Apollo Global Management Inc. APO -5.74% reported lower fourth-quarter profit, as its private-equity portfolio underperformed the broader market.
The New York investment firm posted net income of $243.6 million, or 91 cents per share, down from $434.1 million, or $1.80, a year earlier.
Apollo’s private-equity portfolio appreciated by 5.2% in the quarter, falling short of the 11% gain for the S&P 500.
Shares of Apollo fell 2.2% to $68.14 in Friday morning trading.
On a brighter note, distributable earnings, which the company could return to shareholders, were $483 million, or $1.05 a share. That is up from $317.4 million, or 72 cents a share, in the same period of last year. Record fee-related earnings and windfalls from asset sales drove the increase.
Fee-related earnings were $309.1 million, or 67 cents a share, an increase from $275.8 million, or 63 cents, a year earlier.
All told, Apollo’s private-equity business sold off a record $19.1 billion in assets in 2021, as the market charged upward.
Apollo Chief Executive Marc Rowan, who took the helm last year, is the architect of its highly successful strategy of investing assets on behalf of insurers, most notably the firm’s longtime affiliate Athene Holding Ltd.
At the beginning of this year, Apollo closed a deal to buy the 65% of Athene it didn’t already own.
Under Mr. Rowan, Apollo has identified three key growth areas, which include adding new platforms to originate loans, building its business aimed at individual investors and expanding its capital-markets business.
During the quarter, Apollo announced the acquisitions of lending businesses in consumer, energy-transition and supply-chain finance.
Apollo also said it would buy the wealth-distribution and asset-management businesses of Griffin Capital Co., part of its strategy to reach wealthy individuals.
In December, the firm completed a $4 billion loan to SoftBank Group Corp. secured by the assets in the Japanese investing giant’s second Vision Fund.
Shares of private-equity firms posted strong performance in 2021 but have wavered with the market this year, driven by investor concerns about the impact of higher interest rates on their businesses.
On a call Friday with analysts, Mr. Rowan said Apollo, which tends to be more value-oriented in its investments than most peers, should thrive in the current market environment because “purchase price matters.”
“We have achieved amazing results over the past decade in a market that has not necessarily been kind to our strategy,” he said. “I believe we are in the right place at the right time.”
Apollo’s assets under management were $497.6 billion at the end of the fourth quarter, up from $481.1 billion at the end of the third period and $455.5 billion a year earlier. The firm last year set a goal of reaching $1 trillion in assets by 2026.
A dispute between Mr. Rowan’s Apollo co-founders, Leon Black and Josh Harris, is threatening to overshadow the CEO’s efforts. Mr. Black, the firm’s longtime CEO and chairman, has accused Mr. Harris of plotting his removal in an act of revenge for being passed over as CEO. Mr. Harris has denied the allegations.
The firm said it would pay a dividend of 40 cents a share, in keeping with its previously announced fixed-dividend policy in connection with the Athene deal.
Write to Miriam Gottfried at Miriam.Gottfried@wsj.com
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