Glossary
Index
Index
A
AIFMD: Alternative Investment Fund Managers Directive (Directive (2011/61/EU), as may be amended from time to time.
Alternatives: Non-traditional investments, such as private equity, real estate, and commodities, which can provide diversification and potential for higher returns.
Annualized returns: The average rate of return of an investment over a specified period, expressed as a percentage and adjusted to reflect an annual rate.
Annualized volatility: The standard deviation of an investment's returns over a one-year period, expressed as a percentage, which indicates the investment's historical risk or price fluctuations.
Asset coverage: A financial ratio that measures the extent to which a company's assets can cover its outstanding debt obligations, used to evaluate the creditworthiness and risk profile of a borrower.
Asset-backed securities (ABS): Financial instruments that represent an ownership interest in a pool of underlying assets, such as loans or receivables, which generate cash flows for the security holders.
Asset-based lending (ABL): A type of lending where the loan is secured by a borrower's assets, such as inventory or accounts receivable, which can be liquidated in the event of default to repay the loan.
Assets Under Management (AUM): Assets of the funds, partnerships and accounts to which we provide investment management, advisory, or certain other investment-related services, including, without limitation, capital that such funds, partnerships and accounts have the right to call from investors pursuant to capital commitments.
B
Balance sheet: References to investments made on Apollo’s balance sheet, means investments made by Apollo using its own capital to invest.
Basis points (bps): Unit of measurement used to express the percentage change in a metric. One basis point is equal to 0.01% or one-hundredth of a percentage point.
Borrowing costs: The expenses a borrower incurs when taking out a loan or issuing debt, such as interest payments, fees, and other charges.
Bottom-up selection: Investment approach that focuses on analyzing individual companies, their financial performance, competitive position, and growth prospects.
Broadly syndicated loans (BSL): Loans issued by below-investment grade companies and purchased by institutional investors. Broadly syndicated loans are senior secured and have a floating rate coupon that adjusts with short-term interest rates.
C
Capital calls: Requests made by a fund manager to the investors (i.e., LPs) for the payment of their committed capital, used to fund investments or cover expenses.
Capital solutions: Financing options provided to businesses to support growth, acquisitions, or other strategic initiatives, which may include debt, equity, or hybrid instruments.
Cash flow yield: A measure of an investment's income-generating potential, calculated by dividing the annual cash flow generated by the investment by its market value or purchase price.
Climate-focused United Nations Sustainable Development Goals (UN SDGs): The United Nations Sustainable Development Goals (UN SDGs) include several goals specifically focused on climate action and environmental sustainability. These goals are designed to address global challenges related to climate change and environmental degradation. These are a list of 17 objectives ((1) no poverty, (2) zero hunger, (3) good health and well-being, (4) quality education, (5) gender equality, (6) clean water and sanitation, (7) affordable and clean energy, (8) decent work and economic growth, (9) industry, innovation and infrastructure, (10) reduced inequalities, (11) sustainable cities and communities, (12) responsible consumption and production, (13) climate action, (14) life below water, (15) life on land, (16) peace, justice and strong institutions, and (17) partnerships for the goals). More details on the UN SDGs are available here.
Clean Transition: As defined by Apollo, Clean Transition refers to the strategic shift of financial assets and investments towards projects, companies, and technologies that promote environmental sustainability and reduce carbon emissions. This concept encompasses the transition from traditional, carbon-intensive industries to cleaner, renewable energy sources and sustainable business practices.
Climate and Transition Investment Framework (CTIF): The CTIF is proprietary to Apollo and is intended to assess whether opportunities align with certain climate-focused UN SDGs, which is achieved by assessing whether investments contribute to SEAs. The CTIF is subject to change at any time without notice.
Co-invest / co-investment: An investment made alongside a fund or another investor, often on the same terms and conditions, which can provide access to additional investment opportunities and enhance diversification.
Collateralized loan obligation (CLO): A type of structured finance product backed by a pool of loans, typically leveraged loans, which are grouped together and sold to investors as securities with varying levels of risk and return.
Committed capital: The total amount of money that investors have agreed to contribute to a fund over a specified period.
Concentration: The degree to which an investment portfolio is focused on a particular asset class, industry, or geographic region, which can increase the portfolio's risk and volatility.
