(Reuters) - Buyout firm Apollo Global Management LLC (APO.N) reported its first quarterly loss in two years on Thursday, as stock market jitters weighed on its holdings, including a lackluster listing of its home security business ADT Inc (ADT.N).
Profits have soared at private equity firms such as Blackstone Group LP (BX.N) in recent years, as a U.S. stock market rally allowed them to sell assets for top dollar. That rally came to an end in the first quarter, amid a trade dispute between the United States and China, the world’s two largest economies.
Apollo reported an economic net loss of 30 cents per share in the first quarter, steeper than analysts’ average expectations for a loss of 15 cents, according to Thomson Reuters I/B/E/S. In the first quarter of 2017, Apollo reported economic net income per share of 82 cents.
Economic net income reflects the mark-to-market valuation of gains or losses in Apollo’s portfolio and is a closely watched measure of earnings for U.S. private equity firms.
“Despite some volatility in Apollo’s first quarter results, primarily driven by unrealized losses in our private equity business, we believe Apollo is exceptionally well-positioned for continued long-term growth and profitability across our integrated global investment platform,” Chairman and Chief Executive Leon Black said in a statement.
Apollo said its private equity funds depreciated by 2.7 percent during the quarter. By comparison, peer Blackstone disclosed last week its private equity funds appreciated by 6.4 percent in the quarter, while peer Carlyle Group LP (CG.O) said most of its funds generating performance fees appreciated by 3 percent on average.
Apollo launched ADT’s initial public offering earlier this year after buying the company for roughly $7 billion in 2016 and merging it with Protection 1, another security company it owns.
However, the IPO proved difficult and ended up pricing at $14 per share, well below target. ADT shares are currently trading at less than $9. Apollo still holds a roughly 85 percent stake in ADT, which has a current market capitalization of $6.517 billion, according to Thomson Reuters data.
Apollo’s bottom line was also hit by a the drop in the share price of fixed annuity service provider Athene (ATH.N), which was spun out of Apollo in 2016.
Distributable earnings - the actual cash available for paying dividends - was $191.2 million in the first quarter, compared with $317.2 million in the prior quarter.
New York-based Apollo’s assets totaled $247.4 billion at the end of the first quarter, down from $248.9 billion the previous quarter, partly because of valuation dips in its private equity portfolio.
Reporting by Joshua Franklin in New York; Editing by Chizu Nomiyama and Steve Orlofsky