Good morning and welcome to Apollo Global Management's 2015 Second Quarter Earnings Conference Call. During today's presentation all callers will be placed in listen-only-mode and following management prepared remarks the conference call will be open for questions. This conference call is being recorded. I would now like to turn the call over to Gary Stein, Head of Corporate Communications. Please go ahead.

Thanks Crystal, and welcome everyone. Joining me today from Apollo are Leon Black, Chairman and Chief Executive Officer. Josh Harris, Co-Founder and Senior Managing Director; Jim Zelter, Global Head of Credit and Martin Kelly, Chief Financial Officer. Leon, Martin and I will review some prepared remarks and Josh and Jim will be available with us during Q&A session. I would also point out that Josh is calling in from overseas. Turning to our results earlier this morning we reported non-GAAP economic net income of $0.38 per share and distributable earnings to common and equivalent holders of $0.48 per share for the second quarter of which $0.42 per share was declared as a cash distribution. Before I hand the call over to Leon, I wanted to remind you that today's conference call may include forward-looking statements and projections, and we ask that you refer to our most recent SEC filings for factors that could cause actual results to differ materially from these statements and projections, as well as risk factors relating to our business. We don't undertake to update our forward-looking statements or projections unless required by law. We'll also be discussing certain non-GAAP measures on this call, which are reconciled to GAAP figures in our second quarter earnings presentation. This conference call is copyrighted property and may not be duplicated, reproduced or rebroadcast without our consent. As usual, if you have questions about any information in the earnings presentation or on this call, please feel free to follow up with me or Noah Gunn. With that, I'd like to turn the call over to Leon Black, Chairman and Chief Executive Officer of Apollo Global Management.

Thanks Gary and good morning everyone. Amid a volatile and complex backdrop we continue to identify opportunities for growth during the second quarter. And I'd like to focus my remarks this morning around the few key drivers of our business including the continued strength of our management business as well as recent fund raising and deployment activity. As you know we have been very focused on growing the management business contribution to the overall profitability of the firm particularly since it provides a steady and predictable source of cash flow. The revenues we generate in our Management Business are primarily derived from management fees we earn from long-lived assets we manage, more than 75 billion of which are in permanent capital vehicles. In addition, to driving top line growth in our Management Business, we also remained focused on margin improvements. During the second quarter, our Management Business generated pretax distributable earnings of $0.27 per share or more than $1 per share of cash on an annualized basis, which we believe represents a strong base of cash flow to our shareholder. In the context of our current share price, the $1 plus of annualized cash flow per share from our management business alone represents the current yield of approximately 5% and this is before any of the upside cash earnings potential from our incentive business where we have more than $80 billion of carry eligible assets under management. Turning now to fundraising, by leveraging our integrated platform we generated inflows of $3.2 billion during the quarter similar to the previous quarter our fund raising activity came from a variety of our investment strategies and reflect the continued growth and diversification of our business. We received $1 billion from the expansion of our existing strategic investment account with the Teachers Retirement System…

Thanks, Leon, and good morning, again, everyone. Starting with our economic innings for the quarter. In the Management Business, we earned $92 million of economic income, which was in line with the prior quarter. While we continue to carefully manage our cost base, looking forward we expect compensation and non-compensation expense to rise as we continue to grow the platform. Specifically over the second half of the year we expect to incur fund placement fee expenses of approximately $13 million related to various fund raising initiatives. Primarily reflecting expanding distribution relationships with Wolf Management platforms. As Leon mentioned, we remained focus on expanding our management business through top-line growth and disciplined cost management. Further driving our margin which we believe is already industry leading among our peers. Turning to the incentive business, in private equity the 2.7% appreciation in the second quarter was driven by 1% appreciation in publicly traded portfolio company holdings and 4% appreciation in private portfolio company holdings. With $14 billion of unrealized value across the private equity funds we managed at the end of the second quarter. This generated total carry of $81 million during the quarter. In credit the investment performance of the funds we manage was positive up approximately 1.2% on a gross basis and 0.8% on a net basis for the quarter excluding the non-subadvised assets of Athene. Despite the positive fund performance, carry income was on the lighter side as one of the drawdown funds we managed that was earning accelerated catch up carry, reversed costs and returns some of the accelerated carry that was previously accrued as is convention. I'd also like note however that we continue to see growth in both carry eligible and carry generating AUM, within the credit business during the quarter. In fact carry eligible AUM in…

