,
2019 as compared to the six months ended June 30, 2018. This change was
primarily attributable to the commencement of Fund IX's investment period in
April 2018, resulting in an increase of $79.5 million in management fees during
the six months ended June 30, 2019, compared to the same period during 2018, and
an increase in management fees earned from Athene of $66.2 million. The increase
in management fees was partially offset by decreased management fees earned from
Fund VIII of $23.0 million during the six months ended June 30, 2019, as
compared to the six months ended June 30, 2018. For additional details regarding
changes in management fees in each segment, see "-Segment Analysis" below.
Advisory and transaction fees, net, increased by $21.7 million for the six
months ended June 30, 2019 as compared to the six months ended June 30, 2018.
This change was primarily attributable to an increase in net advisory and
transaction fees earned with respect to Fund IX's portfolio companies and Hybrid
Value Fund's portfolio companies of $12.1 million and $11.1 million,
respectively, during the six months ended June 30, 2019, as compared to the same
period during 2018.
Performance allocations increased by $423.4 million for the six months ended
June 30, 2019 as compared to the six months ended June 30, 2018. The increase in
performance allocations was primarily attributable to increased performance
allocations earned from Fund VIII, Fund VI and ANRP II of $356.3 million, $56.3
million and $20.2 million, respectively, partially offset by a decrease in
performance allocations earned from Fund VII of $66.1 million.

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The increase in performance allocations from Fund VIII was primarily driven by
greater appreciation of the fund's public portfolio companies primarily in the
financial services and consumer services sectors, and greater appreciation of
the fund's private portfolio companies in the manufacturing and industrial,
consumer services, leisure and natural resources sectors, during the six months
ended June 30, 2019 as compared to the same period during 2018. The increase in
performance fees from Fund VI was primarily driven by appreciation of the fund's
public portfolio companies primarily in the leisure sector, during the six
months ended June 30, 2019 as compared to the same period during 2018. The
increase in performance allocations from ANRP II was primarily driven by
appreciation from private investments in the natural resources sector during the
six months ended June 30, 2019 as compared to the same period during 2018. The
decrease in performance allocations from Fund VII was primarily attributable to
decreased appreciation of the fund's public portfolio companies primarily in the
natural resources sector during the six months ended June 30, 2019 as compared
to the same period during 2018.
Principal investment income increased by $56.4 million for the six months ended
June 30, 2019, as compared to the six months ended June 30, 2018. This change
was primarily driven by increases in the value of investments held by certain
Apollo funds and other entities in which the Company has a direct interest,
mainly with respect to Fund VIII and VA Capital of $42.3 million and $5.3
million, respectively, during the six months ended June 30, 2019 as compared to
the same period in 2018.
Incentive fees decreased by $17.3 million for the six months ended June 30, 2019
as compared to the six months ended June 30, 2018. This change was primarily
attributable to a decrease in incentive fees earned from AINV and a strategic
investment account of $9.5 million and $8.8 million, respectively, during the
six months ended June 30, 2019 as compared to the six months ended June 30,
2018. The decrease in incentive fees earned from AINV was a result of the
amended and restated investment management agreement with AINV, as described in
note 14 to our condensed consolidated financial statements. The fee arrangement
with AINV was revised to be on a total return measure and the total return
hurdle rate was not achieved as of June 30, 2019. The decrease in incentive fees
from a strategic investment account was driven by incentive fees that
crystallized during the six months ended June 30, 2018, which did not recur
during the six months ended June 30, 2019.
Expenses
Three Months Ended June 30, 2019 Compared to Three Months Ended June 30, 2018
Compensation and benefits increased by $13.2 million for the three months ended
June 30, 2019, as compared to the three months ended June 30, 2018. This
increase was primarily driven by an increase in salary, bonus and benefits of
$8.6 million and an increase in equity-based compensation of $6.9 million for
the three months ended June 30, 2019, as compared to the same period in 2018.
The increase in salary, bonus and benefits was primarily due to increased
headcount and the increase in equity-based compensation was primarily due to
increased amortization expense relating to grants of RSUs to certain employees
under the Equity Plan.
Included in profit sharing expense is $18.9 million for the three months ended
June 30, 2018 related to a performance based incentive arrangement for certain
Apollo partners and employees designed to more closely align compensation on an
annual basis with the overall realized performance of the Company (referred to
herein as the "Incentive Pool"). There was no profit sharing expense related to
the Incentive Pool for the three months ended June 30, 2019. Allocations to
participants in the Incentive Pool contain both a fixed component and a
discretionary component, each of which may vary year to year. The Incentive Pool
is separate from the fund related profit sharing expense and may result in
greater variability in compensation and have a variable impact on the blended
profit sharing percentage during a particular period. See "-Profit Sharing
Expense" in the Critical Accounting Policies section for an overview of the
Incentive Pool.
Interest expense increased by $8.1 million for the three months ended June 30,
2019, as compared to the three months ended June 30, 2018, as a result of the
issuance of the 2029 Senior Notes, as described in note 10 to our condensed
consolidated financial statements.
General, administrative and other expenses increased by $19.3 million for the
three months ended June 30, 2019, as compared to the three months ended June 30,
2018, primarily due to an increase in professional fees and fund organizational
expenses during the three months ended June 30, 2019, as compared to the three
months ended June 30, 2018.
Six Months Ended June 30, 2019 Compared to Six Months Ended June 30, 2018
Compensation and benefits increased by $161.8 million for the six months ended
June 30, 2019, as compared to the six months ended June 30, 2018. This change
was primarily attributable to an increase in profit sharing expense of $133.5
million due to a corresponding increase in performance allocations during the
six months ended June 30, 2019, as compared to the same period in 2018. In any
period the blended profit sharing percentage is impacted by the respective
profit sharing ratios of the funds generating performance allocations in the
period. In addition, equity-based compensation increased by $16.4 million
primarily attributable to increased amortization expense relating to grants of
RSUs to certain employees under the Equity Plan.

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Included in profit sharing expense is $17.0 million and $34.4 million for the
six months ended June 30, 2019 and 2018, respectively, related to the Incentive
Pool. See "-Profit Sharing Expense" in the Critical Accounting Policies section
for an overview of the Incentive Pool.
Interest expense increased by $13.5 million for the six months ended June 30,
2019, as compared to the six months ended June 30, 2018, primarily due to
additional interest expense incurred during the six months ended June 30,
2019 as a result of the issuance of the 2029 Senior Notes, partially offset by a
decrease in interest expense as a result of the repayment of the remaining
amount of the 2013 AMH Credit Facilities, as described in note 10 to our
condensed consolidated financial statements.
General, administrative and other expenses increased by $29.3 million for the
six months ended June 30, 2019, as compared to the six months ended June 30,
2018. This change was primarily driven by an increase in professional fees and
fund organizational expenses during the six months ended June 30, 2019 as
compared to the same period in 2018.
Other Income (Loss)
Three Months Ended June 30, 2019 Compared to Three Months Ended June 30, 2018
Net gains from investment activities were $45.1 million for the three months
ended June 30, 2019, as compared to net losses from investment activities of
$67.5 million for the three months ended June 30, 2018. This change was
primarily attributable to a gain on the Company's investment in Athene Holding
during the three months ended June 30, 2019 as compared to a loss on the
Company's investment in Athene Holding during the three months ended June 30,
2018. See note 6 to the condensed consolidated financial statements for further
information regarding the Company's investment in Athene Holding.
Net gains from investment activities of consolidated VIEs decreased by $4.6
million for the three months ended June 30, 2019, as compared to the three
months ended June 30, 2018, primarily driven by a decrease in net gains from
Champ, L.P. during the three months ended June 30, 2019, as compared to the same
period in 2018. See note 5 to the condensed consolidated financial statements
for details regarding net gains from investment activities of consolidated VIEs.
Interest income increased by $4.2 million for the three months ended June 30,
2019, as compared to the three months ended June 30, 2018, primarily due to
increased interest income earned from U.S.Treasury securities held during the
three months ended June 30, 2019, as compared to the same period in 2018.
Other income, net was $6.6 million during the three months ended June 30, 2019,
as compared to other loss, net of $5.4 million during the three months ended
June 30, 2018. This change was primarily attributable to the reversal of a
liability relating to a favorable judgment in a legal proceeding during the
three months ended June 30, 2019, which did not occur during the same period in
2018. The increase was also driven by a decrease in foreign exchange losses
during the three months ended June 30, 2018, as compared to the same period in
2018.
Six Months Ended June 30, 2019 Compared to Six Months Ended June 30, 2018
Net gains from investment activities were $63.9 million for the six months ended
June 30, 2019, as compared to net losses from investment activities of $134.6
million for the six months ended June 30, 2018. This change was primarily
attributable to a gain on the Company's investment in Athene Holding during the
six months ended June 30, 2019 as compared to a loss on the Company's investment
in Athene Holding during the six months ended June 30, 2018. See note 6 to the
condensed consolidated financial statements for further information regarding
the Company's investment in Athene Holding.
Net gains from investment activities of consolidated VIEs decreased by $1.6
million for the six months ended June 30, 2019, as compared to the six months
ended June 30, 2018, primarily driven by a decrease in net gains from Champ,
L.P. during the six months ended June 30, 2019, as compared to the same period
in 2018. See note 5 to the condensed consolidated financial statements for
details regarding net gains from investment activities of consolidated VIEs.
Interest income increased by $7.7 million for the six months ended June 30,
2019, as compared to the six months ended June 30, 2018, primarily due to
increased interest income earned from U.S.Treasury securities held during the
six months ended June 30, 2018, as compared to the same period in 2018.
Other income, net was $6.7 million during the six months ended June 30, 2019, as
compared to other loss, net of $1.2 million during the six months ended June 30,
2018. This change was primarily attributable to the reversal of a liability
relating to a favorable judgment in a legal proceeding during the six months
ended June 30, 2019, which did not occur during the same period in 2018. The
increase was also driven by a decrease in foreign exchange losses during the six
months ended June 30, 2019, as compared to the same period in 2018. For
additional details regarding changes in other income, net in each segment, see
"-Segment Analysis" below.

