Apollo Global Management builds AI capabilities into its private equity portfolio companies

Overview

Apollo Global Management runs a structured playbook, led by its Data, Digital and AI team, to build AI capabilities into portfolio companies before and after acquisition. Cited results include: Cengage running eight AI projects with costs down 40% in select content production and a Student Assistant tutor bot scaled to 1 million users; Yahoo seeing engineering productivity gains exceeding 20% with over 10,000 lines of AI-generated code accepted daily; Barnes Group achieving a five-times return on a generative-AI documentation tool in its first year; and Univar Solutions' AI sales agent achieving a 30% engagement rate reactivating dormant customers.

The challenge

While many companies have struggled to create economic value with AI, private equity investor Apollo Global Management wanted a disciplined way to build AI capabilities into its portfolio companies before and after acquisition to make them more competitive and valuable.

The solution

Apollo built up a portfolio-operations team and, in mid-2021, hired an operating partner to lead a Data, Digital, and AI team. That team identifies 'value pools' where digital technologies can improve performance, assesses AI impact on a target company and its industry before investment, conducts detailed diligence on AI's impact on the company's products and projects, and then develops and implements specific use cases post-acquisition. Apollo Funds also partnered with venture capital firm 25madison to launch the incubator 25m Evolve in 2024 to nurture AI startups that can supply the portfolio, and Apollo runs its own AI system that analyzes purchasing contracts and invoices across more than 40 portfolio companies to benchmark best prices.

Reported business value

Cited results include: Cengage running eight AI projects with costs down 40% in select content production, 15-20% in lead generation, 15% in customer care and 10-15% in software development, plus a Student Assistant tutor bot scaled to 1 million users; Yahoo seeing engineering productivity gains exceeding 20% with over 10,000 lines of AI-generated code accepted daily and roughly one hour saved per user per week from AI copilots; Barnes Group achieving a five-times return on a generative-AI documentation tool in its first year; Univar Solutions' AI sales agent achieving a 30% engagement rate reactivating dormant customers in an initial pilot; and Apollo's own procurement AI analyzing 15,000 software purchase agreements in minutes, helping one portfolio company realize a procurement cost reduction of more than 65%.