Marc Rowan: I think it’s important to say, we’re not in the credit risk business in what we’re talking about. There’s nothing about the advanced rate that is going to be different than that which that is available commercially everywhere. We want to get paid for structure and direct origination. We are not looking to get paid for credit risk unless we’re in a credit fund that is supposed to get paid for credit risk. This is about avoidance. And in terms of the funding of this, the funding of this, there’s very little equity funding that is required for the platform upfront. It will be funded by AAA and by third party investors side by side. And this will — the funding structure itself is all laid out in the 10-K coming up.
Operator: Thank you. The next question is coming from Rufus Hone of BMO Capital Markets. Please go ahead.
Rufus Hone: Great. Good morning. Thanks very much. I wanted to come back to your comments about the capital efficiency at Athene. The sidecars contribution is now stepping up to about 40% of the capital. I guess that’s a fair amount of capital being freed up. And I was curious about where you’re looking to deploy that capital. And I think the last couple of quarters, you’ve mentioned buybacks were right at the top of your capital hierarchy. I suppose how are you thinking about all that? Thank you.
Martin Kelly: Good morning. It’s Martin. So at the top of the house, we have choices, and the choices are to buy back stock, which we expect to be programmatic about. We think that that’s a very attractive use of capital, given the business plan we see in front of us even at current multiples. I think a small portion for increasing the dividend, because we think that’s important to be sort of an S&P like company. And then a portion to invest in the business, which frankly I think we see less need to do right now given most of the growth is organic, and the three initiatives and the next six are being built out with people and not being acquired. So that HoldCo capital benefits from a dividend up from Athene each year of $750 million.
We expect that that will continue at its current level. And then when you look at the capital efficiency at the Athene level, Athene is growing massively. So growth requires capital. Athene is creating meaningful earnings, 2.3 billion of SRE in the year just finished, up 20% next year. That will be used to fund growth that’s not retained by ADIP and to fund the $750 million dividend. But as we look at the choice to spend $1 of capital of Athene with or without the benefit of ADIP, it’s clearly more accretive across the group to leverage ADIP. And ADIP validates the structure and has terrific returns for its own investors. And then there’s AAA, right, which gets to the platform strategy. So they’re the key pockets of capital that we look at, and we’re looking to optimize it, realizing that uses of capital for buybacks, dividend increases and investments are all attractive in their own ways.
But growth requires capital at Athene. And so we’re very focused on making sure that we can manage that appropriately and maintain low leverage and strong capital levels above what’s required to ensure that the balance sheet is really robust.
Operator: Thank you. The next question is coming from Ben Budish of Barclays. Please go ahead.
Benjamin Budish: Hi, guys. Thanks so much for taking my question. I wanted to dig in a little bit on the inflow outlook for Athene. It sounds like you guys have a lot of confidence that growth is going to continue pretty nicely into next year. I’m just kind of curious, on the retail side, how much of that is coming from new distribution versus sort of ongoing, just underlying strength given where rates are? And on the pension side, just kind of curious, you explained that it’s somewhat seasonal. But just curious, what we should think of as kind of a normalized run rate as we go into next year? Thanks.
Marc Rowan: So we’ll get back to on the absolute breakdown between new distribution and strong distribution. But it is clear to me that consumers prefer higher rates versus lower rates. And so you’re seeing a tailwind to the industry. Having said that, new distribution, new pockets we opened up in the beginning of last year have been incredibly strong. And I won’t steal Athene’s thunder or their announcement, but they expect this year to be at least two massive launches. And so we are still early in our build out phase of expanding distribution, not to mention new suites of products and everything else. So I think there the tailwind is really good across distribution. And based on what we’ve seen, at least so far, early dates, it appears that ’23 is off to a really good start.
In terms of PRT, this is not a — there’s a lot of volume to do out there. But the only business worth doing is business that comes at acceptable spreads. And so we have a budget of what we want to do for the year, roughly 10-ish billion, and it’s our job to optimize within the deals that are out there and that which provides us the greatest spread in term and the best mix of business. We expect — and I’ll say we expect that we will exceed organically in ’23 what Athene did in ’22. And we will likely have to make choices and temper our growth. This will not be a question of whether there’s business to do. This is going to be a question of how much business we want to do.
Operator: Thank you. The next question is coming from Gerry O’Hara of Jefferies. Please go ahead.
Gerald O’Hara: Great, thanks. Hoping maybe we could get just a little bit of an update on sort of the outlook for global wealth. Appreciate it’s still early days, but hoping we could get a sense of how to think about the cadence and flows while balancing I think your comments of not looking to be necessarily the biggest or fastest growing kind of product generation? And then also if you could just maybe give us a sense of what the incremental products are that we might be able to expect as it relates to the sort of nine perpetual products by year and that you called out in prepared remarks? Thank you.
Jim Zelter: Thanks for the question. We’ll just dimensionalize it, like taking a step back, Marc talked about what we did last year around 6 billion. We got about 30 billion in the entire platform right now of products within various global wealth channels in terms of our existing products. And as you point out, like of the 9 billion to 10 billion this year, probably two thirds of that, 6.5 billion, 7 billion will be in the perpetual type of product that we’ve created, which is AAA, Apollo Debt Solutions, which has been out ADS, as well as a variety of non-traded REITs. And we also purchased a couple of products from Griffin, an interval fund in real estate and an interval fund in credit. So we see broad growth across those.
And then the residual of the 9 billion this year will be a variety of our institutional products that we put in the appropriate wrapper. But again, our view is you’re stepping back is this is a long journey. Certainly the characteristics of those who are going to win, not everybody is going to win. The distribution channels want a handful of producers or providers. We have the track record. We have the brand now. And what’s additional necessary is the technology and the education. So those are how we want to solve the riddle, if you will. But we’re not seeing — the vehicles we have had solid performance. We’ve not gotten anything that we would think as any kind of redemptions at year end from Windows. So we’re happy with the journey we’re on and it’s, as I said, between the retail perpetual funds from none a couple of years ago to almost nine at year end to the variety of drawdown funds, more than five of those.
We feel very comfortable with our product set.
Operator: Thank you. The next question is coming from Adam Beatty of UBS. Please go ahead.
Adam Beatty: Thank you and good morning. Just a quick follow up on retail wealth. Marc, I think mentioned some of the challenges that product elsewhere faced last year. Just wondering, has that kind of dampened sentiment? How do you view the take up? And also Jim just mentioned your education? How much recognition have you seen so far that some of the Apollo products are just truly distinctive and a better mousetrap? Thank you.