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Net Income Attributable to Non-Controlling Interests and Series A and Series B
Preferred Shareholders
For information related to net income attributable to Non-Controlling Interests
and net income attributable to Series A and Series B Preferred shareholders, see
note 13 to the condensed consolidated financial statements.
Income Tax Provision
The Apollo Operating Group and its subsidiaries generally operate as
partnerships for U.S. federal income tax purposes. As a result, only a portion
of the income we earn is subject to corporate-level tax in the United States and
foreign jurisdictions. The provision for income taxes includes federal, state
and local income taxes in the United States and foreign income taxes.
Three Months Ended June 30, 2019 Compared to Three Months Ended June 30, 2018
The income tax provision decreased by $2.0 million for three months ended June
30, 2019, as compared to the three months ended June 30, 2018. The decrease in
the income tax provision was primarily due to an overall change in the mix of
earnings when comparing the amount of earnings that are subject to
corporate-level tax to those earnings that are not subject to corporate-level
tax as such earnings are passed through to Non-Controlling Interests and Class A
shareholders. The provision for income taxes includes federal, state, local and
foreign income taxes resulting in an effective income tax rate of 4.7% and 11.6%
for the three months ended June 30, 2019 and 2018, respectively. The most
significant reconciling items between our U.S. federal statutory income tax rate
and our effective income tax rate were due to the following: (i) income passed
through to Non-Controlling Interests; (ii) income passed through to Class A
shareholders; and (iii) state and local income taxes including NYC UBT (see note
9 to the condensed consolidated financial statements for further details
regarding the Company's income tax provision).
Six Months Ended June 30, 2019 Compared to Six Months Ended June 30, 2018
The income tax provision increased by $9.0 million for the six months ended June
30, 2019, as compared to the six months ended June 30, 2018. The increase was
due to an increase in pre-tax GAAP net income during the six months ended June
30, 2019 as compared to the six months ended June 30, 2018 and an overall change
in the mix of earnings when comparing the amount of earnings that are subject to
corporate-level tax to those earnings that are not subject to corporate-level
tax as such earnings are passed through to Non-Controlling Interests and Class A
shareholders. The provision for income taxes includes federal, state, local and
foreign income taxes resulting in an effective income tax rate of 5.3% and 44.4%
for the six months ended June 30, 2019 and 2018, respectively. The most
significant reconciling items between our U.S. federal statutory income tax rate
and our effective income tax rate were due to the following: (i) income passed
through to Non-Controlling Interests; (ii) income passed through to Class A
shareholders and (iii) state and local income taxes including NYC UBT (see note
9 to the condensed consolidated financial statements for further details
regarding the Company's income tax provision).
Segment Analysis
Discussed below are our results of operations for each of our reportable
segments. They represent the segment information available and utilized by our
executive management, which consists of our Managing Partners, who operate
collectively as our chief operating decision maker, to assess performance and to
allocate resources. See note 16 to our condensed consolidated financial
statements for more information regarding our segment reporting.
Our financial results vary, since performance fees, which generally constitute a
large portion of the income from the funds that we manage, as well as the
transaction and advisory fees that we receive, can vary significantly from
quarter to quarter and year to year. As a result, we emphasize long-term
financial growth and profitability to manage our business.

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Credit

The following table sets forth our segment statement of operations information
and our supplemental performance measure, Segment Distributable Earnings, within
our credit segment.
                             For the Three Months Ended                                            For the Six Months Ended June
                                      June 30,                                                                  30,
                                2019             2018        Total Change     Percentage Change        2019             2018        Total Change     Percentage Change
                                            (in thousands)
Credit:
Management fees             $  190,275$  153,177$     37,098              24.2  %      $  373,017$  302,892$     70,125              23.2  %
Advisory and transaction
fees, net                        5,510            2,100            3,410             162.4              8,358            4,295            4,063              94.6
Performance fees(1)              9,261            5,766            3,495              60.6              9,922           11,041           (1,119 )           (10.1 )
Fee Related Revenues           205,046          161,043           44,003              27.3            391,297          318,228           73,069              23.0

Salary, bonus and benefits (50,465 ) (42,729 ) (7,736 )

           18.1            (94,769 )        (89,550 )         (5,219 )       

5.8

General, administrative and
other                          (31,647 )        (27,843 )         (3,804 )            13.7            (59,143 )        (54,211 )         (4,932 )             9.1
Placement fees                    (157 )           (279 )            122             (43.7 )              148             (555 )            703                NM
Fee Related Expenses           (82,269 )        (70,851 )        (11,418 )            16.1           (153,764 )       (144,316 )         (9,448 )             6.5
Other income (loss), net of
Non-Controlling Interest         1,968           (1,188 )          3,156                NM              1,564            1,995             (431 )           (21.6 )
Fee Related Earnings           124,745           89,004           35,741              40.2            239,097          175,907           63,190              35.9
Realized performance fees       18,030           14,635            3,395              23.2             21,357           17,749            3,608         

20.3

Realized profit sharing
expense                         (7,877 )        (11,493 )          3,616    

(31.5 ) (11,395 ) (14,327 ) 2,932

     (20.5 )
Net Realized Performance
Fees                            10,153            3,142            7,011             223.1              9,962            3,422            6,540             191.1
Realized principal
investment income                7,909            5,931            1,978              33.4             10,958           10,211              747               7.3
Net interest loss and other     (4,656 )         (3,952 )           (704 )            17.8             (9,042 )         (7,470 )         (1,572 )            21.0
Segment Distributable
Earnings                    $  138,151$   94,125$     44,026              46.8  %      $  250,975$  182,070$     68,905              37.8  %

(1) Represents certain performance fees from business development companies and

Redding Ridge Holdings.



Three Months Ended June 30, 2019 Compared to Three Months Ended June 30, 2018
Management fees increased by $37.1 million for the three months ended June 30,
2019, as compared to the three months ended June 30, 2018. This change was
primarily attributable to an increase in management fees earned from Athene,
SCRF IV and Apollo Total Return Fund, L.P. of $27.1 million, $2.1 million and
$1.9 million, respectively, during the three months ended June 30, 2019, as
compared to the same period during 2018.
Advisory and transaction fees, net increased by $3.4 million for the three
months ended June 30, 2019, as compared to the three months ended June 30, 2018.
This change was primarily attributable to an increase in net transaction and
advisory fees earned from Financial Credit Investment III, L.P. ("FCI III") of
$2.8 million during the three months ended June 30, 2019, as compared to the
same period during 2018.
Performance fees increased by $3.5 million for the three months ended June 30,
2019, as compared to the three months ended June 30, 2018. This change was
primarily attributable to an increase in performance fees earned from Redding
Ridge Holdings and a business development company of $4.9 million and $4.4
million during the three months ended June 30, 2019, as compared to the same
period during 2018. The performance fees from Redding Ridge Holdings and the
business development company were primarily driven by the vehicles achieving
their annualized hurdle rate during the three months ended June 30, 2019, which
did not occur during the same period during 2018. This increase in performance
fees was partially offset by decreased performance fees from AINV of $5.8
million during the three months ended June 30, 2019, as compared to the same
period during 2018, as a result of the amended and restated investment
management agreement with AINV, as described in note 14 to our condensed
consolidated financial statements. The fee arrangement with AINV was revised to
be on a total return measure and the total return hurdle rate was not achieved
as of June 30, 2019.
Salary, bonus and benefits expense increased by $7.7 million for the three
months ended June 30, 2019, as compared to the three months ended June 30, 2018
primarily due to an increase in headcount and changes in bonus accrual
estimates.
General, administrative and other increased by $3.8 million during the three
months ended June 30, 2019, as compared to the three months ended June 30, 2018.
The change was primarily driven by an increase in professional fees and
technology expenses during the three months ended June 30, 2019, as compared to
the same period in 2018.
Other income, net of Non-Controlling Interest was $2.0 million for the three
months ended June 30, 2019, as compared to other loss, net of Non-Controlling
Interest of $1.2 million the three months ended June 30, 2018. This change was
primarily

