Apollo's deal-first, 'no walls' playbook for infra investing

Bruno Alves (0:03)

Hi, I'm Bruno Alves, Editor-in-Chief of Infrastructure Investor, and welcome to the Infrastructure Investor Podcast. In today's episode, I sit down with Olivia Wassenaar, head of Apollo's infrastructure group. Apollo has been investing in the asset class for a long time, but it only raised its first infrastructure fund in 2018 Olivia talks us through the evolution of the firm's infrastructure business, and its distinctive deal-first philosophy, which enables Apollo to pursue opportunities throughout the asset class and invest flexibly across the capital stack. We also discuss how Apollo thinks about portfolio construction, given its opportunistic approach to investing, the big themes that are catching its attention in infrastructure, investing in a volatile world, and much more.

Hi, Olivia. Welcome to the podcast.

Olivia Wassenaar (1:00)

Thank you for having me, Bruno.

Bruno Alves (1:02)

So I wanted to start by going over Apollo's history of investing in infrastructure. And if I look at it from the perspective of Apollo launching dedicated products to the asset class, I think you raised your first fund in 2018, then that seems sort of relatively late compared to some of the other blue-chip managers of your stature. But I do know you've been investing in infrastructure for longer than that. So I wanted to start there. Just talk us through how long Apollo's been investing in infrastructure, but also kind of zoom in at that point when infrastructure caught Apollo's attention in a way that you decided you needed to launch a dedicated strategy for it.

Olivia Wassenaar (1:44)

Yeah, absolutely. So you're right. Our first dedicated fund was 2018, but we've been investing in infrastructure really since the beginning of Apollo. We were just doing it out of different vehicles. We were doing it out of our private equity funds. We were doing it out of our credit funds. We were looking for creative ways to invest in infrastructure, really from the beginning. When we look at it, I think a couple of our very early deals actually out of the private equity funded Apollo were actually infrastructure deals. So it's certainly something we've been doing for a while, and it kind of mirrors what Apollo as a whole has been doing. I mean, if you think about it, before sort of the GFC, we were a 40 billion AUM private equity focused manager, and today we're a $1.1 trillion fully integrated asset manager. So you've really sort of seen the evolution of Apollo business over that period in a similar way that you've seen an evolution of the infrastructure business as well.

I don't think our philosophy has changed either. We've always been looking for a good deal, right? Like that's Apollo. We always want to find a good deal. We always want to find an asset that we think we can bring value to, and we've really been doing that since the beginning. Today, we're pretty scaled. I mean, we put about $155 billion to work over the last five years in infrastructure.

We've got a 65-person dedicated team, and we've actually had a pretty tremendous run. Over the last quarter, we put about $20 billion to work in infrastructure. So certainly a very active part of Apollo's broader strategy.

Bruno Alves (3:21)

So you're doing all that and you're investing, and then in and around 2018, you close your first fund. Was it just a matter of, okay, this is the time to do a dedicated strategy? Did anything in particular happen in the asset class that you thought, okay, now we feel we need to go into it differently?

Olivia Wassenaar (3:37)

Yeah, we found a good opportunity. So there's a legacy portfolio of assets out of GE that we bought as a whole. So we bought the whole portfolio, but we selected asset by asset by asset, which ones we wanted to buy and what we wanted to pay for them. And so we bought a seed portfolio then and added on to that. And for us, that was a deep value opportunity that really kickstarted our fund business. And we had some good success with that portfolio and that inspired us to launch the next fund.

I will say over that period of time, though, we've really, it's always been more than just funds, right? It's always been looking for ways in which Apollo can bring its insurance balance sheet into these deals, looking at ways in which we can bring other partner capital into the deals as well.

Bruno Alves (4:26)

And I think that really segues into what I wanted to ask you next, because from the outside looking in, I would say what you just described. So this ability that Apollo has to sort of invest across the capital stack and put in place more structured solutions is one of your distinguishing features. And I guess I wanted to ask you if that's a good way of describing how you go about investing in infrastructure, but also wanting to know more about the thinking behind that and what kind of opportunities you feel that unlocks for you guys.