Thank you. The floor is now open for questions. [Operator Instructions]. Your first question comes from the line of Luke Montgomery of Bernstein Research.

In credit, I was hoping you could just walk through the conversion of carry eligible to carry generating AUM. It looks like dry powder invested and invested but not earning carry AUM declined it had, the amount was invested over 24 months is still $4.4 billion and it needs about 6% appreciation. Yet the carried generating AUM increased about $2.6 billion to $23.3 billion, so perhaps if you can just help me bridge the change, which is better than those indicators you would have suggested?

I think, so I think you hit on a number of the points there, within credit the 1.2% gross return was a 2.7% gross return in the drawdown funds and within that segment of the business we had a number of funds that were plus to carry that not in carry less quarter step up above the press. And that was really the reason for the increase, what's left to your point is a slightly reduced amount of AUM investment on in carry, but with that slightly greater gaps against in the press.

So it was the market appreciation then?

Yes, in opportunistic in particular driven by the higher -- higher yielding assets, some of which was energy, some of which was broader based.

And then on the escrow piece from funds -- it always seems a little bit mysterious. You've had realization from the fund, the remaining investments are 100% of cost, I think versus a 104% last quarter that hurl rate is 115, but the balance is more or less flat at 167 million. So maybe just help me understand the puts and takes that drive that balance. I guess there's the taxable income that caused you to maybe distribute some of it but, what are the inflows and outflows?

So, the escrow calculations are quite complex, and the key moving cost to the calculation I guess firstly the escrow is based on what's remaining in the portfolio. So, what's the value of remaining assets relative to their cost base and that ratio then is affected by a couple of different things, one is change in value of those assets, two is what's sold and in what sequence assets are sold meaning sort of high cost base versus low cost base and then thirdly any other changes to the cost base of the assets. During the first half, we recognized and examined on one of the assets in Fund VI and while that did not impact ENI because we already marked it down. It did bring down the cost base of that asset and it also resulted in a diversion of cash flows from sales to the piece, so when you stand back from it the cash that came in from sales was diverted to a piece as a result of that impairment the benefit of that was that it helps the escrow ratio by reducing the denominator in the ratio and it would all else being equal would result in us coming out of escrow sooner than we would otherwise. The last point I'd make is that the Fund VI itself sort of lost money on a mark-to-market basis during the quarter that was mitigated by the return on capital that I just mentioned. So all of that sort of nets off to a cash, cash is the same on a per share basis and the ratio is effectively unchanged within a couple of percentage points.

Thank you. Your next question comes from the Bill Katz with Citigroup.

First is actually two part question, so I was wondering could you layout the timeline towards the elevated placement expenses for the second half of the year. I know you step back, I think you've been pretty active you just linked up with Waddell and you're working with Oppenheimer and now you actually have this wealth management strategy. Just to step back and tell us where you think you are strategically in terms of any real time momentum for generating some retail flows that might boost the overall growth rate?

I'll address the first part of the question and I'll hand it over to Gary for the second. So on the placement fees, it's a couple of different funds the most important and most meaningful is our second natural resources fund. Although we expect a first close of that fund during the third quarter, it's tough to predict specifically when the placement phase we paid because they'll be paid for White House for the high network distributions. So it could be Q3 or Q4 or actually both.