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attributable to the reversal of a liability relating to a favorable judgment in
a legal proceeding during the three months ended June 30, 2019.
Realized performance fees increased by $3.4 million during the three months
ended June 30, 2019, as compared to the same period in 2018. This change was
primarily attributable to increases in realized performance fees generated from
Financial Credit Investment I, L.P. ("FCI I") of $12.0 million, offset by a
decrease in realized performance fees generated from a strategic investment
account of $8.8 million during the three months ended June 30, 2019 as compared
to the three months ended June 30, 2018. The increase in realized performance
fees generated from FCI I was primarily driven by realizations of the fund's
investments in various life settlement policies during the three months ended
June 30, 2019, while the fund had no realized performance fees during the three
months ended June 30, 2018. The decrease in realized performance fees generated
from the strategic investment account was driven by incentive fees that
crystallized during the three months ended June 30, 2018, while the strategic
investment account had no realizations during the three months ended June 30,
2019.
Realized profit sharing expense decreased by $3.6 million during the three
months ended June 30, 2019, as compared to the same period in 2018. This change
was primarily attributable to a decrease in profit sharing expense related to
the Incentive Pool. Included in realized profit sharing expense is $1.3 million
related to the Incentive Pool for the three months ended June 30, 2018. There
was no realized profit sharing expense related to the Incentive Pool for the
three months ended June 30, 2019. In any period the blended profit sharing
percentage is impacted by the respective profit sharing ratios of the funds
generating performance fees in the period. The Incentive Pool is separate from
the fund related profit sharing expense and may result in greater variability in
compensation and have a variable impact on the blended profit sharing percentage
during a particular period.
Realized principal investment income increased by $2.0 million for the three
months ended June 30, 2019, as compared to the three months ended June 30, 2018.
This change was primarily attributable to an increase in realizations from
Apollo's equity ownership interest in MidCap of $2.3 million during the three
months ended June 30, 2019, as compared to the same period in 2018.
Net interest loss and other increased by $0.7 million for the three months ended
June 30, 2019, as compared to the three months ended June 30, 2018, primarily
due to additional interest expense incurred during the three months ended June
30, 2019 as a result of the issuance of the 2029 Senior Notes, as described in
note 10 to our condensed consolidated financial statements.
Six Months Ended June 30, 2019 Compared to Six Months Ended June 30, 2018
Management fees increased by $70.1 million for the six months ended June 30,
2019, as compared to the six months ended June 30, 2018. This change was
primarily attributable to an increase in management fees earned from Athene,
Apollo Total Return Fund, L.P. and SCRF IV of $54.7 million, $3.9 million and
$3.8 million, respectively, during the six months ended June 30, 2019, as
compared to the same period during 2018. This increase in management fees was
partially offset by decreased management fees earned from Apollo Credit Master
Fund Ltd. ("Credit Fund") of $3.6 million during the six months ended June 30,
2019, as compared to the same period during 2018.
Performance fees decreased by $1.1 million for the six months ended June 30,
2019, as compared to the six months ended June 30, 2018. This change was
primarily attributable to a decrease in performance fees earned from AINV of
$9.5 million during the six months ended June 30, 2019, as compared to the same
period during 2018, as a result of the amended and restated investment
management agreement with AINV, as described in note 14 to our condensed
consolidated financial statements. The fee arrangement with AINV was revised to
be on a total return measure and the total return hurdle rate was not achieved
as of June 30, 2019. This decrease in performance fees was partially offset by
increased performance fees from Redding Ridge Holdings and a business
development company of $4.5 million and $3.9 million during the six months ended
June 30, 2019, as compared to the same period during 2018. The performance fees
from Redding Ridge Holdings and the business development company was primarily
driven by the vehicles achieving their annualized hurdle rates during the during
the six months ended June 30, 2019, which did not occur during the same period
during 2018.
Salary, bonus and benefits expense increased by $5.2 million for the six months
ended June 30, 2019, as compared to the six months ended June 30, 2018 primarily
due to an increase in headcount.
General, administrative and other increased by $4.9 million during the six
months ended June 30, 2019, as compared to the six months ended June 30, 2018.
The change was primarily driven by an increase in technology and other expenses
during the six months ended June 30, 2019, as compared to the same period in
2018.
Realized performance fees increased by $3.6 million during the six months ended
June 30, 2019, as compared to the same period in 2018. This change was primarily
attributable to an increase in realized performance fees generated from FCI I of
$12.0 million, offset by a decrease in realized performance fees generated from
a strategic investment account of $8.8 million during the six months ended June
30, 2019 as compared to the six months ended June 30, 2018. The increase in
realized performance

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fees generated from FCI I was primarily driven by realizations of the fund's
investments in various life settlement policies during the six months ended June
30, 2019, while the fund had no realized performance fees during the six months
ended June 30, 2018. The decrease in realized performance fees generated from
the strategic investment account was driven by incentive fees that crystallized
during the six months ended June 30, 2018, while the strategic investment
account had no realizations during the six months ended June 30, 2019.
Realized profit sharing expense decreased by $2.9 million during the six months
ended June 30, 2019, as compared to the same period in 2018. This change was
primarily attributable to a decrease in profit sharing expense related to the
Incentive Pool. Included in realized profit sharing expense is $0.1 million and
$1.4 million related to the Incentive Pool for the six months ended June 30,
2019 and 2018, respectively. In any period the blended profit sharing percentage
is impacted by the respective profit sharing ratios of the funds generating
performance fees in the period. The Incentive Pool is separate from the fund
related profit sharing expense and may result in greater variability in
compensation and have a variable impact on the blended profit sharing percentage
during a particular period.
Net interest loss and other increased by $1.6 million for the six months ended
June 30, 2019, as compared to the six months ended June 30, 2018, primarily due
to additional interest expense incurred during the six months ended June 30,
2019 as a result of the issuance of the 2029 Senior Notes, as described in
note 10 to our condensed consolidated financial statements.
Private Equity
The following table sets forth our segment statement of operations information
and our supplemental performance measure, Segment Distributable Earnings, within
our private equity segment.
                             For the Three Months Ended                                             For the Six Months Ended June
                                      June 30,                                                                   30,
                                2019             2018        Total Change      Percentage Change        2019             2018        Total Change      Percentage Change
                                            (in thousands)
Private Equity:
Management fees             $  129,638$  132,417$      (2,779 )            (2.1 )%      $  260,134$  214,697$      45,437              21.2  %
Advisory and transaction
fees, net                       20,257           13,319             6,938              52.1             36,393           23,974            12,419              51.8
Fee Related Revenues           149,895          145,736             4,159               2.9            296,527          238,671            57,856              24.2
Salary, bonus and benefits     (40,267 )        (41,879 )           1,612              (3.8 )          (83,500 )        (82,604 )            (896 )     

1.1

General, administrative and
other                          (22,962 )        (18,333 )          (4,629 )            25.2            (48,824 )        (36,316 )         (12,508 )            34.4
Placement fees                    (618 )            (32 )            (586 )              NM               (483 )            (83 )            (400 )           481.9
Fee Related Expenses           (63,847 )        (60,244 )          (3,603 )             6.0           (132,807 )       (119,003 )         (13,804 )            11.6
Other income, net                3,963               82             3,881                NM              4,159              391             3,768                NM
Fee Related Earnings            90,011           85,574             4,437               5.2            167,879          120,059            47,820              39.8
Realized performance fees       12,231           54,640           (42,409 )           (77.6 )           72,687          167,412           (94,725 )           (56.6 )
Realized profit sharing
expense                         (4,089 )        (31,512 )          27,423   

(87.0 ) (41,816 ) (89,260 ) 47,444

       (53.2 )
Net Realized Performance
Fees                             8,142           23,128           (14,986 )           (64.8 )           30,871           78,152           (47,281 )           (60.5 )
Realized principal
investment income                1,877            9,079            (7,202 )           (79.3 )            9,965           27,409           (17,444 )           (63.6 )
Net interest loss and other     (7,650 )         (5,259 )          (2,391 )            45.5            (13,783 )        (10,615 )          (3,168 )            29.8
Segment Distributable
Earnings                    $   92,380$  112,522$     (20,142 )           (17.9 )%      $  194,932$  215,005$     (20,073 )            (9.3 )%


Three Months Ended June 30, 2019 Compared to Three Months Ended June 30, 2018
Management fees decreased by $2.8 million for the three months ended June 30,
2019, as compared to the three months ended June 30, 2018. This change was
primarily attributable to a decrease in management fees earned from Credit
Opportunity Fund III, L.P. ("COF III") and Fund VII of $1.8 million and $1.0
million, respectively, during the three months ended June 30, 2019.
Advisory and transaction fees, net increased by $6.9 million for the three
months ended June 30, 2019, as compared to the three months ended June 30, 2018.
This change was primarily attributable to an increase in net advisory and
transaction fees earned with respect to Hybrid Value Fund's portfolio companies
of $11.1 million, partially offset by a decrease in net advisory and transaction
fees earned with respect to Fund VIII's portfolio companies of $5.8 million
during the three months ended June 30, 2019, as compared to the same period
during 2018.

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Salary, bonus and benefits expense decreased by $1.6 million for the three
months ended June 30, 2019 as compared to the three months ended June 30, 2018
primarily due to changes in bonus accrual estimates.
General, administrative and other increased by $4.6 million during the three
months ended June 30, 2019, as compared to the three months ended June 30, 2018.
The change was primarily driven by increased professional fees and fund
organizational expenses related to Apollo Natural Resources Partners III, L.P.
during the three months ended June 30, 2019, as compared to the same period in
2018.
Other income, net increased by $3.9 million for the three months ended June 30,
2019, as compared to the three months ended June 30, 2018. The change was
primarily driven by the reversal of a liability relating to a favorable judgment
in a legal proceeding during the three months ended June 30, 2019.
Realized performance fees decreased by $42.4 million for the three months ended
June 30, 2019, as compared to the three months ended June 30, 2018. This change
was primarily attributable to decreases in realized performance fees generated
from Fund VIII and ANRP II of $24.6 million and $7.5 million, respectively,
during the three months ended June 30, 2019 as compared to the three months
ended June 30, 2018. The decrease in realized performance fees from Fund VIII
was primarily driven by a decrease in profits realized from investment sales and
income from the fund's investments. The realized performance fees from Fund VIII
during the three months ended June 30, 2019 were the result of sales and income
generated from investments primarily in the natural resources and financial
services sectors. The realized performance fees during the three months ended
June 30, 2018 were the result of sales and income generated from investments
primarily in the natural resources, leisure and consumer services sectors. The
decrease in realized performance fees from ANRP II was primarily driven by a
decrease in profits realized from investment sales. The realized performance
fees from ANRP II during the three months ended June 30, 2019 were the result of
income earned on an escrow account balance and the realized performance fees
during the same period in 2018 were from the result of sales generated from
investments in the natural resources sector.
Realized profit sharing expense decreased by $27.4 million during the three
months ended June 30, 2019, as compared to the same period in 2018, as a result
of a corresponding decrease in realized performance fees as described above. In
any period the blended profit sharing percentage is impacted by the respective
profit sharing ratios of the funds generating performance fees in the period.
Included in realized profit sharing expense is $9.8 million related to the
Incentive Pool for the three months ended June 30, 2018. There was no realized
profit sharing expense related to the Incentive Pool for the three months ended
June 30, 2019. The Incentive Pool is separate from the fund related profit
sharing expense and may result in greater variability in compensation and have a
variable impact on the blended profit sharing percentage during a particular
period.
Realized principal investment income decreased by $7.2 million for the three
months ended June 30, 2019, as compared to the same period in 2018. This change
was primarily attributable to a decrease in realizations from Apollo's equity
ownership interest in Fund VIII and Fund VII of $4.6 million and $1.1 million,
respectively, during the three months ended June 30, 2019, as compared to the
same period in 2018.
Net interest loss and other increased by $2.4 million for the three months ended
June 30, 2019, as compared to the three months ended June 30, 2018, primarily
due to additional interest expense incurred during the three months ended June
30, 2019 as a result of the issuance of the 2029 Senior Notes, as described in
note 10 to our condensed consolidated financial statements.
Six Months Ended June 30, 2019 Compared to Six Months Ended June 30, 2018
Management fees increased by $45.4 million for the six months ended June 30,
2019, as compared to the six months ended June 30, 2018. This change was
primarily attributable to the commencement of Fund IX's investment period in
April 2018, resulting in an increase of $79.5 million in management fees during
the six months ended June 30, 2019, as compared to the six months ended June 30,
2018. The increase in management fees was partially offset by decreased
management fees earned from Fund VIII and COF III of $23.0 million and $4.6
million, respectively, during the six months ended June 30, 2019 as compared to
the six months ended June 30, 2018.
Advisory and transaction fees, net increased by $12.4 million for the six months
ended June 30, 2019, as compared to the six months ended June 30, 2018. This
change was primarily attributable to an increase in net advisory and transaction
fees earned with respect to Fund IX's portfolio companies and Hybrid Value
Fund's portfolio companies of $12.1 million and $11.1 million, respectively,
during the six months ended June 30, 2019, as compared to the same period during
2018. The increase in net advisory and transaction fees was partially offset by
decreased net advisory and transaction fees earned from Fund VIII's portfolio
companies of $8.5 million during the six months ended June 30, 2019 as compared
to the six months ended June 30, 2018.
General, administrative and other increased by $12.5 million during the six
months ended June 30, 2019, as compared to the six months ended June 30, 2018.
The change was primarily driven by increased professional fees and fund
organizational

