Apollo Global Management, Inc. (new) · NYSE:APO

Apollo Global Management, Inc. (new) — Apollo Global Management — Deutsche Bank Global Financial Services Conference 2016

30 slides from Apollo Global Management, Inc. (new)'s conference presentation, May 31, 2016

1. Slide 1: Deutsche Bank Global Financial Services Conference

   Deutsche Bank Global Financial Services Conference May 31, 2016 Information contained herein is as of March 31, 2016 unless otherwise noted. Not for distribution in whole or in part without the express consent of Apollo Global Management, LLC. It should not be assumed that investments made in the fu

2. Slide 2: Legal Disclaimer

   Legal Disclaimer This presentation is confidential and may not be distributed, transmitted or otherwise communicated to others, in whole or in part, without the express consent of Apollo Global Management, LLC or any of its affiliates (“Apollo”). Recipients of this presentation (and their representa

3. Slide 3: Apollo is One of the World's Largest Alternative Asset Managers

   Apollo is One of the World’s Largest Alternative Asset Managers Firm Profile(1) Business Segments Founded: 1990 Private Equity Credit Real Estate AUM: $173bn $38bn AUM $124bn AUM $11bn AUM  Drawdown  Residential and commercial Employees: 928  Opportunistic buyouts  Liquid / Performing  Distress

4. Slide 4: Apollo's Platform is Built for Continued Growth and Innovation

   Apollo’s Platform is Built for Continued Growth and Innovation Our stair step growth has been driven by Credit and we believe this trend is likely to continue $250-300+ RE Billion Credit 10-YR $173 CAGR Billion PE 23% RE +$11bn RE $11bn Successor Scale Existing Credit Funds Strategies Credit +$122bn

5. Slide 5: Apollo / Industry Outperformance Is Still Not Fairly Valued

   Apollo / Industry Outperformance Is Still Not Fairly Valued S&P 500 Traditional Mgrs(6) Alt Asset Mgrs(7) APO AUM CAGR(1) - 5% 13% 20% Mgmt. Revenue CAGR(2) 3% 5% 13% 13% Mgmt. Business / Operating 12% 31% 22% 36% Margin(3) Dividend Yield 2% 4% 8% 10% (2017E)(4) Cumulative Cash Returns(5) 9% 18% 42%

6. Slide 6: Apollo's Cash Earnings Poised For Growth

   Apollo’s Cash Earnings Poised For Growth Cash Earnings Profile Underpinned by Growing Management Business and Likely to Benefit from an Inflecting Incentive Business Management Business DE Incentive Business DE Total Distributable Earnings Pre-Tax, Per Share Pre-Tax, Per Share Pre-Tax, Per Share Man

7. Slide 7: Observations within the current market environment

   Observations within the current market environment

8. Slide 8: Public Markets are Fully Valued in Light of Sluggish Growth; Volatility is Increasing

   Public Markets are Fully Valued in Light of Sluggish Growth; Volatility is Increasing  Negative sentiment around China, oil prices and the Fed tightening drove market declines and volatility in 2H’15 and early 2016  Dovish central bank policy led to market recovery in early 2016  QE won this rece

9. Slide 9: Private Equity Purchase Multiples Remain at All-Time Highs

   Private Equity Purchase Multiples Remain at All-Time Highs  Private Equity valuations have reached 2007/2008 levels, despite a pullback in leverage levels U.S. and European LBO Purchase Price Multiples U.S. and European LBO Leverage Levels 12x Current multiple is 23% higher than average Current mul

10. Slide 10: Global Picture: Low Rates, Low Growth, Falling Inflation

    Global Picture: Low Rates, Low Growth, Falling Inflation  Despite historically low rates, global growth and inflation remain below historical averages Global Developed Sovereign Yields Global GDP Growth Global Headline Inflation 10% 9% 10% 9% 8% 8% 8% 7% 7% 6% Historical Average 6% 6% 6% Historical

11. Slide 11: In the US, Stable Fundamentals Although Recovery is Increasingly Late Cycle

    In the US, Stable Fundamentals Although Recovery is Increasingly Late Cycle Strong Job Adds Continue to Drive Down Unemployment Continued Muted Wage Growth 700 Headline Unemployment is Currently at 5.0% 10% % YoY 600 9% 4.5 500 8% 4.0 400 7% 3.5 300 6% 200 5% 3.0 100 4% 2.5 0 3% 2.0 -100 2% -200 1%

12. Slide 12: With the U.S. Further Along in Recovery, Monetary Policy Divergence is Likely

    With the U.S. Further Along in Recovery, Monetary Policy Divergence is Likely  Slowdown abroad may limit US monetary policy options, which are increasingly controlled by foreign issues While the U.S. is Close to Full Employment, Europe Has a Long Way to Go and Japan Faces Structural Challenges 14%

13. Slide 13: Divergence is Rare: As the U.S. Begins to Tighten, Other Countries Continue Easing

    Divergence is Rare: As the U.S. Begins to Tighten, Other Countries Continue Easing  As we enter a world of policy divergence, it is worthwhile to recognize the global nature of today’s economy – In particular, credit yields remain highly correlated  Historically, other G-10 countries tightened sim

14. Slide 14: Prospects for Continued Easing: The Efficacy of Quantitative Easing Has Declined

    Prospects for Continued Easing: The Efficacy of Quantitative Easing Has Declined  QE had not been able to prop up asset prices in Europe and Japan, although it continues to suppress yields ECB Balance Sheet / Eurostoxx 50 Index Correlation BoJ Balance Sheet / Nikkei Index Correlation 160 300 74% Co

