Non-compensation expenses for Apollo’s Management Business were $59.1 million during the third quarter of 2012, an increase of $10.8 million, or 22%, from the third quarter of 2011. The increase in non-compensation expense during the third quarter of 2012 was largely driven by $7.6 million and $4.1 million of additional general administrative expenses and professional fees, respectively, which were both impacted in part by the acquisition of Stone Tower Capital LLC and its related management companies (collectively “Stone Tower”) in April 2012.
Private Equity Segment
ENI from Apollo’s private equity segment was $240.2 million for the third quarter of 2012, compared to an economic net loss of $886.9 million for the third quarter of 2011. The quarter over quarter change was largely driven by total carried interest income of $340.6 million during the third quarter of 2012, compared to a total carried interest loss of $1,358.6 million during the third quarter of 2011. Income from equity method investments was $24.9 million for the third quarter of 2012, compared to a loss from equity method investments of $39.4 million for the same period in 2011.
The performance of Apollo’s private equity funds, as measured by IRR, improved during the third quarter of 2012. From its inception in 2008 through September 30, 2012, Fund VII has generated an annual gross and net IRR of 35% and 26%, respectively. Fund VI, which began investing in 2006, continued to generate an annual gross and net IRR of 9% and 8%, respectively, since its inception through September 30, 2012. The combined fair value of Apollo’s private equity funds was 55% above cost as of September 30, 2012 and appreciated by 8% during the third quarter of 2012. Uncalled private equity commitments were $7.1 billion as of September 30, 2012, which includes approximately $700 million from Apollo’s natural resources fund.
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