Fabrice Jeusette (Apollo): Keeping Luxembourg Competitive    

Apollo is a leading alternative asset manager investing in Debt instruments, Equity and Real Estate. An interview with Fabrice Jeusette, Managing Director at Apollo Global Management and Head of their Luxembourg Office. 

 

Can you describe Apollo in a few words? 

 Apollo is a US based alternative asset manager that seeks to provide our clients with excess return at every point along the risk-reward spectrum, from investment grade to private equity. Today we manage more than $520 billion of assets across yield, hybrid and equity strategies.  Established in 1990, Apollo has grown to employ more than 2,000 people in its Asset Management business, including more than 650 investment professionals. Apollo is headquartered in New York and invests globally, with offices in major financial centers around the world. The firm has been present in Luxembourg for over 10 years and together with its local portfolio entities, it employs more than 100 people in the country.  Apollo is dedicated in "investing in tomorrow today", we challenge convention, embrace complexity and favour sparking new ideas. We deploy our capital across sectors and geographies, serving as a solutions provider to public, private and sponsor-backed businesses to help finance their growth and success. Our focus on building stronger companies helps to fuel local economies while seeking outsize returns for our investors.  We maintain a disciplined and rigorous approach and promote sound ESG practices to produce better outcomes for our clients and the businesses they invest in. We are also committed to helping companies drive a more sustainable future, including by investing in energy transition and decarbonization projects through our sustainable investment platform. Our investors are mainly retirees, whether we are serving them indirectly through institutional LPs that include some of the world’s largest pensions, endowments and sovereign wealth funds, or directly via our Global Wealth products or individual products offered by Athene, our Retirement Services business. Accordingly, we offer a wide range of retirement savings solutions to help meet our investors’ long-term objectives.    

“The goal remains to constantly reduce business friction”

For people not familiar with alternative asset industry, this business seems not accessible and they consider having no exposure to it. Is it true? 

At Apollo, we think of alternatives simply as an alternative to a publicly traded stock or bond. It is important to understand that, at the minimum indirectly, we are almost all exposed to alternative investments. 

When subscribing to a life insurance, a pension plan or a "Plan d'épargne logement", it is highly probable that part of the amount you invested will be used to invest in Alternative Funds or vehicles. 

These funds and vehicles are part of the investment mix helping banks and insurance companies to generate sufficient returns to cover their costs, their margin and provide you with the expected contractual returns. Over the last years we have increasingly seen alternatives managers, including Apollo, develop products specifically designed for retail investors where, under certain conditions, you and I can invest in and benefit from these strategies, which can offer excess return, lower volatility and less correlation relative to public market strategies. We expect alternative strategies will continue become a larger portion of retirement portfolios, commensurate with continued growth of private markets. . Similarly, many large, multinational companies help fund their corporate strategies through alternative asset managers. Traditionally, one might only associate alts with controlled private equity companies or venture capital backed start-ups. But Apollo alone is a lender to major companies such as AB InBev and AirFrance, and we’re a leading capital provider in areas like fleet leasing, trade finance, commercial real estate and more.  The perpetual and flexible nature of our capital base allows us to act as a responsive solutions provider, supporting business and economic growth.  

  

How is your business growing in Luxembourg and are you facing some particular challenge? 

We are anticipating to double our assets under management by 2026. 

This should generate growth for our local staff as well as support the growth of our local partners here in Luxembourg.  

In terms of challenges, our business is in constant evolution and the laws and regulations supporting it are evolving rapidly. In this context, we are focused on maintaining a mutually constructive and supportive relationship with the Luxembourg government and institutions, particularly as other countries look to attract the business of alternatives managers to their local jurisdictions in places like the Netherlands, Italy and the UK.   

  

  

How can Luxembourg optimize its competitiveness? 

In order to continue its distinction as the place of choice in Europe for funds structuring and management, we believe it is important to anticipate and react to measures taken by other European jurisdictions to attract asset managers and align where necessary. We want to continue expanding our toolbox for fund structuring and propose an instrument for debt investment that would be comparable to the SICAR regime in the private equity business. As our business is regulated, it is very important to maintain very close relationship with the regulator to ensure proper understanding of obligations and constraints. We need to keep our renown professionalism and compliance without falling victim to the type of regulatory bureaucracy that can add unnecessary costs and stifle competitiveness.  Finally, another key element to supporting our growth is, of course, our ability to attract and retain the best people. Historically, Luxembourg has been a large importer of talent, but that trajectory has slowed as workers grapple with the high cost of real estate and living. And while remote work could help mitigate this, home-work taxation for those working but not residing in Luxembourg has proven to be another hurdle. We rely on the government to lead discussions with the countries sharing borders with Luxembourg to help drive growth of  tele-working. We believe more progressive policies can grow Luxembourg-based businesses while reducing things like carbon emissions, energy usage, traffic jams, and improving workers’ quality of life.