Yes, just on the retail component of our business, as we said in the past retail remains an important part of our platform and will be a growing contributor to our flows overtime. Today retail includes high network and the office is around 15% of our AUM and we do certainly expect that to grow over time. You've mentioned just yesterday Waddell put out in press release announcing that they have filed to launch two new mutual funds, both of which will have Apollo as a component of the funds specifically it will look to replicate our total return strategy within credit versus the more liquid end of our credit business. They hope pending SEC approval to launch those funds in October and so we'll just have to wait and see on the timeline there. And then with respect to Oppenheimer which we mentioned previously where we also have a sub-advisory relationship. The shareholders of that fund did approve an allocation to Apollo and we do also expect that to begin to ramp in the fourth quarter. And then we continue to have conversations with others. We said in the past we do believe this sub-advisory component to be very scalable and works really well in terms of marrying our less liquid solutions with the more liquid needs of daily liquidity funds. And so we expect this to grow over time.

And then follow-up maybe on the treasure perspective, couple of your peers have sort of laid out how quickly they think they could put some of their dry powder work or more importantly some of their non-fee paying AUM yet at this point in time, so just given your thoughts about where we're in terms of market levels, how do we think about the outlook for fee paying AUM growth which has been pretty flat for last several quarters?

So fee paying AUM has about $10 billion of fee potential, most of that is in credit, 7 billion of the 10 is in credit. We think credit, most of the drawn down funds pay fees as money is deployed versus as it's committed. So I would look at place of deployment in credit which was 1.4 billion in the quarter, 2 billion on a year-to-date basis and if you go back, back in time it's 5 billion last year, 3 billion before that's probably, if you average that that's probably a good run rate to think about as actually paying it puts away, realizing that not all of that is earned on deployed some of its non committed that the majority of it is.

Thank you. Your next question comes from Chris Harris of Wells Fargo.

I wonder if you could provide a little bit commentary of the real-estate manager you required in Asia, what the plans are there how quickly you think you can scale that and what potential opportunities might be?

Yes, I'll take that, we're building an opportunistic Apollo as business in Asia, it's hard to do that and so therefore this business is likely to start and this is a great team, it had a great -- was our style of investor and so by joining with us we provide over sighting distribution to this team and it links very well with the existing private equity in credit. Platform that we have and it creates kind of a special situation approach. I would say we are -- this will be a small but growing part of our platform. And if you thing about Asia today Asia is between 1% and 2% of our assets. And clearly there is a lot of upside there and the trick is doing in an opportunistic Apollo-esque way and many of the investments in Asia are higher priced and the creditors rates and our legal systems in many countries are difficult, so you have to take your spots. So we today are very focused on ramping Asia and we think Asia could grow significantly but we're growing off a small base.

And my one follow-up would be. As you guys continue to ramp Fund VIII; are there any restrictions to where that fund can invest whether it's by sector individual holdings, I'm just wondering if there is any concentration limits to raise that fund?

Yes. There's no specific limitations in various parts but what we tend to do as apply common sense limitations and when we get to an industry that we get to 20% to 25% of funding and even in the broad industry categorization we tend to have back off, and then we really will go above 10% of funding in any one investment and even 10% is a lot and I'd say that in general U.S. has been 75% to 80%; 85% of everything we've done and Europe and rest of world sort of have been the balance and when Europe and the rest of the world are interesting, we tend to do a little more in Europe and the rest of the world that's interesting we tend to do a little less. But to a large extent, usually that fund is a primarily North American fund, but we have a global network and we're always looking. Today Europe is actually quite interesting, so we might achieve towards those higher end of that range from an international point of view. But constraint that fund is highly flexible and opportunistic but we tend to self constraint based on common sense.

Thank you. Your next question is coming from the line of Ken Worthington of JP Morgan.

Couple of things on real-estate. Seeing nice AUM and fee generating AUM growth part of it acquisition, part of it new funds, any reason why you wouldn’t or couldn’t buy in Europe the way you have -- just have in Asia. And on your Asian manager what do the IRRs look like in its legacy funder funds and your real-estate business has been real complement to your credit business. So can you talk about how this new manager kind of fits in the credit area as well?

