John Zito - Inside Apollo - [Invest Like the Best, EP.426]

Episode Summary

Executive Summary: Patrick O’Shaughnessy interviews Apollo co-president John Zito about how Apollo has evolved from a credit firm into a capital-markets platform spanning private credit, insurance, asset origination, and public/private convergence. Zito argues the next era of finance is longer-duration, more customized, and increasingly liquid, with Apollo positioned to finance compute, infrastructure, and corporate balance sheets at scale.

Main Topics: Apollo’s business model shift (Priority: 10/5): Apollo merged with Athene to combine asset management with its own balance sheet and liabilities. Capital markets convergence (Priority: 9/5): Private and public markets are blending as issuers seek customized, longer-duration capital. U.S. capital market dominance (Priority: 8/5): Zito argues America’s rule of law, talent, and market depth still anchor global capital flows. Origination as a moat (Priority: 10/5): Apollo’s edge comes from owning origination networks and spanning the full capital structure. Liquidity and private assets (Priority: 8/5): Evergreen structures, secondaries, and tokenization will make private assets more liquid. AI and infrastructure financing (Priority: 7/5): Apollo expects large-scale compute and infrastructure needs to create major financing opportunities. Culture and execution at Apollo (Priority: 7/5): The firm prizes accountability, flexibility, and creative problem-solving across deals and teams.

Key Arguments: Apollo wins by pairing asset management with principal capital and long-duration liabilities. Private and public markets are converging; issuers want customized financing, not one-size-fits-all debt. Apollo’s full-stack origination creates repeat business and information advantages across cycles. The U.S. remains the global capital-market center because of rule of law, talent, and market depth. More assets will become liquid over time, pushing private markets toward evergreen and secondary structures. AI will drive massive compute spending, and Apollo’s liability structure fits that funding need.

Data Points: Apollo assets under management: just under $800 billion - Zito describes Apollo’s current scale. Apollo credit assets: just under $700 billion - Credit is the core of Apollo’s business. Apollo balance sheet: just over $300 billion - Own balance sheet brought in through Athene merger. Balance sheet mix: 95% investment grade, 5% alternatives - Athene-style capital is invested with long duration. Annual growth: $150 billion a year - Zito cites current growth rate. Annual annuity writing: a billion to $2 billion per week - Scale of Athene liability origination. Annual origination: $260 billion - Apollo originated investment-grade and private asset product last year. Automated expense reviews: 85% - Ramp ad at the start of the episode. Expense review accuracy: 99% - Ramp ad claims AI accuracy. Company savings: 5% - Ramp ad claims cost savings. U.S. securitized market: $15 trillion - Zito contrasts U.S. market depth with Europe. European securitized market: $500 billion - Shows underdevelopment relative to U.S. U.S. debt market: $50 trillion - Illustrates tailwinds in U.S. capital markets. U.S. economy size: $30 trillion - Compared with Europe in the discussion. Europe economy size: $24 trillion - Compared with U.S. in the discussion. Intel deal size: $11 billion - Example of Apollo financing large corporates. Atlas warehouse assets: $28 billion - Apollo’s acquired structured-products/warehouse platform. Atlas goal: $100 billion - Long-term warehouse business target. Carvana bonds low: 30 - Apollo bought bonds during the selloff. Carvana stock low: 4 - Apollo bought the stock during distress. Carvana stock high: 280 - Stock rallied after restructuring. Hertz exit financing: $2.5 billion - Apollo provided exit financing in the Hertz workout. Hertz total capital deployed: $10 billion - Apollo deployed across multiple parts of the capital structure. Apollo deal team size: 4,000 employees - Employees supporting originations across bought/build businesses. Private wealth clients without alts: 91% - Zito says wealth is still underallocated to alternatives. Credit fund size mentioned historically: $5 million - Early career anecdote about what was then considered small. Credit fund growth: $1.4 billion - Jim Casper’s fund size in 2002–2003.

Pivotal Quotes: "We think the future of asset management is being aligned with our clients in a way that no one else is." — John Zito: Explaining the Athene merger and Apollo’s principal-investor model. "We have no walls." — John Zito: Describing Apollo’s cross-asset, cross-team investment approach. "The number one rule is make sure you spend all the time in the world to define the credit box." — John Zito: His syllabus for building a great origination platform.

Implications: Apollo’s next challenge is proving that private, liquid, and public capital can coexist at scale while preserving returns, trust, and discipline.