15. Slide 15: Negative Interest Rates Persist

    Negative Interest Rates Persist Negative Global Real Yields… …Are Forcing Investors to Seek Yield Through Beta Of the $25 trillion in developed world government bonds, nearly two thirds have yields below the rate of inflation of ~1% 2016: Yield vs. Carry Breakeven 12% Investors are being forced to ~

16. Slide 16: Rates Will Likely Remain Low, but the Stronger Dollar May Replace High Long Term Rates

    Rates Will Likely Remain Low, but the Stronger Dollar May Replace High Long Term Rates in Cooling the U.S. Economy  The Federal Reserve raised its target range by 25 bps to 0.25% – 0.50% in December 2015  The market expects rates to remain lower for longer, pricing in only one rate hike in 2016 –

17. Slide 17: Continued Tail Risk: Quantitative Failure

    Continued Tail Risk: Quantitative Failure Fund Managers View QE Failure as Their Biggest Tail Risk 21% 19% 19% % of responses 11% 11% 11% 9% Quantitative Brexit/Eurozone Other US Outlook EM/Energy Debt China Outlook Geopolitical Crisis Failure Default Source: Estimated per BofA Merrill Lynch Global

18. Slide 18: China is Slowing, Leading to Declining Commodity Prices

    China is Slowing, Leading to Declining Commodity Prices China’s GDP Growth is Projected to Decelerate… …Driven by Slowing Fixed Asset Investment Growth 16% 25% 14.2 12.7 11.3 12% 10.010.1 10.4 20% 9.1 9.6 9.3 8.4 8.3 9.2 7.8 7.8 7.3 8% 6.9 6.5 6.3 6.3 15% YoY Services 4% 10% Total GDP 0% 5% Industry

19. Slide 19: Commodity Prices Have Led to a Rise in Distressed

    Commodity Prices Have Led to a Rise in Distressed  Excluding Energy and Metals & Mining, high yield defaults are at post-crisis lows  Energy and Metals & Mining represent ~70% of defaulted debt over the last 12 months 12-Month Trailing High Yield Default Rate 12-Month Defaulted Debt Breakdown by S

20. Slide 20: Meanwhile, Fallen Angels Volume and Dry Powder Continue to Climb

    Meanwhile, Fallen Angels Volume and Dry Powder Continue to Climb Market Value of Bonds Trading Below 85 Has Outpaced Distressed Dry Powder We are actively evaluating credits across our nine core sectors, and have begun to build positions in distressed credits, particularly in Natural Resources $ bil

21. Slide 21: So how is Apollo positioned within this backdrop?

    So how is Apollo positioned within this backdrop?

22. Slide 22: We are Disciplined, Value-Oriented Buyers

    We are Disciplined, Value-Oriented Buyers  YTD 2016, Fund VIII and co-investors have invested or committed to invest approximately $6bn Private Equity Capital Deployment(1) Continued Expansion, Followed by Great Recession Expansion Market Volatility $7.3 10-Year Average: ~$3.7 Billion ($ in billion

23. Slide 23: Uncovering Value Across Market Trends

    Uncovering Value Across Market Trends  As contrarian, value-oriented investors we are focusing our investment activity on less obvious, often more complicated, paths towards value in the face of current market uncertainty  Opportunities generally fall into two distinct buckets. One driven by Marke

24. Slide 24: Fund VIII is Continuing Apollo's Value-Oriented Approach

    Fund VIII is Continuing Apollo’s Value-Oriented Approach Fund V Fund VI Fund VII Fund VIII Vintage: 2001 Vintage: 2006 Vintage: 2008 Vintage: 2013 Total Commitments: $3.7bn Total Commitments: $10.1bn Total Commitments: $14.7bn Total Commitments: $18.4bn Total Invested: $5.2bn Total Invested: $12.5bn

25. Slide 25: Key Themes Driving Credit

    Key Themes Driving Credit Current Market Trends 1 De-leveraging of financial institutions 2 Re-regulation of financial institutions 3 Insatiable search for yield More Relevant Than Ever in 2016 1 Filling the role of the banks to a broad set of borrowers 2 Dynamic reshaping of traditional banking act

26. Slide 26: Significant Opportunity for Providers of Alternative Credit

    Significant Opportunity for Providers of Alternative Credit Shrinking Bank Balance Sheets Coupled with Broad Base of Investable Assets Searching for Yield Poised to Drive Growth for Alternative Credit Managers $119 trillion Japan $38tn $74 trillion China $26tn + Six Other Public Alternative Asset Ma

27. Slide 27: We Have a Range of Solutions Across the Credit Spectrum

    We Have a Range of Solutions Across the Credit Spectrum Apollo manages more than 100 discrete funds or accounts across a broad set of investment strategies Illustrative Composition of Apollo’s Credit Business Target Return $124 billion of AUM 15%+ Drawdown Funds ($20bn) Hedge Funds Credit 10-15% ($6

28. Slide 28: Well Positioned for the Future

    Well Positioned for the Future A Differentiated investment strategy with strong historical performance P Increasing diversification and growth in earnings, AUM and permanent capital O Growing level of recurring cash flow with compelling valuation L Healthy operating margins with further scale potent

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30. Slide 30: Risk Factors and Definitions

    Risk Factors and Definitions Risk Factors – please refer to section entitled “Risk Factors” in the Company's Annual Report on Form 10-K filed with the United States Securities and Exchange Commission (“SEC”) on February 26, 2015; as such factors may be updated from time to time in our periodic filin

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