So, lot of questions there. I would say that there is no reason why we can't buy a real-estate manager in Europe. We do have through -- we have been buying a decent amount of real-estate through our non-performing loan business. We have a small dedicated real-estate effort in Europe but we're -- if you think about our non-performing loans platform, you know the underlying collateral is greater than half real-estate. So we today that’s been the right way for us, we think to get the most value. We also have the ability to invest out of -- we have a global real-estate business that’s been focused on the U.S.; we can also use that. So I'd say that we're always looking opportunistically in that and we found the right people with the right culture and the right value orientation at the right price, we would certainly buy something in Europe. Today we're getting that exposure through means that I chatted about. So that was question one. What was the other question?

The other question was just on Asia so IRRs in its legacy funder funds and then the complement of the Asian real-estate business to your credit operation which you, kind of talked about generally, but just how does the Asia component may be fit in?

So the IRRs -- the legacy IRRs, some of that ran the Asian region real-estate business, came from Warburg Pincus and his IRRs we can't disclose but they were quite attractive and in any time we buy a manager certainly one, big component that will be what their historic track record has been and getting behind that. And so that was a big component about diligence. In terms of how it complement he tends to be very Apollo-esque. So, much of what he did was it's very highly structured debt investing in addition to private equity investing similar to what we've done in our private equity fund. And so therefore it sits quite nicely into our credit business in a sense that it's similar to the way our U.S. and our European businesses work -- we use the private equity funds for control oriented distress and credit fits in nicely above that in stressed and opportunistic all the way up to performing. And so clearly this gives us a way to express the view on a company in a much broader sense. And so certainly it expands the number of offices we have in Asia, it expands in team in Asia -- the team has integrated very similarly to our U.S. and European teams and therefore when an idea comes in we look across the capital structure up and down, so it fits quite nicely they have a strong presence in India as do our credit business as well. And so there's a lot of I think strategic synergy to the Asian real-estate business and just gives us girth there that we didn't expand our team and our ability to invest and we're actually quite focused on it in terms of it being a place where we can grow both AUM and investor capital which we have even talked about.

Thank you. Our next question comes from Craig Siegenthaler of Credit Suisse.

On the capital vehicle detail, Slide 13. So on a profitability basis not AUM, how do you rank these seven from capital vehicles in terms of incremental future growth?

Well this is Jim -- certainly we’ve got to put a team at the top of the list. The business that they have today, when Josh alluded to it, but not only in the U.S. but in Europe, there's quite a bit of potential M&A opportunity with that company going forward, so certainly we think that is going to be a major driver and following our five trend in December, we're still excited about the organic and M&A opportunities around the team. Second to that certainly has to be midcap -- midcap has grown, we bought it a bit ago this quarter or year-to-date it added over 500 million in assets. And we are very-very excited about the success of the team date and the opportunities that we're seeing in the market place with a continued deregulation and deleveraging of financial institutions, the middle market lending historically for midcap has been in the really in the healthcare industry, but we have successfully through the integrated platform -- brought in a variety of other financing opportunities. So, our long-term goals and aspirations at midcap are just beginning and we think that will be a big driver. Certainly it's sort of been alluded to in the call earlier, but real-estate the way to play real-estate in a overvalued market or in a highly valued market is to do more debt structures of solutions. We've done that through Apollo Commercial Real Estate Finance and certainly we believe that that's going to steadily grow and create a variety of opportunities for -- and that team not only supplies product for that vehicle but also for a team as well on their balance sheet. Entirely AIMB which is a BEC that continues in a market place where certainly permanent capital vehicles in the credit space are few and far between and now staying where the NAV book value, the stock trading to book value we still believe there is nice steady growth opportunity in that vehicle as well. So, a couple of the other ones are closed end vehicles, the tactical income fund and senior floating rate fund, that was really also created to establish a task for retail investors to be involved with us. And as Gary mentioned earlier our dialogue on 40 Act products with Waddell and Oppenheimer, we still feel those will be future opportunities. So, really need to summarize -- we're sort of in the top, followed by Midcap commercial real-estate in the BDC, those are the four areas of the real drivers of continued growth.