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expenses related to Apollo Natural Resources Partners III, L.P. during the six
months ended June 30, 2019, as compared to the same period in 2018.
Other income, net increased by $3.8 million for the six months ended June 30,
2019, as compared to the six months ended June 30, 2018. The change was
primarily driven by the reversal of a liability relating to a favorable judgment
in a legal proceeding during the six months ended June 30, 2019.
Realized performance fees decreased by $94.7 million for the six months ended
June 30, 2019, as compared to the six months ended June 30, 2018. This change
was primarily attributable to decreases in realized performance fees generated
from Fund VIII and ANRP II of $66.3 million and $7.4 million, respectively,
during the six months ended June 30, 2019 as compared to the six months ended
June 30, 2018. The decrease in realized performance fees from Fund VIII was
primarily driven by a decrease in profits realized from investments sales. The
realized performance fees from Fund VIII during the six months ended June 30,
2019 were the result of sales and income generated from investments primarily in
the business services, manufacturing and industrial, financial services and
leisure sectors. The realized performance fees during the six months ended June
30, 2018 were the result of sales and income generated from investments
primarily in the chemicals, natural resources, consumer services and leisure
sectors. The decrease in realized performance fees from ANRP II was primarily
driven by a decrease in profits realized from investment sales. The realized
performance fees from ANRP II during the six months ended June 30, 2019 were the
result of income earned on an escrow account balance and the realized
performance fees during the same period in 2018 were the result of sales
generated from investments in the natural resources sector.
Realized profit sharing expense decreased by $47.4 million during the six months
ended June 30, 2019, as compared to the same period in 2018, as a result of a
corresponding decrease in realized performance fees as described above. In any
period the blended profit sharing percentage is impacted by the respective
profit sharing ratios of the funds generating performance fees in the period.
Included in realized profit sharing expense is $16.9 million and $24.6 million
related to the Incentive Pool for the six months ended June 30, 2019 and 2018,
respectively. The Incentive Pool is separate from the fund related profit
sharing expense and may result in greater variability in compensation and have a
variable impact on the blended profit sharing percentage during a particular
period.
Realized principal investment income decreased by $17.4 million for the six
months ended June 30, 2019, as compared to the same period in 2018. This change
was primarily attributable to a decrease in realizations from Apollo's equity
ownership interest in Fund VIII, Fund VII, COF III and ANRP 1 of $9.7 million,
$2.1 million, $2.0 million, and $1.5 million, respectively, during the six
months ended June 30, 2019, as compared to the same period in 2018.
Net interest loss and other increased by $3.2 million for the six months ended
June 30, 2019, as compared to the six months ended June 30, 2018, primarily due
to additional interest expense incurred during the six months ended June 30,
2019 as a result of the issuance of the 2029 Senior Notes, as described in
note 10 to our condensed consolidated financial statements.

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Real Assets
The following table sets forth our segment statement of operations information
and our supplemental performance measure, Segment Distributable Earnings, within
our real assets segment.
                            For the Six Months Ended
                                    June 30,                                                       For the Six Months Ended June 30,
                               2019           2018        Total Change     Percentage Change          2019                 2018           Total Change     Percentage Change
                                          (in thousands)
Real Assets:
Management fees            $  46,398$  40,270$      6,128              15.2  %      $       91,783$       80,478$     11,305              14.0  %
Advisory and transaction
fees, net                      5,295             161            5,134                NM                  5,371                  305             5,066                NM
Fee Related Revenues          51,693          40,431           11,262              27.9                 97,154               80,783            16,371              20.3
Salary, bonus and benefits   (19,537 )       (19,893 )            356              (1.8 )              (37,725 )            (38,878 )           1,153              (3.0 )
General, administrative
and other                     (8,547 )        (9,500 )            953             (10.0 )              (18,222 )            (19,524 )           1,302              (6.7 )
Fee Related Expenses         (28,084 )       (29,393 )          1,309              (4.5 )              (55,947 )            (58,402 )           2,455              (4.2 )
Other income, net of
Non-Controlling Interest         156              55              101             183.6                     94                  223              (129 )           (57.8 )
Fee Related Earnings          23,765          11,093           12,672             114.2                 41,301               22,604            18,697              82.7

Realized performance fees 3,074 45,199 (42,125 )

      (93.2 )                3,080               51,615           (48,535 )           (94.0 )
Realized profit sharing
expense                       (1,340 )       (26,805 )         25,465             (95.0 )               (1,234 )            (29,870 )          28,636             (95.9 )
Net Realized Performance
Fees                           1,734          18,394          (16,660 )           (90.6 )                1,846               21,745           (19,899 )           (91.5 )
Realized principal
investment income              1,495           4,363           (2,868 )           (65.7 )                1,794                5,146            (3,352 )           (65.1 )
Net interest loss and
other                         (2,708 )        (1,968 )           (740 )            37.6                 (4,881 )             (3,877 )          (1,004 )            25.9
Segment Distributable
Earnings                   $  24,286$  31,882$     (7,596 )           (23.8 )%      $       40,060$       45,618$     (5,558 )           (12.2 )%


Three Months Ended June 30, 2019 Compared to Three Months Ended June 30, 2018
Management fees increased by $6.1 million for the three months ended June 30,
2019, as compared to the three months ended June 30, 2018. This change was
primarily attributable to an increase in management fees earned from Athene, ARI
and Apollo Infrastructure Equity Fund ("Infrastructure Fund") of $4.2 million,
$1.3 million and $0.7 million, respectively, along with modest increases in
management fees earned across most of our real assets funds during the three
months ended June 30, 2019, as compared to the same period during 2018. The
increase in management fees was partially offset by decreased management fees
earned from Apollo European Principal Finance Fund II, L.P. ("EPF II") of $2.4
million during the three months ended June 30, 2019, as compared to the same
period during 2018.
Advisory and transaction fees, net increased by $5.1 million for the three
months ended June 30, 2019, as compared to the three months ended June 30, 2018.
This change was primarily attributable to an increase in net advisory and
transaction fees earned with respect to EPF III of $3.8 million during the three
months ended June 30, 2019, as compared to the same period during 2018.
Realized performance fees decreased by $42.1 million for the three months ended
June 30, 2019, as compared to the three months ended June 30, 2018. The decrease
in realized performance fees was primarily attributable to decreases in realized
performance fees generated from EPF II and strategic investment accounts of
$37.2 million and $3.5 million, respectively, during the three months ended June
30, 2019, as compared to the three months ended June 30, 2018. The decrease in
realized performance fees from EPF II is primarily due to the realizations of UK
hotel assets held by the fund during the three months ended June 30, 2018, while
the fund had no realizations during the three months ended June 30, 2019.
Realized performance fees generated from certain funds, including U.S. RE Fund
I, U.S. RE Fund II, Apollo Asia Real Estate Fund, L.P. ("Asia RE Fund") and EPF
II, includes an allocation of realized performance fees from strategic
investment accounts that invest in the funds. Realized performance fees from
strategic investment accounts decreased primarily due to lower allocations of
realizations relating to underlying fund investments for the three months ended
June 30, 2019, as compared to the same period during 2018.
Realized profit sharing expense decreased by $25.5 million during the three
months ended June 30, 2019, as compared to the same period in 2018, as a result
of a corresponding decrease in realized performance fees as described above. In
any period the blended profit sharing percentage is impacted by the respective
profit sharing ratios of the funds generating performance fees in the period.
Included in realized profit sharing expense is $7.8 million related to the
Incentive Pool for the three months ended June 30, 2018. There was no realized
profit sharing expense related to the Incentive Pool for the three months ended
June 30, 2019. The Incentive Pool is separate from the fund related profit
sharing expense and may result in greater variability in compensation and have a
variable impact on the blended profit sharing percentage during a particular
period.

