Apollo, Schroders join forces to sell funds to wealthy investors
The partnership comes as investors are fretting about private capital managers’ exposure to software companies
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[NEW YORK/LONDON] Apollo Global Management is teaming up with Schroders to develop funds for wealth and pension clients, in a strategic partnership the firms expect to ultimately raise billions of US dollars in assets per year.
The alternatives giant will work with London-based Schroders to offer new investment products to wealthy investors in the UK, according to a statement on Monday (Feb 9). The funds will hold both public and private fixed-income assets, with a first vehicle set to be rolled out later this year. Schroders will also be able to allocate money from existing client portfolios to Apollo.
Separately, the firms are preparing to launch a pooled fund for the US pension market in the second quarter, according to the statement. Bloomberg News reported in September that Apollo and Schroders were in talks about a partnership.
The rise of low-cost passive investing has encouraged active managers like Schroders to build out businesses offering alternative investments that clients typically hold for longer periods and for which they tend to pay higher fees. At the same time, alternative asset managers that have historically raised money from institutional investors are increasingly targeting private wealth, prompting them to pursue deals with retail-focused firms.
Mutual funds behemoth Capital Group partnered with KKR to launch vehicles for retail investors, including a target-date fund for retirement plans. In the UK, Legal & General Group struck a private credit partnership with Blackstone that the firms aim to grow to up to US$20 billion over time.
The partnership between Apollo and Schroders comes as investors are fretting about private capital managers’ exposure to software companies, which has hit the shares of various players in recent weeks.
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“We have always said that we would only pursue partnerships which enhance our existing offering and it is clear that this agreement with Apollo meets that criteria,” Schroders chief executive officer Richard Oldfield said in the statement. Britain’s largest standalone money manager oversees £825 billion (S$1.4 trillion) in assets across its public markets, alternatives and wealth businesses.
Its private markets arm, Schroders Capital, offers strategies ranging from mid-market private equity to asset-based finance to real estate. The unit’s assets under management stood at £83.4 billion as of October.
“Schroders is a storied institution with deep investment expertise and a reputation for delivering excellent client outcomes,” Apollo CEO Marc Rowan said. The New York-based firm managed US$908 billion in assets at the end of September. It’s scheduled to report full-year earnings later on Monday. BLOOMBERG
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