Apollo Global Management LLC (APO.US) is engaged in preliminary discussions with Schroders Plc, the UK's largest independent asset management company, regarding a potential product collaboration partnership. The cooperation could involve the private equity giant providing asset sourcing services to Schroders.

According to sources familiar with the matter, senior management teams from both companies are conducting negotiations regarding the collaboration, though they emphasize that "whether a final agreement can be reached remains uncertain." One source added that the discussions do not involve any corporate-level merger or acquisition transactions, and Schroders is simultaneously in talks with other potential partners, aiming to enrich its product and service offerings. Representatives from both Apollo Global Management LLC and Schroders declined to comment on the matter.

In its half-year financial report released in July, Schroders reiterated that building strategic partnerships is a key initiative for "maintaining client relevance and achieving business growth." Last year, the group partnered with Phoenix Group Holdings Plc to establish an investment management company, planning to manage billions of pounds in private assets for UK pension holders.

Currently, the rise of low-cost passive investing is prompting active management institutions like Schroders to accelerate their expansion into alternative investment businesses—these businesses typically see clients holding assets for longer periods, and institutions can charge higher management fees. Meanwhile, alternative asset management companies that traditionally relied on institutional investors for fundraising are increasingly turning their attention to the private wealth market, seeking partnerships with retail-focused institutions.

Several institutions have recently promoted similar collaborations: this week, PGIM, the asset management arm of American International Group, announced a partnership with Partners Group to provide alternative investment products to clients; earlier this month, Goldman Sachs announced it would invest up to $1 billion in T. Rowe Price Group Inc. and collaborate with them to sell private market products to retail investors; German online broker Trade Republic also announced last Sunday that it would partner with EQT to provide clients access to private market investment channels.

For Schroders, the product collaboration discussions with Apollo Global Management LLC come at a critical juncture—the group is undergoing strategic restructuring under its new CEO. Richard Oldfield succeeded long-time company leader Peter Harrison last year and is working to revitalize this 221-year-old London institution. Oldfield has launched multiple reform initiatives: plans to cut £150 million (approximately $203 million) in costs and lay off hundreds of employees; shut down at least 10% of fund products, closed the Brazil office, and divested non-core businesses (including Munich real estate operations and Australian private credit divisions).

As of now, Schroders manages total assets of approximately £776.6 billion, with its alternatives division managing £71 billion in assets as of the end of June. Although this division has achieved scale growth, its growth rate has not yet reached established targets. However, Jefferies data shows that over the past five years, approximately three-quarters of Schroders' private market investment performance has outperformed established benchmarks.

In an interview last year, Oldfield stated that Schroders "has no intention of becoming an institution like Blackstone or KKR," emphasizing that "what we really need to do is attract more capital for our alternative investment business."

As of the end of June, New York-listed Apollo Global Management LLC manages $840 billion in global assets. Company President Jim Zelter stated in a September 16 interview that Apollo Global Management LLC has reached multiple partnerships in recent years, and in addition to its own deal sourcing team, currently has asset origination cooperation agreements with 12 banks to support its private credit business.