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Realized principal investment income decreased by $2.9 million for the three
months ended June 30, 2019, as compared to the three months ended June 30, 2018.
This change was primarily attributable to a decrease in realizations from
Apollo's equity ownership interest in EPF II of $3.3 million during the three
months ended June 30, 2019, as compared to the same period in 2018.
Six Months Ended June 30, 2019 Compared to Six Months Ended June 30, 2018
Management fees increased by $11.3 million for the six months ended June 30,
2019, as compared to the six months ended June 30, 2018. This change was
primarily attributable to an increase in management fees earned from Athene, ARI
and Apollo Infrastructure Equity Fund of $9.1 million, $2.4 million and $1.4
million, respectively, along with modest increases in management fees earned
across most of our real assets funds during the six months ended June 30, 2019,
as compared to the same period during 2018. The increase in management fees was
partially offset by decreased management fees earned from EPF II of $5.2 million
during the six months ended June 30, 2019, as compared to the same period during
2018.
Advisory and transaction fees, net increased by $5.1 million for the six months
ended June 30, 2019, as compared to the six months ended June 30, 2018. This
change was primarily attributable to an increase in net advisory and transaction
fees earned with respect to EPF III and AGRE Debt Fund I of $3.8 million and
$1.1 million, respectively, during the six months ended June 30, 2019, as
compared to the same period during 2018.
Realized performance fees decreased by $48.5 million for the six months ended
June 30, 2019, as compared to the six months ended June 30, 2018. The decrease
in realized performance fees was primarily attributable to decreases in realized
performance fees generated from EPF II and strategic investment accounts of
$39.0 million and $7.2 million, respectively, during the six months ended June
30, 2019, as compared to the six months ended June 30, 2018. Realized
performance fees from EPF II decreased primarily due to the realization of UK
hotel assets held by the fund during the six months ended June 30, 2018, while
the fund had no realizations during the six months ended June 30, 2019. Realized
performance fees generated from certain funds, including U.S. RE Fund I, U.S. RE
Fund II, Asia RE Fund and EPF II, includes an allocation of realized performance
fees from strategic investment accounts that invest in the funds. The decrease
in realized performance fees from strategic investment accounts was primarily
due to lower allocations of realizations relating to underlying investments for
the six months ended June 30, 2019 as compared to the six months ended June 30,
2018.
Realized profit sharing expense decreased by $28.6 million during the six months
ended June 30, 2019, as compared to the same period in 2018, as a result of a
corresponding decrease in realized performance fees as described above. In any
period the blended profit sharing percentage is impacted by the respective
profit sharing ratios of the funds generating performance fees in the period.
Included in realized profit sharing expense is $8.4 million related to the
Incentive Pool for the six months ended June 30, 2018. There was no realized
profit sharing expense related to the Incentive Pool for the six months ended
June 30, 2019. The Incentive Pool is separate from the fund related profit
sharing expense and may result in greater variability in compensation and have a
variable impact on the blended profit sharing percentage during a particular
period.
Realized principal investment income decreased by $3.4 million for the six
months ended June 30, 2019, as compared to the six months ended June 30, 2018.
This change was primarily attributable to a decrease in realizations from
Apollo's equity ownership interest in EPF II of $4.0 million during the six
months ended June 30, 2019.
Net interest loss and other increased by $1.0 million for the six months ended
June 30, 2019, as compared to the six months ended June 30, 2018, primarily due
to additional interest expense incurred during the six months ended June 30,
2019 as a result of the issuance of the 2029 Senior Notes, as described in
note 10 to our condensed consolidated financial statements.

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Summary of Distributable Earnings
The following table is a reconciliation of Distributable Earnings per share of
common and equivalent to net distribution per share of common and equivalent.
                                           For the Three Months Ended     

For the Six Months Ended June

                                                    June 30,                           30,
                                              2019             2018           2019             2018
                                                      (in thousands, except per share data)
Segment Distributable Earnings            $  254,817$  238,529$  485,967$  442,693
Taxes and related payables                   (14,878 )        (13,838 )      (29,514 )        (25,036 )
Preferred distributions                       (9,164 )         (8,952 )      (18,328 )        (13,335 )
Distributable Earnings                       230,775          215,739        438,125          404,322
Add back: Tax and related payables
attributable to common and equivalents        12,777           11,808         25,252           20,975
Distributable Earnings before certain
payables(1)                                  243,552          227,547        463,377          425,297
Percent to common and equivalents                 51 %             51 %           51 %             51 %
Distributable Earnings before other
payables attributable to common and
equivalents                                  124,212          116,049        236,322          216,901
Less: Taxes and related payables
attributable to common and equivalents       (12,777 )        (11,808 )      (25,252 )        (20,975 )
Distributable Earnings attributable to
common and equivalents(2)                 $  111,435$  104,241$  211,070$  195,926
Distributable Earnings per share(3)       $     0.56$     0.52$     1.06$     0.98
Retained capital per share(3)                  (0.06 )          (0.09 )        (0.10 )          (0.17 )
Net distribution per share(3)             $     0.50$     0.43$     0.96$     0.81

(1) Distributable Earnings before certain payables represents Distributable

Earnings before the deduction for the estimated current corporate taxes and

the amounts payable under Apollo's tax receivable agreement.

(2) "Common and equivalents" consists of total Class A shares outstanding and

RSUs that participate in distributions.

(3) Per share calculations are based on end of period Distributable Earnings

Shares Outstanding, which consists of total Class A shares outstanding, AOG

    Units and RSUs that participate in distributions.



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Summary of Non-U.S. GAAP Measures
The table below sets forth a reconciliation of net income attributable Apollo
Global Management, LLC Class A Shareholders to our non-U.S. GAAP performance
measures:
                                           For the Three Months Ended     

For the Six Months Ended June

                                                    June 30,                           30,
                                              2019             2018           2019             2018
                                                 (in thousands)
Net Income (Loss) Attributable to Apollo
Global Management, LLC Class A
Shareholders                              $  155,659$   54,658$  295,552$   (7,987 )
Preferred distributions                        9,164            8,952         18,328           13,335
Net income attributable to
Non-Controlling Interests in consolidated
entities                                       5,143            8,716         13,805           14,695
Net income attributable to
Non-Controlling Interests in the Apollo
Operating Group                              172,195           71,484        330,043           14,419
Net Income                                $  342,161$  143,810$  657,728$   34,462
Income tax provision                          16,897           18,924         36,551           27,504

Income Before Income Tax Provision $ 359,058$ 162,734 $

  694,279       $   61,966
Transaction-related charges(1)                18,135           (6,905 )       23,598           (5,053 )
Charges associated with corporate
conversion(2)                                 10,006                -         10,006                -
Net income attributable to
Non-Controlling Interests in consolidated
entities                                      (5,143 )         (8,716 )      (13,805 )        (14,695 )
Unrealized performance fees(3)              (129,679 )        (20,619 )     (314,062 )        229,922
Unrealized profit sharing expense(3)          40,799            9,125        116,561          (67,263 )
Equity-based profit sharing expense and
other(4)                                      20,675           17,850         41,637           32,414
Equity-based compensation                     18,237           16,028         36,660           33,463
Unrealized principal investment (income)
loss                                         (31,893 )         (3,419 )      (44,221 )         32,578
Unrealized net (gains) losses from
investment activities and other              (45,378 )         72,451        (64,686 )        139,361
Segment Distributable Earnings(5)         $  254,817$  238,529$  485,967$  442,693
Taxes and related payables                   (14,878 )        (13,838 )      (29,514 )        (25,036 )
Preferred distributions                       (9,164 )         (8,952 )      (18,328 )        (13,335 )
Distributable Earnings                    $  230,775$  215,739$  438,125$  404,322
Preferred distributions                        9,164            8,952         18,328           13,335
Taxes and related payables                    14,878           13,838         29,514           25,036
Realized performance fees                    (33,335 )       (114,474 )      (97,124 )       (236,776 )
Realized profit sharing expense               13,306           69,810         54,445          133,457
Realized principal investment income         (11,281 )        (19,373 )      (22,717 )        (42,766 )
Net interest loss and other                   15,014           11,179         27,706           21,962
Fee Related Earnings                      $  238,521$  185,671$  448,277$  318,570
Depreciation, amortization and other, net      2,733            2,494          5,312            2,494
Fee Related EBITDA                        $  241,254$  188,165$  453,589$  321,064
Realized performance fees(6)                  33,335          114,474         97,124          236,776
Realized profit sharing expense(6)           (13,306 )        (69,810 )      (54,445 )       (133,457 )
Fee Related EBITDA + 100% of Net Realized
Performance Fees                          $  261,283$  232,829     $ 

496,268 $ 424,383

(1) Transaction-related charges include contingent consideration, equity-based

compensation charges and the amortization of intangible assets and certain

other charges associated with acquisitions.

(2) Represents expenses incurred in relation to the previously announced plans to

convert from a publicly traded partnership to a C corporation, as described

in note 1 to the condensed consolidated financial statements.

(3) Includes realized performance fees and realized profit sharing expense

settled in the form of shares of Athene Holding during the six months ended

June 30, 2018.

(4) Equity-based profit sharing expense and other includes certain profit sharing

arrangements in which a portion of performance fees distributed to the

general partner are allocated by issuance of equity-based awards, rather than

    cash, to employees of Apollo. Equity-based profit



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sharing expense and other also includes non-cash expenses related to equity awards in unconsolidated related parties granted to employees of Apollo. (5) See note 16 to the condensed consolidated financial statements for more

details regarding Segment Distributable Earnings for the combined segments.

(6) Excludes realized performance fees and realized profit sharing expense

settled in the form of shares of Athene Holding during the six months ended

June 30, 2018.



Liquidity and Capital Resources
Overview
Apollo's business model primarily derives revenues and cash flows from the
assets it manages. Apollo targets operating expense levels such that fee income
exceeds total operating expenses each period. The company intends to distribute
to its shareholders on a quarterly basis substantially all of its distributable
earnings after taxes and related payables in excess of amounts determined to be
necessary or appropriate to provide for the conduct of the business. As a
result, the Company requires limited capital resources to support the working
capital or operating needs of the business. While primarily met by cash flows
generated through fee income received, liquidity needs are also met (to a
limited extent) through proceeds from borrowings and equity issuances as
described in notes 10 and 13 to the condensed consolidated financial statements,
respectively. The Company had cash and cash equivalents of $945.7 million at
June 30, 2019.
Primary Sources and Uses of Cash
The Company has multiple sources of short-term liquidity to meet its capital
needs, including cash on hand, annual cash flows from its activities, and
available funds from the Company's $750 million revolving credit facility as of
June 30, 2019. The Company believes these sources will be sufficient to fund our
capital needs for at least the next twelve months. If the Company determines
that market conditions are favorable after taking into account our liquidity
requirements, we may seek to issue additional senior notes, preferred equity, or
other financing instruments.
The section below discusses in more detail the Company's primary sources and
uses of cash and the primary drivers of cash flows within the Company's
condensed consolidated statements of cash flows:
                                                        For the Six Months Ended June 30,
                                                           2019                   2018
                                                                 (in thousands)
Operating Activities                                $        450,610$        395,075
Investing Activities                                        (398,247 )              223,551
Financing Activities                                         315,223               (310,719 )
Net Increase in Cash and Cash Equivalents,
Restricted Cash and Cash Held at Consolidated
Variable Interest Entities                          $        367,586$        307,907


Operating Activities
The Company's operating activities support its investment management activities.
The primary sources of cash within the operating activities section include: (a)
management fees, (b) advisory and transaction fees, (c) realized performance
revenues, and (d) realized principal investment income. The primary uses of cash
within the operating activities section include: (a) compensation and
non-compensation related expenses, (b) placement fees, and (c) interest and
taxes.
•            During the six months ended June 30, 2019 and 2018, cash provided by
             operating activities primarily includes cash inflows from the
             receipt of management fees, advisory and transaction fees, realized
             performance revenues, and realized principal investment income,
             offset by cash outflows for compensation, general,

administrative,

             and other expenses. Net cash provided by operating activities also
             reflects the operating activity of our consolidated funds and VIEs,
             which primarily include cash inflows from the sale of investments
             offset by cash outflows for purchases of investments.