Contracted cash flows: Predictable and legally binding income streams generated by an investment, often resulting from long-term contracts, leases, or other agreements.
Control / non-control investments: Investments in which a fund may or may not have significant influence over a company's operations or decision-making processes.
Core: An investment considered to be a stable, lower-risk asset or company that is expected to provide consistent, long-term returns with a lower level of volatility compared to more aggressive or speculative investments.
Corporate carveouts: Acquisition of a subsidiary or division of a larger company.
Creation multiple: A measure of the value created by an investment relative to its purchase price.
Credit losses: The amount of money lost due to a borrower's failure to repay a loan or meet their contractual obligations, which can impact the returns of credit-focused investment strategies.
CTIF Eligible Investment: Refers to an investment that aligns with certain climate focused UN SDGs and contributes to Apollo’s SEAs.
Cumulative returns: The total gain or loss on an investment over a specified period, including price appreciation or depreciation and any income generated, such as dividends or interest.
Current yield: The annual income generated by an investment, expressed as a percentage of the investment's current market value, often used to evaluate the income-generating potential of fixed income securities or dividend-paying stocks.
D
Diligence / due diligence: The thorough investigation and analysis of an investment opportunity to assess its risks, potential returns, and overall attractiveness, typically conducted by the asset manager or its advisors before making an investment.
Direct lending: Lenders (non-bank creditors) make loans to companies without using intermediaries such as an investment bank; often a focus on investing at the top of the capital structure in senior, secured first lien debt to reduce risk.
Dislocated credit: A credit investment opportunity that arises due to market dislocations, inefficiencies, or other factors that cause the market value of a debt instrument to deviate significantly from its intrinsic value.
Diversification: An investment strategy that involves spreading investments across a range of asset classes, industries, or regions to reduce risk and increase potential returns.
Downside protection: Strategies or features of an investment that help minimize potential losses in the event of unfavorable market conditions or investment performance.
E
EBITDA: Earnings before interest, taxes, depreciation and amortization. It is one of the most widely used measures of a company's financial health and ability to generate cash.
ELTIF: The European Long-Term Investment Fund, or ELTIF, is a regulated, collective investment framework introduced by the European Union to encourage investment in companies and projects which need long-term capital.
Equity: Equities represent ownership interests in a company, which may involve certain rights, e.g., to a portion of the company's profits, voting rights, and other benefits.
Equity beta: A measure of an investment's sensitivity to changes in the overall stock market, used to evaluate the potential risk and volatility of an investment relative to the market.
Equity-like: An investment that exhibits characteristics similar to equities, such as the potential for capital appreciation, but may also have features of other asset classes.
EU Taxonomy Regulation: Refers to Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088, as amended from time to time.
Excess return: The amount by which an investment's return exceeds a benchmark or target return.
F
FCF yield: A financial metric that compares a company’s FCF to its market value, often used to assess the attractiveness of an investment relative to its price.
Fed: The Federal Reserve, the U.S. central bank.
Fed action: Actions taken by the Fed to influence economic conditions, such as adjusting interest rates or implementing monetary policy measures.
Fed balance sheet: The financial statement of the Federal Reserve, which includes its holdings of government securities, loans, and other assets.
First Lien / First Dollar Risk: First claim on collateral in the event of a bankruptcy.
First mortgage debt: A type of loan secured by a first-priority lien on real property, giving the lender the right to foreclose and take possession of the property if the borrower defaults on the loan.
Fixed income beta: A measure of an investment's sensitivity to changes in the overall fixed income market, used to evaluate the potential risk and volatility of an investment relative to the market.
Flagship funds: The primary or most prominent investment funds managed by an asset manager, which typically have a longer track record and a larger asset base compared to other funds managed by the same firm.
Floating interest rate or floating rate: Interest rate that changes periodically throughout the life of your loan. Depending on the economy and market conditions, the rate of interest will either “float” up or down.
Free cash flow (FCF): The cash generated by a company's operations that is available for distribution to investors, such as paying dividends, repurchasing shares, or paying down debt.
Fully scaled in-force portfolio: A portfolio of investments that has reached its target size and diversification, with all committed capital deployed and the investments generating cash flow or returns.
