Apollo is a global alternative asset manager that has been providing “mainly institutional investors” with access to private market strategies in “traditional institutional fund structures,” explained Veronique Fournier, managing director and head of EMEA global wealth. Fournier, who previously worked at Barings, Schroder Investment Management and Aviva Investors, joined Apollo in September 2022 and is based in Switzerland.
These “traditional” fund structures are typically closed-end funds. “As we thought about delivering solutions to the wealth market, we thought, ‘That’s still relevant to some of the wealth market,’” said Fournier, referring to family offices and more institutionalised wealth investors. “They may want to have the full illiquidity premium and have very comfortable capital-called, drawdown structures.”
We also thought that in some cases it might be helpful to offer investors more windows for liquidity
“But we also thought that in some cases it might be helpful to offer investors more windows for liquidity,” said Fournier. “So we were keen to ensure that we also launched some open-ended semi-liquid fund structures that would enable investors to choose how they want to access our investment ecosystems.”
New “fund umbrella” in Luxembourg
Apollo first did so in the United States, building structures such as their Reit (real estate investment trust) structure or interval funds. “As we were thinking about Europe, we thought, ‘Okay, we’ve got our Luxembourg fund platform that’s already been in existence for closed-ended drawdown funds, and so how do we bring open-ended semi-liquid funds to the European marketplace?”
The firm then decided to launch a “fund umbrella” in the grand duchy that would enable them to “deliver a number of open-ended semi-liquids using either the Part II UCI Sicav [société d’investissement à capital variable] structure, or, potentially using the Eltif [European long-term investment fund] structure,” said Fournier.
It’s really around how we expand our ecosystem to the non-US investor base
Apollo Private Markets SICAV, , has received regulatory authorisation from Luxembourg’s financial regulator, the CSSF. It’s a vehicle that allows the company to provide non-US investors--who could be, for instance, in Europe, Asia or Latin America--with access to more open-ended semi-liquids. “It’s really around how we expand our ecosystem to the non-US investor base.”
Luxembourg’s “beauty” and “flexibility”
When Fournier talks about the “beauty of Luxembourg,” she’s not referring to the country’s historical or architectural attractiveness, of course.
“The beauty we found in Luxembourg was not just the ability to provide a structure that had a European passport, but also the ability to provide some currency hedging,” said Fournier. Currency hedging aims to reduce the effects of currency and exchange rate fluctuations on investments.
Several credit, equity and real asset sub-funds sit under Apollo’s umbrella, which enables it “to deliver investment ecosystems in this open-ended semi-liquid format.” The company wants to provide “different options and access points” for investors.
We see a huge opportunity for families and individuals to increase their allocation to alternative investments
“We were keen to have a platform that would be available to not just European investors, but that could be our platform for non-US investments,” said Fournier. “Luxembourg is a recognised jurisdiction for Latam, for Asian, for European investors. So we are calling it our international funds platform.”
“That flexibility that we have, the fact that [Luxembourg] is a well-accepted fund jurisdiction, has been helpful.”
Offering access to opportunities
Is this part of a trend towards the democratisation of private assets?
“We see a huge opportunity for families and individuals to increase their allocation to alternative investments,” said Fournier. “Some people are calling that democratisation of alternatives. That sounds good, but really it’s around offering individuals and families more access to these types of opportunities that historically haven’t been available to them.” Reasons for this include the lack of structures, regulation and technology.
Apollo defines “alternatives” as just that--an “alternative to publicly traded stocks and bonds,” said Fournier. It’s about “taking away some liquidity to be able to access opportunities in the private markets, to enhance your investment returns from what you might be getting in public markets. Some people can call that the ‘democratisation of alternatives.’ We simply call that, ‘There’s an opportunity set. And investors should be accessing that opportunity set.’”
Looking ahead: different asset classes and investor types
As part of the platform, Apollo has launched a credit strategy--which is focused on the US--as well as an equity strategy. Real assets aren’t yet on the table, but “we want to make sure that we deliver credit, equity, real assets, and access to different regions,” said Fournier.
“Think about global and local opportunities across all asset classes. So, ultimately, we’ll end up with something like eight, 10, 12 strategies within this fund umbrella. That will mean that we will be providing investors access to all these asset classes across the local and global opportunity set.”
You need to educate clients and the market around why these asset classes make sense, how they can be integrated into a portfolio
This umbrella would also allow Apollo to launch some Eltifs, and the firm is thinking about offering different investor types--not just professionals--access to a variety of asset classes.
“Need to educate clients and the market”
Eltifs could be an exciting structure for the market, said Fournier, and it’s easy to say that investors should be increasing their allocation to alternatives. But this is not something that happens “overnight.” Using new fund structures is not as easy as flipping a switch. “You need to educate clients and the market around why these asset classes make sense, how they can be integrated into a portfolio.”
At the end of 2022, the company launched Apollo Academy, which aims to provide education on private markets and integrating them. “It’s a publicly available digital tool that you, clients, bankers can access in terms of educating themselves around alternatives,” said Fournier. “We are transforming the industry, and that requires education.”