And then just circling back to midcap which has a 3.3 billion in AUM now, can you remind us what the AUM growth targets are for Midcap and how we should expect that to be funded between debt and equity?

Well, we talk about it being a driver for growth in our five year plan in December, but we did not really get into details about it, but this is a business that compared to a variety of our commercial finance companies, it has no leverage facilities anywhere, from 3 times to 4.5 times or 5 times but it certainly has a broad base of financing facilities. But certainly looking at growth multiples of where it is today over an extended three year period was certainly within our grasp and our aspirations.

Thank you. And next question is coming from Devin Ryan JMP Securities.

Maybe just starting with credit, the reversal on the catch up carries was highlighted how much that and then also how much is left of the catch up carry there?

So that was in one of our European funds, we haven't' disclosed the amount -- the impact on the quarter was about 3 pennies a share in terms of negative marks.

And then just following up with respect to energy obviously the pullback here in prices, I know that I think last update you guys had said that 75% or so of your exposure was hedged over the next several years, so just curious what point of energy prices commodity prices would have to revisit marks and is that still a case the vast majority is headed out for the next several years?

Yes, I'll take that, I mean I'd say that certainly we're pretty fully hedged, we're significantly hedged through '15 and then it rolls off in '16 and '17, so if we see now, so that's kind of the answer there that certainly the companies that we own in private equities will start to be impacted. If you think about our exposure though it's relatively small when you compare to the capital we have yet to invest and I think that the team has been very conservative about how much leverage they put on the business, the business -- the prices they paid, and liquidity that they have available. And so I feel that I think the current energy cycle is going to be and then we also have a large amount of un-deployed credit dollars where we're sitting and waiting. And so I think that we've been quite public about the fact that we see it getting worse before it gets before better. We were a little surprised at the increase in pricing that's kind of pull back at this way. We thought the markets were wildly aggressive when during the fourth quarter of last year and early this year. There was a record issuance of equity in debt to an essence standing many of the energy companies and so we've sat back and waited. And I think that it's the -- we feel like the market is coming towards this. So I do think that we have a small existing portfolio it's in good shape certainly at some point prices need to go up, but I see much more opportunity than I see downside for us in the energy space.

Yes, I would just add to Josh's point in credit we have been with this integrated view and with Josh's view and Gary's view about what's going on in the macro. We've been very-very cautious and thoughtful this year in capital that we have raised for energy opportunities. As Josh mentioned, in the first quarter there was record equity and debt issuance and people thought that the needs for solution type capital across private equity and credit was muted. The reality is those that issuance from debt and equity have severely underperforming last eight weeks. And certainly we believe form the top down macro in addition to there will be a great deal of bank of these lending redetermination in the fall. This is when people talking about restrictive and regulatory environment, this is a good example where the arm of the OCC and the Fed is going to be much more draconian with reserve based lending and we feel we're in a great position to be able to deploy opportunistic capital across credit and private equity as result of these macro and financing market conditions.

Yes, and just to put some numbers around it, broadly speaking, if you look at our total AUM and back out team asset management, energy broadly defined is about 6% of our total AUM as of quarter end. And that's made up of about 3 billion in private equity exposure and about 3.7 billion across credit.

Thank you. Your next question comes from Michael Carrier of Bank of America Merrill Lynch.

This is Michael [Needham] for Michael Carrier. Several questions on the real-estate business in the quarter performance was pretty good in 2Q, but on economic income basis it's still relatively weak, are there things that you can do to get the management business operated to profit, be it on an acquisition finding other ways to scale that business or maybe something on the expense side?