Fund flows: The net amount of money being invested into or withdrawn from an investment fund, which can affect the fund's performance and liquidity.
Fund series: A group of investment funds managed by the same asset manager, often sharing similar investment strategies or objectives, but with varying terms, fees, or target investor bases.
G
General Partner (GP): The entity responsible for managing a private equity or other investment fund, making investment decisions, and overseeing the fund's operations.
Gross IRR: Depending on the fund, “Gross IRR” of each fund represents the cumulative investment-related or shareholder cash flows for all of the investors in the applicable fund on the basis of the actual timing of investment inflows and outflows (for unrealized investment assuming disposition of the respective “as of” dates referenced) aggregated on a gross basis quarterly and the return is annualized and compounded before management fees, carried interest and certain other fund expenses (including interest incurred by the fund itself) and measures the returns on each fund’s investments as a whole without regard to whether all of the returns would, if distributed, be payable to each fund’s investors.
H
High cash flow investment: An investment that generates a significant and relatively stable stream of cash flow.
Higher rates: Refers to an increase in interest rates, which can affect borrowing costs, investment returns, and overall economic conditions.
High-quality fixed income: Fixed income investments, such as bonds or loans, that are considered low risk due to the creditworthiness of the issuer or borrower.
Hybrid: An investment that combines characteristics of both equity and debt, offering features such as income generation and capital appreciation, while potentially mitigating some of the risks associated with pure equity or debt investments.
I
Incentive fee: A performance-based fee charged by an investment fund's manager, typically calculated as a percentage of the fund's profits above a specified benchmark or hurdle rate.
Internal rate of return (IRR): A metric used to evaluate the profitability of an investment or project, calculated as the discount rate that equates the present value of cash inflows to the present value of cash outflows.
Internally structured: An investment or financial product that has been created and managed in-house, rather than being sourced from an external provider.
Invested capital: The portion of committed capital that has been deployed into investments.
Investment Committee: A group of individuals responsible for overseeing an investment fund's strategy, portfolio construction, and risk management, typically composed of senior investment professionals from the asset manager.
Investment minimum: The minimum amount of capital required for an investor to participate in an investment fund, as described in the Fund’s Prospectus and based on jurisdiction-specific investor eligibility criteria.
Investment sourcing: The process of identifying and evaluating potential investment opportunities, often involving research, networking, and due diligence to find attractive deals that align with a fund's investment strategy.
J
J-Curve: A graphical representation of the typical investment performance of private equity funds over time, where initial losses or low returns are followed by a period of rapid growth and higher returns.
L
Last twelve months (LTM): Performance over last 12-month period for which financial data is available as at the date of this presentation.
Layered fees: Multiple fees charged, which may include management fees, performance fees, and other expenses that can impact an investor's net returns.
Leverage: An investment strategy of using borrowed money—specifically, the use of various financial instruments or borrowed capital—to increase the potential return of an investment.
Leverage levels: Debt relative to equity in a company's capital structure or an investment portfolio.
Leveraged lending: The practice of extending credit to borrowers who already have a significant amount of debt or a low credit rating, often involving higher interest rates and stricter covenants to offset the increased risk.
Leveraged loans: Loans extended to companies or individuals with a high amount of existing debt or a low credit rating, often characterized by higher interest rates and more restrictive covenants than traditional loans.
Leveraged yield credit: A type of credit investment that offers potentially higher returns due to higher levels of risk, often associated with borrowers with more leverage or lower credit quality.
Levered performing credit: A credit investment that involves exposure to performing loans or debt securities, typically using leverage to enhance potential returns while also increasing risk.
Limited Partner (LP): An investor in a fund who provides capital but does not actively participate in the fund's management.
Liquid assets: Investments an individual may easily convert to cash without incurring fiscal penalties.
Liquidity / illiquidity: Generally, the ease / difficulty with which an investment can be bought or sold in the market without significantly affecting its price, which can impact an investor's ability to enter or exit a position. Alternatively, the ease / difficulty with which the investor can redeem their interest in a fund.
Low loss likelihood investment: An investment with a relatively low probability of experiencing significant declines in value or default.
M
Management fee: A fee charged by an investment fund's manager for overseeing the fund's operations and making investment decisions, usually calculated as a percentage of the relevant sub-fund’s Net Asset Value (NAV).
