RBC Capital Markets analyst Bulent Ozcan takes a look at the state of Apollo Global Management after the company reported Q4 earnings this morning.

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Apollo global earnings

Apollo Global Management LLC (NYSE:APO) reported December quarter results that were stronger than we had anticipated. Apollo raised close to $10 billion in the December quarter. The firm deployed $1 billion in private equity in 4Q13. Uncalled private equity commitments stand at $24 billion.

Apollo Global Management LLC (NYSE:APO) declared distributions of $1.08 versus our estimate of $0.98 per share. Economic net income of $1.06 in the December quarter exceeding our estimate of $0.69.

Apollo global’s management business

Total revenues for Apollo Global Management LLC (NYSE:APO)’s Management Business increased from $223.2 million in 4Q12 to $295.7 million in the December quarter. This was driven by higher fee earnings assets due to the Aviva plc (LON:AV) acquisition. Fee generating AUM stood at $128.4 billion as of December 2014, increasing $46.5 billion year over year.

While realized gains from carried interest income declined from $841 million in 2Q13, to $639 million in 3Q13 and $632 million in the December quarter, Apollo’s Incentive Business generated total carried interest above our expectation of $417 million.

Realizations were driven by a number of exits or partial sell-downs including: Evertec Inc (NYSE:EVTC), Sprouts Farmers Market Inc (NASDAQ:SFM), CKE Restaurants; Norwegian Cruise Line Holdings Ltd (NASDAQ:NCLH), Taminco Corp (NYSE:TAM); Countrywide PLC (LON:CWD); and LyondellBasell Industries NV (NYSE:LYB).

Apollo Global Management LLC (NYSE:APO)’s private equity funds appreciated 9% in the December quarter, resulting in a fair value of funds (incl. AAA) of 65% above cost – same as in the September quarter. This compares with an appreciation of 18% during the September quarter and a 5% appreciation in during the June quarter.

Credit Segment reported an Eni SpA (BIT:ENI) of $160.1 million, up 65% year over year. The Management Business ENI increased 2.6x due to the inclusion of Aviva’s assets in fee generating AUM. Realized gains from carried interest increased 32% year over year.

Real Estate Segment reported its first positive ENI since 2Q12. Economic net income stood at $3.9 million.

Net carried interest receivable increased from $1,254 million in the September quarter to $1,375 million in the December quarter.