00:00 Speaker A
Private equity is an $8 trillion industry that originally began by investing in private companies to achieve higher returns than public investments. But in recent years, it has expanded to private credit and beyond. Oh, and many private equity firms themselves have gone public. So let’s discuss the key players and the outlook for the industry. Joining me now for more is Brian Sozzi, Yahoo Finance executive editor.
00:23 Brian Sozzi
Yeah.
00:23 Speaker A
Talk about this. Well, we should say why are we
00:27 Brian Sozzi
Let’s set the scene. Yeah. So we’re going to have exclusive coverage all day tomorrow inside of Apollo, which of course is the parent company of Yahoo Finance. Some really some amazing interviews uh capped off with a chat with Mark Rowan, uh the co-founder and CEO of Apollo. But for me, I’m really interested in a couple areas of this company. One, Athene. You know, we all like to focus on Apollo as a private equity powerhouse. They have built up a giant retirement business, um and they have a significant market share of the retirement and annuity industry. Curious on what the outlook for that business is if we do get another rate cut tomorrow and maybe one more. What does that mean for the annuity industry? Does it mean anything because we are getting millions and millions of people retiring, literally, uh by the day. So there’s that. Um also interested in exits and I got a good stat from EY. Private equity firms have announced exits total totaling $470 billion so far this year. That’s up 40% uh year over year. So this
01:42 Speaker A
What’s the return on those exits, though? That’s my question.
01:46 Brian Sozzi
They don’t put that out. But like your conversation was just saying, you know, it’s often good for what the sellers. Um but just the fact that those exits are picking up uh after a while uh is a good thing to see for the private equity industry. And then also too, deal volume has been pretty good. Third quarter deal value in the private equity industry, uh hit a record 310 billion. So there are some pockets of strength. It’s just a matter of do these pockets of strength get stronger next year?
02:11 Speaker A
Well, I’m really curious about the industry overall, the private equity industry because it has been pushing so much into the so-called wealth channel. That is wealthy individuals in the US who want access to these types of investments. But of course, we should remind folks who are watching, private equity comes at a cost, right? There are high fees that are associated with many of these investments. And so the question for regular investors who are being exposed to this universe for the first time is what it’s going to cost them, what their uh you know, total return is going to be when all is said and done, and what is the return on investment going to be like because as you say, private equity has been extraordinarily active, not just in buying companies, investing in companies, but in expanding into credit, infrastructure, real estate.
03:10 Brian Sozzi
data centers.
03:12 Speaker A
Yeah, data centers too.
03:13 Brian Sozzi
Yeah, and I’m really interested too, you know, of course, what President Trump signed that executive order a couple months ago, um that you could potentially invest in private equity as part of your 401k. So that could be. It’s not a done deal, but I am very curious on what that means for the private equity industry. I mean, that is a potential large, large pool of capital that these companies could get a piece of to further boost their business. And then private markets too. You know, Mark was out with a good op-ed, I believe in the FT a couple days ago making the case, you know, that what the the problems we saw in the private credit markets with two companies um a couple months ago, that wasn’t reflective of the broader investment grade private credit industry. So he made a very good point there. I think that industry, $38 trillion, the investment grade private credit and where we saw some of those rumblings a couple months ago, but uh about two Tri-color.
04:05 Speaker A
Tri-color and Midcap, yes.
04:07 Brian Sozzi
Tri-color. That’s correct. Yeah. So smaller part.
04:09 Speaker A
Yes. Yes, exactly. That seems to be what the defenders are saying. But there’s still concerns percolating out there.
04:16 Brian Sozzi
Yeah, I’m excited. It’s going to be a fun, good day of chat on on Fed day. Yeah, ready to do it.
04:19 Speaker A
Should be good. All right, thanks a lot, Sozz.
04:22 Brian Sozzi
Yep.