Market cycle / cycles: Periods of economic expansion and contraction that impact asset prices and investment returns, often characterized by fluctuations in economic activity, interest rates, and investor sentiment.
Market dislocation: A temporary imbalance in supply and demand for assets, often resulting from external events or shifts in market sentiment, creating opportunities for investors to buy or sell assets at attractive valuations.
Market value: The current price at which an asset or security can be bought or sold in the market, which reflects the prevailing supply and demand dynamics.
Market-value destruction: A decline in the market value of a company or an investment, often due to poor performance, negative news, or unfavorable market conditions.
Mezzanine: Financing which bridges the gap between debt and equity financing.
Middle market: A segment of the market consisting of medium-sized companies.
Middle market lending: A middle market borrower is generally a business with revenues of $25 million to $250 million that is profitable, with a healthy balance sheet that is light on debt.
Monetary expansion: An increase in the money supply in an economy, typically through central bank actions such as lowering interest rates or purchasing government bonds.
N
Net Asset Value: The total value of a fund’s assets minus its liabilities, usually expressed on a per-share basis. It is calculated by dividing the fund’s total assets, minus any liabilities, by the number of shares outstanding.
Net IRR: The gross IRR applicable to a fund, including returns for related parties which may not pay fees or performance fees, net of management fees, certain expenses (including interest incurred or earned by the fund itself) and realized performance fees all offset to the extent of interest income, and measures returns at the fund level on amounts that, if distributed, would be paid to investors of the fund. The timing of cash flows applicable to investments, management fees and certain expenses, may be adjusted for the usage of a fund’s subscription facility. To the extent that a fund exceeds all requirements detailed within the applicable fund agreement, the estimated unrealized value is adjusted such that a percentage of up to 20.0% of the unrealized gain is allocated to the general partner of such fund, thereby reducing the balance attributable to fund investors. In addition, net IRR at the fund level will differ from that at the individual investor level as a result of, among other factors, timing of investor-level inflows and outflows. Net IRR does not represent the return to any fund investor.
Non-controlled debt: Debt investments in which the lender does not have significant influence over the borrower's operations or decision-making processes.
O
On-balance sheet assets: Assets that are owned by a company and recorded on its balance sheet, as opposed to off-balance sheet assets, which are held or financed through separate legal entities or arrangements.
Opportunistic buyout: The purchase of undervalued or distressed companies or of a significant stake of such a company.
Opportunistic investment approach: A flexible investment strategy that seeks to capitalize on market dislocations, mispricings, or other unique opportunities to generate above-average returns.
Original issue discount (OID): Discount in price from a bond’s face value at the time a debt instrument is initially issued.
Origination platform: A system or network through which an asset manager sources investment opportunities, often involving partnerships, relationships, or proprietary research capabilities to gain access to unique or exclusive deals.
P
Perpetual vehicle: An investment structure that has no fixed term or maturity date.
Portfolio allocation: The distribution of a portfolio's assets across different investment types, sectors, or regions, with the goal of optimizing returns and managing risk.
Portfolio construction: The process of selecting and combining various investments in a portfolio to achieve specific objectives, such as diversification, risk management, or return optimization.
Portfolio sizing: The determination of the appropriate amount of capital to allocate to each investment in a portfolio, often based on factors such as risk, return potential, and diversification benefits.
Premium to market rates: A situation in which an investment yields a higher return than the prevailing market rate, often reflecting higher risk or unique characteristics that command a higher price.
Pricing discipline: An investment strategy that emphasizes buying assets at attractive valuations, based on a thorough analysis of their fundamentals and potential for future growth or income generation.
Private credit: Non-bank lending where the debt is not issued or traded on the public markets.
Private direct investments / direct equity investments: Investments made directly into privately-held companies, bypassing public markets, which can offer higher potential returns but may also involve higher risks and lower liquidity.
Private equity: Investments made in private companies or the buyout of public companies that result in a delisting of public equity.
Profit pools: Segments or areas within an industry or market where companies generate a significant portion of their profits, often targeted by investors for their potential to deliver higher returns.
Public market equities: Shares of publicly traded companies that can be bought and sold on stock exchanges.
Purchase price: The amount paid to acquire an investment, such as shares in a company or a bond.