So in other words like the reality is we're investing in the business, and I mean as Leon mentioned, it's all of that people and we have a team that has critical mass and so the assets are caching up. I mean I think to a large extent I think cost cutting from here would be somewhat unproductive in the real-estate business. On a large scale, we're always looking for opportunities to cut costs but this is -- we have a good team. We have a global team and now we need to raise assets to deploy them and that takes time, particularly in a market that is overvalued where you're value in investor.

And I'd just said part of the uptake in expenses in the quarter was one-time costs as a result of the Asia acquisition. And then part of this is providing people which will be part of the run rate going forward.

And just one follow-up, do you seem markup but that flows through the other income line incentive business. Just wondering why that line was so stronger this quarter?

Yes. There is a number of -- I don’t think I see that line, GP stakes as well but most of the Athene -- the impact of Athene markup was $25 million and that relates to 9% our economic interest and in Athene.

I would just add Athene was marked up about 6% in the quarter and you also -- you want some additional detail on Athene continues to perform well. The Athene management team today a public investor call on June 23rd and a replay of that is available through APO alternative assets Web site.

Your next question comes from Michael Cyprys of Morgan Stanley.

So just back to real-estate you spoke about fund raising picking up there and the acquisition of the Asia real-estate managers. I guess just bigger picture, could you talk to your overall strategy in real-estate. You have been in the business for sometime but how are you building out that business today? What are some of the products gaps at geographies that you are looking to fill in? And is there any appetite from moving into to core plus?

I would say all of the above you look at the Apollo today, I think our AUM in real-estate is something in the 10 billion range. I think if few kind of add all the different parts that might even be a little higher in the '14 billion to '16 billion range. Our view is as we said last December is we would like -- we're not projecting but our aspiration to double that. Some of that’s going to be organic and some of it's going on in terms of new product development like what we're doing in Asia but we're also aggressively looking to strategic add-ons and there is the really matter of findings of right people, on right chemistry, fitting in to our Apollo-esque of valuing the world but it's an area that we would like to be a bigger piece of Apollo but it has to make sense from a valuation and a people point of view.

And any additional color you could share in terms of products or geographies where you're thinking about teams and potential acquisitions there?

Well. Certainly as Josh said, we do a lot more in Europe than people would look at because our NPL business really capitalized on that and I think you said it was right now where is your favorite place to invest around the globe in real-estate. Its key gateway cities in the U.S. key gateway cities in the Asia and then throughout the continent in Europe and that’s what we are doing. So as Leon said certainly I think core is something, it's a little bit later for us to add but we're adding a whole host of -- we'd like to add more debt capability, more origination capability and more opportunistic capability but you need to have a market cycle, have a little bit of choppiness in volatility where six-seven years up into an upswing in that market place. So being patient right now the opportunity in Asia came around, we looked at lot of teams that one was is developing in time and we're going to be patient on the other areas as well.

Your next question comes from Brennan Hawken of UBS.

We seen a withdrawal of some of loss fund money among traditional asset managers and obviously different liquidity profile there, but given the decline in oil, have you noticed any change in allocations appetites or behaviors from you offering clients?

The answer methodically is no, in fact our dialogues have expanded, I think it's a little bit the way of fund raising in general. It's kind of a bifurcated world of haves and have not and unfortunately with our performance we've been in the position of haves and that includes our relationships with sovereign fund.

And then on the Levered Finance funding markets, given the regulatory pressure there, are you seeing any change or you seeing a shadow of banking system stepping in to any material degree and how do you think that this could impact deal velocity from here?

