Two more big players in alternative asset management, Apollo Global Management, a New York-based firm with $696 billion in AUM, and TPG, a San Francisco-based manager with $229 billion in assets, provided updates on semi-liquid products they are developing for retail investors.
The firms will join the growing ranks of firms targeting the retail market, which is on pace for more than $100 billion in fundraising this year.
During his firm’s earnings call last week, Apollo CEO Marc Rowan said the company is on track for two launches in the coming months, one in the third quarter and one possibly before the end of 2024.
The first product will include a mix of alternative credit and traditional fixed income. The second would be a partnership with an external manager.
“All of the big firms have a seat at the table and a right to participate in this because they originate somewhat uniquely,” Rowan said.
Rowan added that he expected further competition to develop both as asset managers acquire alternative managers or form partnerships.
“If you think about what's happening in asset management, more generally, active management, traditionally defined, has had a relatively tough decade. It has not outperformed the broader index for a very substantial portion of its time. Each of those active managers is undergoing their own strategy review,” Rowan said. “We will not, as an industry, build the infrastructure required to reach the vast, vast majority of investors who are already well served by traditional asset managers. I believe our role is, as Scott alluded to, to be a parts provider for those pieces of our product that we can originate and we like having the access and to be a joint venture partner. And I can't tell you exactly how it is going to align, but it is one of the more interesting parts of our business right now.”
TPG, meanwhile, during its recent quarterly earnings call, said it was working to launch its first semiliquid private equity fund at the beginning of 2025. The product will include climate themes, similar to strategies in its TPG Rise Climate impact investing franchise.
“That will be a piece of the offering and the componentry of the deals that we ultimately have within the semiliquid private equity vehicle,” TPG CEO Jon Winkelried said. “It will essentially be a broad compilation of opportunities and deals across our private equity franchises, but including climate. So, we feel like that will continue to give us additional distinctiveness with respect to what the channel has an opportunity to participate.”
TPG Founding Partner and Executive Chair James Coulter added the firm will discuss the product with potential investors.
“I’ll be doing a series of one-on-one meetings across Texas, which is always interesting in climate, but the fact that we’re seeing demand there gives you a sense of the overall demand in the marketplace,” Coulter said. “So, I think there are substantial opportunities to expand the distribution of our climate-related platform products. But to Jon’s point, I think as a differentiator to our semiliquid product, it will be very powerful.”
Apollo’s and TPG’s product updates follow similar comments from fellow alternative asset managers KKR and Blackstone during their quarterly earnings calls. Specialized providers like Cliffwater LLC and BlueRock, which solely focus on semi-liquid vehicles designed for retail investors, have also made their mark in the wealth channel.
While asset managers targeting the retail channel are using a variety of wrappers focused on private credit, private equity, real estate and infrastructure, including business-development companies, non-traded REITs and tender-offer funds, interval funds have emerged as a particularly popular tactic.