Investing Activities
The Company's investing activities support growth of its business. The primary
sources of cash within the investing activities section include distributions
from investments. The primary uses of cash within the investing activities
section include: (a) capital expenditures, (b) investment purchases, including
purchases of U.S.Treasury securities, and (c) equity method investments in the
funds we manage.

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•            During the six months ended June 30, 2019 and 2018, cash used by
             investing activities primarily reflects purchases of U.S.Treasury
             securities and other investments and net contributions to equity
             method investments, offset by proceeds from maturities of U.S.Treasury securities.


Financing Activities
The Company's financing activities reflect its capital market transactions and
transactions with owners. The primary sources of cash within the financing
activities section includes proceeds from debt and preferred equity issuances.
The primary uses of cash within the financing activities section include: (a)
distributions, (b) payments under the tax receivable agreement, (c) share
repurchases, (d) cash paid to settle tax withholding obligations in connection
with net share settlements of equity-based awards, and (e) repayments of debt.
•            During the six months ended June 30, 2019, cash provided by
             financing activities primarily reflects proceeds from the issuance
             of the 2029 Senior Notes and 2039 Senior Secured Guaranteed Notes,
             partially offset by distributions to Class A shareholders and
             Non-Controlling interest holders.


•            During the six months ended June 30, 2018, cash used by financing
             activities primarily reflected repayments on the term loan facility
             to AMH and distributions to Class A shareholders and

Non-Controlling

             interest holders, partially offset by proceeds from the

issuance of

             the Series B Preferred shares and the 2048 Senior Notes.


Future Debt Obligations
The Company had long-term debt of $2.4 billion at June 30, 2019, which includes
$2.3 billion of senior notes with maturities in 2024, 2026, 2029, 2039 and 2048.
See note 10 to the condensed consolidated financial statements for further
information regarding the Company's debt arrangements.
Contractual Obligations, Commitments and Contingencies
The Company had unfunded general partner commitments of $1.1 billion at June 30,
2019, of which $434 million related to Fund IX. For a summary and a description
of the nature of the Company's commitments, contingencies and contractual
obligations, see note 15 to the condensed consolidated financial statements and
"-Contractual Obligations, Commitments and Contingencies". The Company's
commitments are primarily fulfilled through cash flows from operations and (to a
limited extent) through borrowings and equity issuances as described in notes 10
and 13 to the condensed consolidated financial statements, respectively.
Consolidated Funds and VIEs
The Company manages its liquidity needs by evaluating unconsolidated cash flows;
however, the Company's financial statements reflect the financial position of
Apollo as well as Apollo's consolidated funds and VIEs. The primary sources and
uses of cash at Apollo's consolidated funds and VIEs include: (a) raising
capital from their investors, which have been reflected historically as
Non-Controlling Interests of the consolidated subsidiaries in our financial
statements, (b) using capital to make investments, (c) generating cash flows
from operations through distributions, interest and the realization of
investments, (d) distributing cash flow to investors, and (e) issuing debt to
finance investments (CLOs).
Other Liquidity and Capital Resource Considerations
Future Cash Flows
Our ability to execute our business strategy, particularly our ability to
increase our AUM, depends on our ability to establish new funds and to raise
additional investor capital within such funds. Our liquidity will depend on a
number of factors, such as our ability to project our financial performance,
which is highly dependent on our funds and our ability to manage our projected
costs, fund performance, access to credit facilities, compliance with existing
credit agreements, as well as industry and market trends. Also during economic
downturns the funds we manage might experience cash flow issues or liquidate
entirely. In these situations we might be asked to reduce or eliminate the
management fee and performance fees we charge, which could adversely impact our
cash flow in the future.
An increase in the fair value of our funds' investments, by contrast, could
favorably impact our liquidity through higher management fees where the
management fees are calculated based on the net asset value, gross assets or
adjusted assets. Additionally, higher performance fees not yet realized would
generally result when investments appreciate over their cost basis which would
not have an impact on the Company's cash flow until realized.

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Consideration of Financing Arrangements
As noted above, in limited circumstances, the Company may issue debt or equity
to supplement its liquidity. The decision to enter into a particular financing
arrangement is made after careful consideration of various factors including the
Company's cash flows from operations, future cash needs, current sources of
liquidity, demand for the Company's debt or equity, and prevailing interest
rates.
Revolver Facility
Under the Company's 2018 AMH Credit Facility, the Company may borrow in an
aggregate amount not to exceed $750 million and may incur incremental facilities
in an aggregate amount not to exceed $250 million plus additional amounts so
long as the Borrower is in compliance with a net leverage ratio not to exceed
4.00 to 1.00. Borrowings under the 2018 AMH Credit Facility may be used for
working capital and general corporate purposes, including without limitation,
permitted acquisitions. As of June 30, 2019, the 2018 AMH Credit Facility was
undrawn.
Distributions
For information regarding the quarterly distributions which were made at the
sole discretion of the Company's manager during 2019 and 2018 to Class A
shareholders, Non-Controlling Interest holders in the Apollo Operating Group and
participating securities, see note 13 to the condensed consolidated financial
statements.
Although the Company expects to pay distributions according to our distribution
policy, we may not pay distributions according to our policy, or at all, if,
among other things, we do not have the cash necessary to pay the intended
distributions. To the extent we do not have cash on hand sufficient to pay
distributions, we may have to borrow funds to pay distributions, or we may
determine not to pay distributions. The declaration, payment and determination
of the amount of our quarterly distributions are at the sole discretion of our
manager.
On July 31, 2019, the Company declared a cash distribution of $0.50 per Class A
share, which will be paid on August 30, 2019 to holders of record at the close
of business on August 16, 2019. Also, the Company declared a cash distribution
of $0.398438 per Series A Preferred share and Series B Preferred share which
will be paid on September 16, 2019 to holders of record at the close of business
on August 30, 2019.
Tax Receivable Agreement
The tax receivable agreement provides for the payment to the Managing Partners
and Contributing Partners of 85% of the amount of cash savings, if any, in U.S.
federal, state, local and foreign income taxes that APO Corp. realizes subject
to the agreement. For more information regarding the tax receivable agreement,
see note 14 to the condensed consolidated financial statements.
AGM Share Repurchases
For information regarding the Company's share repurchase program, see note 13 to
the condensed consolidated financial statements.
AINV Share Purchases
On March 11, 2016, it was announced that Apollo intended to embark on a program
to purchase $50 million of AINV's common stock, subject to certain regulatory
approvals. Under the program, shares may be purchased from time to time in open
market transactions and in accordance with applicable law. As of June 30, 2019,
Apollo had purchased approximately 871 thousand shares, or approximately $4.9
million of AINV's common stock.
Athora
On April 14, 2017, Apollo made an unfunded commitment of €125 million to
purchase new Class B-1 equity interests in Athora, a strategic platform
established to acquire traditional closed life insurance policies and provide
capital and reinsurance solutions to insurers in Europe. In January 2018, Apollo
purchased Class C-1 equity interests in Athora that represent a profits interest
in Athora which, upon meeting certain vesting triggers, will be convertible by
Apollo into additional Class B-1 equity interests in Athora. Apollo and Athene
are minority investors in Athora and long term strategic partners with aggregate
voting power of 35% and 10%, respectively. For more information regarding
unfunded general partner commitments, see "-Contractual Obligations, Commitments
and Contingencies".