Well, I think that what we have found in our recent acquisitions in private equity, we have not had any challenges of accessing the market. We've done -- we've really gone out to make sure that investors know how we're -- what our strategy has been, what our returns have been and we've been very positively and nicely surprised by the breadth of investors who want to spend the time to get to know us because they know that we will be large issuer going forward. Certainly there are some opportunities -- could we see the traditional banking financial providers be augmented by some alternative providers in our capital structures and private equity. Certainly due and I'm not surprised by it. On the other side of the coin, our activities whether it's in Midcap, our activities in our loan business -- lot of our opportunistic business we continue to benefit from that. I do think the headlines are correct. The leverage lending guidelines are being followed in stricter manner by a variety of banks today and that is impacting some loan origination -- loan origination is down year-over-year about 25%. And but that's not held us back from achieving our goals and CLO formation structure credit formations. So as Leon said about this fund raising of the sovereigns we are in the haves versus the have nots. So, we've been able to -- to be able to navigate that and we've been the positive beneficiary. So I see that continuing. I don't see a massive widening of new issue yields because of some players withdrawing, but I see a pretty firm market for companies that can have access.

Thank you. Your next question comes from Chris Kotowski of Oppenheimer.

Yes, I guess this is a question for Jim Zelter, recognizing that you invest in a lot of non traded illiquid credit, I mean if you look at the portion of the iceberg that is liquid and traded, it's just seems like that you can't get an uptick in the past year that we've -- whether you look at the high yield indexes or leverage credit indices, they're all down steadily in the past year and the BDC sectors now including Apollo that they all trade like we're on the brink of a recession. And I guess my question is what is the market trying to tell us and other than energy do you see any stress on the borrowers that would imply the deteriorating credit quality in terms of coverage ratio or things like that?

Well there was a bunch of questions, but just sort of go from one at a time. You are correct, if you look at year-to-date loan and high yield returns -- loan funds are up 2% to 3% high yield breakeven to 1%. And the performing -- our loan funds and our CLO's have done very-very well. And so that part of the market. The market you identify is -- whether it's the BDCs or high yield funds, there's a great deal of concern about energy exposure, there's a great deal of concern about liquidity of the underlying assets and -- what you're really -- what you're highlighting is the indexes are still on the black year-to-date nominally but if you look at the amount of credit dispersion, energy, metals and mining, some of that consumer retail, there's been a lot of pain and performance out there along with names like Puerto Rico which were not involved with some of that liquidation trades whether it was WaMu or Nortel. So, there has been a lot of pain in the stress and distress area of credit. Luckily we don’t have most of our capital is really in the performing side or in the deeper stress side, but -- and I think in your BDC question it really is more of a question of people's perception of their ability to raise equity or inability to raise equity right now because it's creating a discount and it's really-- that's a -- while it's a nice business for us and it's a 3 billion, 3.5 billion, the other parts of our credit business are much larger and have been beneficiary of positive performance. So from our perspective, -- whether it's going on in China energy the commodity concern of the imploding commodities across the spectrum. This redetermination of energy, we think there's going to be good opportunities for us over the next six to twelve months in terms of -- deploying some of our dry powder, but you are right the indexes in headlines don't reflect the dispersion is going on in the underlined markets.

Thank you. Next question comes from Patrick Davitt of Autonomous.

Is there any credit group of comps reconstruct in those, is there really best in to pay attention to what they're kind of reporting to public I think you pointed to that June call or you are just trying to track when those big markets are going to coming through?

Well, we value Athene -- when we raised the financing a year so ago, we remarked then offering price, and then since then we apply violation model which is called [indiscernible] which basically a DCF model of the enforce business and that's effected by change in rates, so the backup remains this quarter increase the value given it's sort of a structurally short company and new origination with policies. We will, we expect to move to a multiple approach once we have a current NOI of book value and so as Athene continues to work through their catch up phase and restating their earnings; we will likely in the next couple of quarters get to a point where we move to a multiple approach.

I just want to clarify that the perspective with the -- obviously they have restated their Q1 '14 financials on the June 23rd call, they released their Q2 and Q3 financial statements for '14 and they should be caught up with '14 financials by September and fully caught up by yearend?

And then finally could you give an update on the distribution quarter today. I think there is a big close this recap coming through?

Yes, so the distribution is announced but not post transaction is $0.10 and that's related to assets.

