Apollo will have a huge need for origination talent in the UK. It's currently hiring apprentices
If you're an 18-year-old school-leaver in the UK with a few A-levels under your belt and no university placement, we have a hot tip for you: apply for the origination apprenticeship that's just opened at PIC, Pensions Insurance Corporation. It could lead to some very big things.
Last month, Athora, an insurance group backed by Apollo, the US private capital giant, agreed to purchase PIC for £5.7bn ($7.6bn). The purchase is still clearing regulatory hurdles, but speaking yesterday as they announced second quarter results, Apollo's senior executives made it clear that the purchase of PIC is expected to be a transformational deal.
PIC is Apollo's entry point into the UK's retirement market. Apollo wants PIC to become the UK version of its incredibly successful US retirement services arm, Athene.
Apollo acquired Athene in January 2022 for $11bn. Athene has $690bn in assets under management and ingested $40bn of new inflows in the first six months of this year alone. Apollo uses Athene to raise money from people looking for guaranteed retirement income through annuities. It then invests that money in "mostly investment-grade assets" with the intention of creating what Apollo CEO Marc Rowan described yesterday as, "alpha on the buy, alpha on the build and alpha on the exit." So far this year, Apollo has earned $3.3bn from "spread related earnings" related to its retirement products, most of which are comprised of Athene.
PIC already accounts for around 17% of the UK's bulk annuity market. Rowan said yesterday that under Apollo's guidance, it has the potential to grow dramatically. "The U.K. has many of the same demographic, corporate and pension trends and needs that the U.S. does," he observed. "And the U.K. regulatory regime and the U.K. regulatory mood is one of encouraging private capital into its marketplace, particularly investment-grade private capital that supports the long-term projects that the U.K. and other, quite frankly, European governments want to do."
If PIC is to grow, though, it will need originators and it will need investors. "We have a massive need for assets in the U.S. as a result of Athene. That has incented us to create massive amounts of origination," said Rowan yesterday. Something similar is coming to the UK. "PIC is the opportunity to create a massive pound-based origination ecosystem," said Rowan. The lowly origination apprenticeship is the tip of a gigantic iceberg.
In the US, Apollo is known for paying its private equity (PE) investment professionals very handsomely indeed. 28-year-old associates were earning $550k a few years ago. It's also known for working people very hard, although this has allegedly softened under Rowan.
Does this mean that the small origination apprentice will be starting at 4.30am and earning over £100k? Probably not. Rowan also noted yesterday that one of Athene's great virtues is that it's incredibly cheap to run, implying that people aren't on big PE packages after all.
Initially, the apprentice will be helping with data input and the scheduling of meetings. That should evolve. As the UK retirement industry opens up under the weight of the enormous US investment firm, part of originating assets may entail persuading British retirees not to read the small print of what they're actually investing in. The documentation that comes with an annuity is "100 pages long," said Rowan yesterday. "Very few people can understand what they're buying. When people are uncomfortable with what they're buying, you tend not to buy as much of it," he observed. "Having said that, the compelling need is still causing the market to be very sizeable."
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