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In June 2019, Athora announced its intention to acquire VIVAT N.V.s life
insurance business, which is expected to close in 2020 subject to customary
closing conditions including regulatory approvals. VIVAT is expected to provide
Athora with a platform for future growth due to its scale in the Dutch market,
strong brands and deep distribution and underwriting capabilities
Fund VIII, Fund VII, Fund VI, ANRP I and ANRP II Escrow
As of June 30, 2019, the remaining investments and escrow cash of Fund VIII were
valued at 125% of the fund's unreturned capital, which was above the required
escrow ratio of 115%. As of June 30, 2019, the remaining investments and escrow
cash of Fund VII, Fund VI, ANRP I and ANRP II were valued at 73%, 37%, 62% and
112% of the fund's unreturned capital, respectively, which were below the
required escrow ratio of 115%. As a result, these funds are required to place in
escrow current and future performance fee distributions to the general partner
until the specified return ratio of 115% is met (at the time of a future
distribution) or upon liquidation.
Clawback
Performance fees from our private equity funds and certain credit and real
assets funds are subject to contingent repayment by the general partner in the
event of future losses to the extent that the cumulative performance fees
distributed from inception to date exceeds the amount computed as due to the
general partner at the final distribution. See "-Overview of Results of
Operations-Performance Fees" for the maximum performance fees subject to
potential reversal by each fund.
Indemnification Liability
The Company recorded an indemnification liability in the event that our Managing
Partners, Contributing Partners and certain investment professionals are
required to pay amounts in connection with a general partner obligation to
return previously distributed performance fees. See note 14 to the condensed
consolidated financial statements for further information regarding the
Company's indemnification liability.
Investment Management Agreements - Athene Asset ManagementThe Company provides asset management and advisory services to Athene as
described in note 14 to the condensed consolidated financial statements. On
September 20, 2018, Athene and Apollo agreed to revise the existing fee
arrangements (the "amended fee agreement") between Athene and Apollo. The
amended fee agreement was subject to approval by Athene's shareholders of a
bye-law amendment providing that Athene will not elect to terminate the
investment management arrangement between Athene and Apollo, except for cause,
for a period of four years from the date of the bye-law amendment and thereafter
only on each successive two-year anniversary of the expiration of the initial
four-year period. On June 10, 2019, the Athene shareholders approved the bye-law
amendment and the amended fee agreement took effect retroactive to the month
beginning January 1, 2019. The Company began recording fees pursuant to the
amended fee agreement on January 1, 2019. The amended fee agreement provides for
sub-allocation fees which vary based on portfolio allocation differentiation, as
described below.
The base management fee covers a range of investment services that Athene
receives from the Company, including investment management, asset allocation,
mergers and acquisition asset diligence and certain operational support services
such as investment compliance, tax, legal and risk management support, among
others. Additionally, the amended fee agreement provides for a possible payment
by the Company to Athene, or a possible payment by Athene to the Company, equal
to 0.025% of the Incremental Value as of the end of each year, beginning on
December 31, 2019, depending upon the percentage of Athene's investments that
consist of core assets and core plus assets. In furtherance of yield support for
Athene, if more than 60% of Athene's invested assets which are subject to the
sub-allocation fees are invested in core and core plus assets, Athene will
receive a 0.025% fee reduction on the Incremental Value. As an incentive for
differentiated asset management, if less than 50% of Athene's invested assets
which are subject to the sub-allocation fee are invested in core and core plus
assets, thereby reflecting a higher allocation toward assets with the highest
alpha-generating abilities, Athene will pay an additional fee of 0.025% on
Incremental Value.
The amended fee agreement is intended to provide for further alignment of
interests between Athene and the Company. On the Backbook Value, assuming
constant portfolio allocations, the near-term impact of the amended fee
agreement is anticipated to be immaterial. On the Incremental Value, assuming
the same allocations as the Backbook Value, total fees paid by Athene to the
Company are expected to be marginally lower than fees paid by Athene to the
Company would have been under the prior fee arrangement. If invested asset
allocations are more heavily weighted to assets with lower alpha-generating
abilities than Athene's current investment portfolio, the fees that Athene pays
to the Company under the Fee Agreement would be expected to decline relative to
the prior fee arrangement. Conversely, if a greater proportion of Athene's
investment portfolio is allocated to differentiated assets with higher
alpha-generating abilities, Athene's net investment earned rates would be
expected to increase, and so would the fees Athene pays to the Company relative
to the prior fee arrangement.

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Equity-Based Profit Sharing Expense
Profit sharing amounts are generally not paid until the related performance fees
are distributed to the general partner upon realization of the fund's
investments. Under certain profit sharing arrangements, a portion of the
performance fees distributed to the general partner is allocated by issuance of
equity-based awards, rather than cash, to employees. See note 2 to the condensed
consolidated financial statements for further information regarding the
accounting for the Company's profit sharing arrangements.
Strategic Relationship Agreement with CalPERS
On April 20, 2010, the Company announced that it entered into a strategic
relationship agreement with CalPERS. The strategic relationship agreement
provides that Apollo will reduce fees charged to CalPERS on funds it manages, or
in the future will manage, solely for CalPERS by $125 million over a five-year
period or as close a period as required to provide CalPERS with that benefit.
The agreement further provides that Apollo will not use a placement agent in
connection with securing any future capital commitments from CalPERS. As of
June 30, 2019, the Company had reduced fees charged to CalPERS on the funds it
manages by approximately $108.2 million.
Critical Accounting Policies
This Management's Discussion and Analysis of Financial Condition and Results of
Operations is based upon the condensed consolidated financial statements, which
have been prepared in accordance with U.S. GAAP. The preparation of financial
statements in accordance with U.S. GAAP requires the use of estimates and
assumptions that could affect the reported amounts of assets and liabilities,
the disclosure of contingent assets and liabilities and the reported amounts of
revenues and expenses. Actual results could differ from these estimates. A
summary of our significant accounting policies is presented in note 2 to our
condensed consolidated financial statements. The following is a summary of our
accounting policies that are affected most by judgments, estimates and
assumptions.
Consolidation
The Company assesses all entities with which it is involved for consolidation on
a case by case basis depending on the specific facts and circumstances
surrounding each entity. Pursuant to the consolidation guidance, the Company
first evaluates whether it holds a variable interest in an entity. Apollo
factors in all economic interests including proportionate interests through
related parties, to determine if such interests are to be considered a variable
interest. As Apollo's interest in many of these entities is solely through
market rate fees and/or insignificant indirect interests through related
parties, Apollo is generally not considered to have a variable interest in many
of these entities under the guidance and no further consolidation analysis is
performed. For entities where the Company has determined that it does hold a
variable interest, the Company performs an assessment to determine whether each
of those entities qualify as a VIE.
The determination as to whether an entity qualifies as a VIE depends on the
facts and circumstances surrounding each entity and therefore certain of
Apollo's funds may qualify as VIEs under the variable interest model whereas
others may qualify as voting interest entities ("VOEs") under the voting
interest model. The granting of substantive kick-out rights is a key
consideration in determining whether a limited partnership or similar entity is
a VIE and whether or not that entity should be consolidated.
Under the voting interest model, Apollo consolidates those entities it controls
through a majority voting interest. Apollo does not consolidate those VOEs in
which substantive kick-out rights have been granted to the unaffiliated
investors to either dissolve the fund or remove the general partner.
 Under the variable interest model, Apollo consolidates those entities where it
is determined that the Company is the primary beneficiary of the entity. The
Company is determined to be the primary beneficiary if it holds a controlling
financial interest in the VIE defined as possessing both (i) the power to direct
the activities of the VIE that most significantly impact the VIE's economic
performance and (ii) the obligation to absorb losses of the VIE or the right to
receive benefits from the VIE that could potentially be significant to the VIE.
If Apollo alone is not considered to have a controlling financial interest in
the VIE but Apollo and its related parties under common control in the aggregate
have a controlling financial interest in the VIE, Apollo will still be deemed to
be the primary beneficiary if it is the party within the related party group
that is most closely associated with the VIE. If Apollo and its related parties
not under common control in the aggregate have a controlling financial interest
in a VIE, then Apollo is deemed to be the primary beneficiary if substantially
all the activities of the entity are performed on behalf of Apollo. Apollo
determines whether it is the primary beneficiary of a VIE at the time it becomes
initially involved with the VIE and reconsiders that conclusion continuously.
Investments and redemptions (either by Apollo, related parties of Apollo or
third parties) or amendments to the governing documents of the respective entity
may affect an entity's status as a VIE or the determination of the primary
beneficiary.

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The assessment of whether an entity is a VIE and the determination of whether
Apollo should consolidate such VIE requires judgment by our management. Those
judgments include, but are not limited to: (i) determining whether the total
equity investment at risk is sufficient to permit the entity to finance its
activities without additional subordinated financial support, (ii) evaluating
whether the holders of equity investment at risk, as a group, can make decisions
that have a significant effect on the success of the entity, (iii) determining
whether the equity investors have proportionate voting rights to their
obligations to absorb losses or rights to receive the expected residual returns
from an entity and (iv) evaluating the nature of the relationship and activities
of those related parties with shared power or under common control for purposes
of determining which party within the related-party group is most closely
associated with the VIE. Judgments are also made in determining whether a member
in the equity group has a controlling financial interest including power to
direct activities that most significantly impact the VIE's economic performance
and rights to receive benefits or obligations to absorb losses that could be
potentially significant to the VIE. This analysis considers all relevant
economic interests including proportionate interests held through related
parties.
Revenue Recognition
Performance Fees. We earn performance fees from our funds as a result of such
funds achieving specified performance criteria. Such performance fees generally
are earned based upon a fixed percentage of realized and unrealized gains of
various funds after meeting any applicable hurdle rate or threshold minimum.
Performance allocations are performance fees that are generally structured from
a legal standpoint as an allocation of capital to the Company. Performance
allocations from certain of the funds that we manage are subject to contingent
repayment and are generally paid to us as particular investments made by the
funds are realized. If, however, upon liquidation of a fund, the aggregate
amount paid to us as performance fees exceeds the amount actually due to us
based upon the aggregate performance of the fund, the excess (in certain cases
net of taxes) is required to be returned by us to that fund. We account for
performance allocations as an equity method investment, and accordingly, we
accrue performance allocations quarterly based on fair value of the underlying
investments and separately assess if contingent repayment is necessary. The
determination of performance allocations and contingent repayment considers both
the terms of the respective partnership agreements and the current fair value of
the underlying investments within the funds. Estimates and assumptions are made
when determining the fair value of the underlying investments within the funds
and could vary depending on the valuation methodology that is used. See
"Investments, at Fair Value" below for further discussion related to significant
estimates and assumptions used for determining fair value of the underlying
investments in our credit, private equity and real assets funds.
Incentive fees are performance fees structured as a contractual fee arrangement
rather than a capital allocation. Incentive fees are generally received from the
management of CLOs, managed accounts and AINV. For a majority of our incentive
fees, once the quarterly or annual incentive fees have been determined, there is
no look-back to prior periods for a potential contingent repayment, however,
certain other incentive fees can be subject to contingent repayment at the end
of the life of the entity. In accordance with the new revenue recognition
standard, certain incentive fees are considered a form of variable consideration
and therefore are deferred until fees are probable to not be significantly
reversed. There is significant judgment involved in determining if the incentive
fees are probable to not be significantly reversed, but generally the Company
will defer the revenue until the fees are crystallized or are no longer subject
to clawback or reversal. Prior to the adoption of the new revenue recognition
guidance, incentive fees were recognized on an assumed liquidation basis.
Management Fees. Management fees related to our credit funds, can be based on
net asset value, gross assets, adjusted cost of all unrealized portfolio
investments, capital commitments, adjusted assets, capital contributions, or
stockholders' equity all as defined in the respective partnership agreements.
The credit management fee calculations that consider net asset value, gross
assets, adjusted cost of all unrealized portfolio investments and adjusted
assets are normally based on the terms of the respective partnership agreements
and the current fair value of the underlying investments within the funds.
Estimates and assumptions are made when determining the fair value of the
underlying investments within the funds and could vary depending on the
valuation methodology that is used. The management fees related to our private
equity funds, by contrast, are generally based on a fixed percentage of the
committed capital or invested capital. The corresponding fee calculations that
consider committed capital or invested capital are both objective in nature and
therefore do not require the use of significant estimates or assumptions. The
management fees related to our real assets funds are generally based on a
specific percentage of the funds' stockholders' equity or committed or net
invested capital or the capital accounts of the limited partners. See
"Investments, at Fair Value" below for further discussion related to significant
estimates and assumptions used for determining fair value of the underlying
investments in our credit, private equity and real assets funds.
Investments, at Fair Value
On a quarterly basis, Apollo utilizes valuation committees consisting of members
from senior management, to review and approve the valuation results related to
the investments of the funds it manages. For certain publicly traded vehicles
managed by Apollo, a review is performed by an independent board of directors.
The Company also retains independent valuation firms to