Thank you. Our final question is coming from Robert Lee of KBW.

First question is, will be the modeling question I guess but on Page 10 of the deck, if I look at taxes payables that drive ENI and that's down 40 million year-over-year, so kind of curious what's driving that and how should we assume that over the second half of the year that that's going to bounce back towards historical norms or is this kind of -- is there something going on here that's going to leave it below historical trend?

I would look at the ENI effective tax rate and the ENI effective tax and I'd say a couple of things, one is if you compare us now this year where we were at last year, the tax rate is benefiting from two things one is we have seen [CNSP] from Athene last year which was taxable non-cash income and sort of taxed at a high marginal rate and since that ended last year that has benefited the tax rate. And we're also benefiting from in this year a number of stock delivery deductions, that relates to stock was issued back at the roll up and jut being delivered now. And so there is no impact of that on our share count it's in the four diluted share count, but we're getting the tax benefit for it now. And then I think we're also benefiting in the tax rate from a sort of large taxable carry period of time so mix of taxable income and nontaxable is important to the rate. So I would say for the balance of the year and as I said in my remarks think single-digit although that subject to taxable carry long gets firm as we get into next year, the ENI tax rate would be sort of in the teens sort of 10% to 20% range. The cash tax rate on a fully diluted basis will lag a bit behind that on the assumption that realization lag behind value creation.

And maybe a follow-up this goes back to kind of new market lending and midcap and AINV [ph], I guess I am just kind of curious no both midcap and AINV doing middle market lending two different form of capital vehicles understand BDC can't raise capital right now as one that on leverage, midcap financial I guess this is C-core to put more leverage on it, so I guess in terms of these deals souring or origination, they really kind of doing the same thing or how are their businesses different and I mean I know you guys have been pretty creative over the years is there a way of actually combining those platforms to build scale even faster and maybe grow the middle marketing lending business faster?

Let me answer two questions, while they are both origination enterprises they really service a different set of clients in a different product set. Midcap really is a senior secured lender typically, they're lending whether it's an ABL or revolver or term loan, at leverage point of 3 to 4.5 times and for that they get LIBOR 450 to 550, 600. I mean if you're correct that entity then can have some financing such that you get return on equity with that type of loan with 3 to 4 turns of leverage in the low to mid teens and that's the business that midcap is pursuing. So a variety of that they're servicing middle markets sponsors and other corporations really as a senior secured lender. The DDCs for the most part not only Apollo but all of our peers, we because of the leverage limitations of one-time you never really want to operate at one-time you typically operate 3.5 and 0.7 making that LIBOR plus 450 to 500 loan you're not able to lever that enough to actually be turned have the return requirement. So you're much more of an enterprise lender or -- while you wanted to be a senior lender, your lending more as an enterprise rest than really a cash flow senior secured lender. So it is two different markets, we cover, we work very well together, we source together, we hand transactions back and forth. So it's a very, very -- it's an integrated approach with our coverage model and certainly you know we think of ourselves as creative and if there is a time in the future or either the leverage lending changes in terms of what a BDC can do that may give us a more opportunity to us. But right now we look at the businesses that they pursue, while integrated yet distinct and unique to each other.

Just squeezing one more quick question on Athene. Delta Lloyd -- if I remember correctly that was supposed to expected to close, I guess later this year as $2 billion of assets that’s the case?

Delta Lloyd it's actually $6 billion of assets that are on target to close during the fourth quarter and as we said really, I think Athene looks at Delta Lloyd as potentially a platform within the German market and looks to that potentially as a vehicle to consolidate the German market just as it done in the U.S. over the past five years.

That concludes the Q&A portion of today's call. I will now return the floor to Gary Stein for any additional or closing remarks.

Thanks operator. Thanks everyone for joining us this morning for the call. As we said if you have any follow-up questions, please feel free circle back to Noah Gunn or myself.

Thank you for participating in the Apollo Global Management's 2015 second quarter earnings conference call. You may now disconnect.