(Adds executive comment, updates shares)
By Greg Roumeliotis
Feb 5 (Reuters) - Apollo Global Management LLC said on Thursday its 2014 fourth-quarter profit fell by 79 percent, more than most analysts expected, as a big drop in crude oil prices weighed on the value of its private equity and credit assets.
While Apollo earned more than seven times its investors’ money in exploration and production company Athlon Energy Inc when it sold it to Encana Corp for $7.1 billion in the quarter, the value of its overall portfolio suffered due to the markdown in the equity value of some other energy-related companies, or their loans and bonds.
Shares of EP Energy, for example, another of Apollo’s oil and gas exploration and production companies, fell by 40 percent in the quarter, wiping out more than $1.7 billion from the company’s market capitalization.
Overall, this resulted in Apollo’s private equity fund portfolio appreciating less than 1 percent in the fourth quarter. Rival Blackstone Group LP said last week its private equity funds appreciated 4.2 percent.
Total economic net income (ENI) after taxes was $93.8 million versus $444 million in the quarter of 2013. This translated into post-tax ENI per share of 23 cents, lower than the average analyst estimate of 38 cents, according to a poll by Thomson Reuters I/B/E/S.
Apollo shares were down 2.6 percent at $24.49 in midday trading in New York on Thursday.
Apollo sold chemical company Taminco Corp to Eastman Chemical Co for $2.8 billion and Prestige Cruise Holdings Inc to Norwegian Cruise Line Holdings Ltd for $3 billion in the fourth quarter. But the cash generated by asset sales overall failed to beat the fourth quarter of 2013.
As a result, distributable earnings after taxes and related payables, which show actual cash available to pay dividends, came to $374.4 million versus $508.2 million for the same period in 2013.
Total assets under management were $159.8 billion at the end of December, down from $163.9 billion as of the end of September.
Apollo expects its second natural resources-focused private equity fund it is currently raising to be significantly larger than its predecessor, senior managing director Joshua Harris told analysts on a conference call. Apollo is also raising its first energy-focused credit fund.
Harris noted that energy investments currently account for just 5 percent of Apollo’s funds.
Apollo declared a fourth-quarter dividend of 86 cents. (Reporting by Greg Roumeliotis in New York; Editing by Franklin Paul and Nick Zieminski)