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provide third-party valuation consulting services to Apollo, which consist of
certain limited procedures that management identifies and requests them to
perform. The limited procedures provided by the independent valuation firms
assist management with validating their valuation results or determining fair
value. The Company performs various back-testing procedures to validate their
valuation approaches, including comparisons between expected and observed
outcomes, forecast evaluations and variance analyses. However, because of the
inherent uncertainty of valuation, the estimated values may differ significantly
from the values that would have been used had a ready market for the investments
existed, and the differences could be material.
The fair values of the investments in our funds can be impacted by changes to
the assumptions used in the underlying valuation models. For further discussion
on the impact of changes to valuation assumptions see "Item 7A. Quantitative and
Qualitative Disclosures About Market Risk-Sensitivity" in our 2018 Annual
Report. There have been no material changes to the valuation approaches utilized
during the periods that our financial results are presented in this report.
Fair Value of Financial Instruments
Except for the Company's debt obligations (each as defined in note 10 to our
condensed consolidated financial statements), Apollo's financial instruments are
recorded at fair value or at amounts whose carrying values approximate fair
value. See "-Investments, at Fair Value" above. While Apollo's valuations of
portfolio investments are based on assumptions that Apollo believes are
reasonable under the circumstances, the actual realized gains or losses will
depend on, among other factors, future operating results, the value of the
assets and market conditions at the time of disposition, any related transaction
costs and the timing and manner of sale, all of which may ultimately differ
significantly from the assumptions on which the valuations were based. Financial
instruments' carrying values generally approximate fair value because of the
short-term nature of those instruments or variable interest rates related to the
borrowings.
Profit Sharing Expense. Profit sharing expense is primarily a result of
agreements with our Contributing Partners and employees to compensate them based
on the ownership interest they have in the general partners of the Apollo funds.
Therefore, changes in the fair value of the underlying investments in the funds
we manage and advise affect profit sharing expense. The Contributing Partners
and employees are allocated approximately 30% to 50%, of the total performance
fees which is driven primarily by changes in fair value of the underlying fund's
investments and is treated as compensation expense. Additionally, profit sharing
expenses paid may be subject to clawback from employees, former employees and
Contributing Partners to the extent not indemnified. When applicable, the
accrual for potential clawback of previously distributed profit sharing amounts,
which is a component of due from related parties on the condensed consolidated
statements of financial condition, represents all amounts previously distributed
to employees, former employees and Contributing Partners that would need to be
returned to the general partner if the Apollo funds were to be liquidated based
on the current fair value of the underlying funds' investments as of the
reporting date. The actual general partner receivable, however, would not become
realized until the end of a fund's life.
Several of the Company's employee remuneration programs are dependent upon
performance fee realizations, including the Incentive Pool, and dedicated
performance fee rights.  The Company established these programs to attract and
retain, and provide incentive to, partners and employees of the Company and to
more closely align the overall compensation of partners and employees with the
overall realized performance of the Company.  Dedicated performance fee rights
entitle their holders to payments arising from performance fee realizations.
The Incentive Pool enables certain partners and employees to earn discretionary
compensation based on realized performance fees in a given year, which amounts
are reflected in profit sharing expense in the Company's condensed consolidated
financial statements.  Amounts earned by participants as a result of their
performance fee rights (whether dedicated or Incentive Pool) will vary
year-to-year depending on the overall realized performance of the Company (and,
in the case of the Incentive Pool, on their individual performance). There is no
assurance that the Company will continue to compensate individuals through the
same types of arrangements in the future and there may be periods when the
executive committee of the Company's manager determines that allocations of
realized performance fees are not sufficient to compensate individuals, which
may result in an increase in salary, bonus and benefits, the modification of
existing programs or the use of new remuneration programs.  Reductions in
performance fee revenues could also make it harder to retain employees and cause
employees to seek other employment opportunities.
Fair Value Option. Apollo has elected the fair value option for the Company's
investment in Athene Holding, the assets and liabilities of certain of its
consolidated VIEs (including CLOs), the Company's U.S.Treasury securities with
original maturities greater than three months when purchased and certain of the
Company's other investments. Such election is irrevocable and is applied to
financial instruments on an individual basis at initial recognition. See notes
3, 5, and 6 to the condensed consolidated financial statements for further
disclosure.
Equity-Based Compensation. Equity-based compensation is accounted for in
accordance with U.S. GAAP, which requires that the cost of employee services
received in exchange for an award is generally measured based on the grant date
fair value of the award. Equity-based awards that do not require future service
(i.e., vested awards) are expensed immediately. Equity-based employee awards
that require future service are recognized over the relevant service period. In
addition, certain RSUs granted

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by the Company vest subject to continued employment and the Company's receipt of
performance fees, within prescribed periods, sufficient to cover the associated
equity-based compensation expense. In accordance with U.S. GAAP, equity-based
compensation expense for such awards, if and when granted, will be recognized on
an accelerated recognition method over the requisite service period to the
extent the performance fee metrics are met or deemed probable. The addition of
these performance measures helps to promote the interests of our Class A
shareholders and fund investors by making RSU vesting contingent on the
realization and distribution of profits on our funds. Forfeitures of
equity-based awards are accounted for when they occur. Apollo's equity-based
awards consist of, or provide rights with respect to, AOG Units, RSUs, share
options, restricted shares, AHL Awards and other equity-based compensation
awards. For more information regarding Apollo's equity-based compensation
awards, see note 12 to our condensed consolidated financial statements. The
Company's assumptions made to determine the fair value on grant date are
embodied in the calculations of compensation expense.
A significant part of our compensation expense is derived from amortization of
RSUs. The fair value of all RSU grants after March 29, 2011 is based on the
grant date fair value, which considers the public share price of the Company.
The Company has three types of RSU grants, which we refer to as Plan Grants,
Bonus Grants, and Performance Grants. Plan Grants may or may not provide the
right to receive distribution equivalents until the RSUs vest and, for grants
made after 2011, the underlying shares are generally issued by March 15th after
the year in which they vest. For Plan Grants, the grant date fair value is based
on the public share price of the Company, and is discounted for transfer
restrictions and lack of distributions until vested if applicable. Bonus Grants
provide the right to receive distribution equivalents on both vested and
unvested RSUs and Performance Grants provide the right to receive distribution
equivalents on vested RSUs and may also provide the right to receive
distribution equivalents on unvested RSUs. Both Bonus Grants and Performance
Grants are generally issued by March 15th of the year following the year in
which they vest. For Bonus Grants and Performance Grants, the grant date fair
value for the periods presented is based on the public share price of the
Company, and is discounted for transfer restrictions.
We utilized the present value of a growing annuity formula to calculate a
discount for the lack of pre-vesting distributions on certain Plan Grant and
Performance Grant RSUs.
We utilize the Finnerty Model to calculate a marketability discount on the Plan
Grant, Bonus Grant and Performance Grant RSUs to account for the lag between
vesting and issuance. The Finnerty Model provides for a valuation discount
reflecting the holding period restriction embedded in a restricted security
preventing its sale over a certain period of time.
The Finnerty Model proposes to estimate a discount for lack of marketability
such as transfer restrictions by using an option pricing theory. This model has
gained recognition through its ability to address the magnitude of the discount
by considering the volatility of a company's stock price and the length of
restriction. The concept underpinning the Finnerty Model is that a restricted
security cannot be sold over a certain period of time. Further simplified, a
restricted share of equity in a company can be viewed as having forfeited a put
on the average price of the marketable equity over the restriction period (also
known as an "Asian Put Option"). If we price an Asian Put Option and compare
this value to that of the assumed fully marketable underlying security, we can
effectively estimate the marketability discount. The inputs utilized in the
Finnerty Model are (i) length of holding period, (ii) volatility and
(iii) distribution yield.
Bonus Grants constitute a component of the discretionary annual compensation
awarded to certain of our professionals. During 2016, the Company increased the
default portion of annual compensation to be awarded as a discretionary Bonus
Grant relative to the portion awarded in previous years. The increase in the
proportion of discretionary annual compensation awarded as a Bonus Grant has
generally been offset by a decrease in discretionary annual cash bonuses. These
changes are intended to further align the interests of Apollo's employees and
stakeholders and strengthen the long-term commitment of our partners and
employees.
Fair Value Measurements
See note 6 to our condensed consolidated financial statements for a discussion
of the Company's fair value measurements.
Recent Accounting Pronouncements
A list of recent accounting pronouncements that are relevant to Apollo and its
industry is included in note 2 to our condensed consolidated financial
statements.

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Off-Balance Sheet Arrangements
In the normal course of business, we engage in off-balance sheet arrangements,
including transactions in derivatives, guarantees, commitments, indemnifications
and potential contingent repayment obligations. See note 15 to our condensed
consolidated financial statements for a discussion of guarantees and contingent
obligations.
Contractual Obligations, Commitments and Contingencies
The Company's material contractual obligations consisted of lease obligations,
contractual commitments as part of the ongoing operations of the funds and debt
obligations. Fixed and determinable payments due in connection with these
obligations are as follows as of June 30, 2019:

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