R
Rally: A sustained increase in the prices of financial assets, such as stocks or bonds, often driven by positive market sentiment, economic factors, or news.
Real assets / real assets equity: Investments in tangible assets, such as real estate, infrastructure, or natural resources.
Real estate lending / Real estate credit: The process of providing financing for the acquisition, development, or refinancing of real property, including residential, commercial, and industrial properties.
Recurring revenue: A stable and predictable stream of income generated by a business, typically from long-term contracts or subscription-based services, which can be attractive to investors for its reliability and potential to support valuation.
Risk-adjusted returns: A measure of investment performance that takes into account the level of risk involved, allowing investors to compare the relative attractiveness of investments with different risk profiles.
Risk-reward spectrum: A continuum representing the trade-off between the potential risks and rewards of different investments.
S
Secular changes: Long-term trends or shifts in an industry or market, driven by factors such as technological advancements, demographic changes, or regulatory developments, which can have a lasting impact on investment opportunities and risks.
Securitizations: The process of pooling various types of contractual debt (e.g., mortgages, credit card debt) and selling the cash flows to investors as securities, which can provide liquidity to the originators and diversify risk for investors.
Senior asset-based debt: A debt instrument secured by specific assets of the borrower that has priority in repayment over other debt or equity claims in the event of a default or bankruptcy.
Senior cash debt flow: The portion of a company's cash flow that is available to service and repay senior debt obligations, prioritizing these payments over other financial obligations.
Senior debt solutions: Financing options that provide companies with capital in the form of loans or other debt instruments, which have priority in repayment over other types of debt or equity in the event of a default or bankruptcy.
Senior venture debt: A type of debt financing provided to early-stage or growth-stage companies, typically secured by the company's assets and ranking senior to other types of debt or equity.
SFDR Article 8: SFDR Article 8 refers to where a financial product promotes, among other characteristics, environmental or social characteristics, or a combination of those characteristics, provided that the companies in which the investments are made follow good governance practices.
Sharpe ratio: A measure of risk-adjusted return that compares the average return of an investment to its volatility or risk, helping investors evaluate the performance of an investment relative to its risk.
Standard deviation: Standard deviation is a statistical measure that describes the amount of variation or dispersion of a set of data points around the mean or average. Standard deviation can be used to assess the level of risk associated with an investment.
Stock and bond correlation: The degree to which the prices of stocks and bonds move together, either in the same direction (positive correlation) or opposite directions (negative correlation).
Stressed / Distressed investments: Investments in companies or assets that are under financial pressure or distress, often involving high levels of risk but also the potential for significant returns if the situation can be successfully managed or resolved.
Structured credit: A type of credit investment that involves creating customized financing solutions with specific risk and return profiles, often through the use of derivatives, securitizations, or other financial instruments.
Structured equity: A type of equity investment that incorporates elements of debt financing, offering investors a combination of equity ownership and predetermined cash flow streams, often with downside protection features.
Subordinated term debt: A type of debt that ranks below other senior debt in terms of priority for repayment, typically offering higher interest rates to compensate for the increased risk.
Subscriptions: The process by which investors commit capital to an investment fund, typically involving the submission of subscription documents and the transfer of funds.
Sustainable Economy Activities (SEAs): SEAs are specific categories under the CTIF set by Apollo and are different concepts to environmentally sustainable economic activities under Article 3 of the EU Taxonomy or “sustainable investments” as defined under SFDR. Apollo’s SEAs are categorized into (1) Energy Transition; (2) Industrial Decarbonization; (3) Sustainable Mobility; (4) Sustainable Resource Use; and (5) Sustainable Real Estate.
Sustainable Finance Disclosure Regulation (SFDR): Refers to Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability‐related disclosures in the financial services sector, as amended from time to time.
Sustainable Investing: Apollo views sustainable investment to be the strategy and practice of incorporating ESG factors and sustainability considerations into our investment decisions, practices, and ownership, to the extent they are deemed to be material to financial performance and consistent with fiduciary obligations.
Other
% Positive quarterly return: Measure of how often a fund has achieved positive returns in a given quarter.
1st lien senior secured: A type of debt that has first priority in repayment and is secured by specific collateral, offering lenders a higher level of protection in the event of a default or bankruptcy.
