Apollo Global Management, Inc. (new) · NYSE:APO
Apollo Global Management, Inc. (new) — Apollo Global Management — BofA Merrill Lynch Conference 2011
24 slides from Apollo Global Management, Inc. (new)'s conference presentation, Nov 15, 2011
Slide 1: Apollo Global Management presentation
! " #$%&'## It should not be assumed that investments made in the future will be profitable or will equal the performance of the investments in this document. Figures are presented as of September30, 2011 unless otherwise indicated. Not for distribution, in whole or in part, without the express cons
Slide 2: It should not be assumed that investments made in the future will be profitable
! "# " $ # % &&'( # ( ) * + ,- # " . / ! / # ( # " #" * # " !0 " +# * " ,+ ",+ " ,+ " ,+ , / ! # * / #" * * * # ! #1 " !0 # * # # +2 , 3 ' ( 2 )#- ' )+ ',- % 4" 4 " # '" # '( # ! ! *! # * # 1 ' !0 # # * / " " * ! +$ 522, * * / * # * ) 6 * *+ , - # . " 6 # " ) # - ( * " # "# # ( * ! +7 522, 522 # * "
Slide 3: Founded in 1990; $65 billion diversified alternative investment manager
Founded in 1990 by Leon Black, Josh Harris and Marc Rowan who have worked together for more than 20 years $65 billion diversified alternative investment manager with integrated global platform across private equity, credit-oriented capital markets, real estate and natural resources Value-oriented, c
Slide 4: Consistent Growth and Diversification
Consistent Growth and Diversification ($ in millions) $65 Billion Total Scale Existing $6,469 Businesses $7,900 $495 0 % New Product :3 GR $22,283 Development CA UM $22,406 oA o ll $19,112 Ap Geographic $15,108 Expansion $10,533 Expand 1990-2002: Distribution PE Only $4,392 $2,463 Channels $38,799 $
Slide 5: Apollo private equity fund net IRR vs top quartile
1,500 3Q07 - Present 1990 - 1993 2001 - 3Q03 $18 bn invested $3.4 bn invested $1.6 bn invested 1,250 S&P 500 Index 1,000 44.5% 36.7% 30.5% 20.9% 23.7% 750 12.3% 14.6% 12.1% 9.0% 5.7% 4.7% 7.7% 10.5% 1.3% 3.2% 500 I, II, MIA Fund IV Fund V (2001) Fund VI Fund VII ('90/'92) (1998) (2006) (2008) 250 90
Slide 6: Bank C&I lending has declined; banks hoarding cash
! " #$ % ! Bank C&I Lending Has Declined (1) Issuance of Asset Backed Securities (2) $1,500 $1,750 $1,255 C&I Loans ($ in billions) $1,584 -20% $1,250 Total US Banks $1,500 $1,433 $1,000 ($ in billions) $882 -90% $1,291 $1,264 $750 $1,220 $1,250 $500 $221 $184 $1,000 $250 $127 2007 2008 2009 2010 20
Slide 7: Financial Crisis has Led to Gaps in the Investment Landscape
Financial Crisis has Led to Gaps APOLLO in the Investment Landscape aN mer ae Freddie LEHMAN rman o . 7 cy rs : it @ Mac BROTHERS . Washington FER S coun de Mutual Financial. A National en Corus a Guaranty CAPMARK City. BankUnited a" at UCB & (8) Premenpann Coro FIRST FEDERAL BANK
Slide 8: Many sources of long-term, illiquid capital have disappeared
Since the onset financial crisis, many sources of long-term, illiquid capital have disappeared – Financial institution balance sheets – Prop trading desks – Hedge funds However, our clients – pension funds, sovereign wealth funds, endowments, and other institutional investors – are well- positioned
Slide 9: Many portfolios not positioned to take advantage of opportunities
…! & ' Many portfolios today are not positioned to take advantage of the opportunities in the marketplace Pension Fund Allocations(1) Mortgages 8% Inflation Protected High Yield 29% 35% Core Fixed Short Term Income Securities Lev. Equity 27% Loans 26% 50% 5% Credit 5% Alternatives 19% (1) Sources: P
Slide 10: A Pension Plan's Need for Yield
( A Pension Plan’s Need for Yield Investors are Challenged – Rates Have Crashed “Then” “Now” March 31, Change $200 Billion October 12, 2011 2007 Asset Fund CD Rate (1 year) 4.94% 0.78% -84.2% Money Market 3.76% 0.54% -85.6% Rates U.S. 5-Year 4.53% 1.07% -76.4% Assuming a 40 Year Even Annuity Treasur
Slide 11: Flight to Safety Has Decimated Yields
) * + Flight to Safety…. …Has Decimated Yields 25% Monthly Cumulative Fund Flows 160,000 $142 B 120,000 20% 80,000 15% ($ in millions) 40,000 Yield $15 B 0 10% (40,000) 8.3% (80,000) 5% 4.5% (120,000) $ (141) B (160,000) 0% 12/09 02/10 04/10 06/10 08/10 10/10 12/10 02/11 04/11 06/11 08/11 09/08 03/0
Slide 12: Not all yields are created equal
, - .- ) % Not all yields are created equal 25% 20% Life Settlements: 18.5% 15% New Issue Mezz: 14-15% Yield Euro Bank Loans: 10.6% 10% Euro High Yield: 9.5% US Bank Loans: 8.6% US CLO: 8.5% 5% US IG Corporates: 4.5% U.S. Treasuries: 2.2% 0% 06 07 08 09 10 11 6 7 8 9 0 7 8 9 0 1 07 08 09 10 11 -0 -0
Slide 13: Significant private equity dollars chasing limited clean and safe assets
# , #/ %0& & 1 2 Significant private equity dollars chasing limited clean and “safe” assets We believe the single biggest determinant to private equity success is a cheap purchase price… …Yet EBITDA Multiples are Near Historic Highs Size of $500M or more 12x 10.2 9.8 8.8 8.9 8.8 8.9 9.1 8.8 8.8 9x 8
Slide 14: Portfolio allocations to alternatives have continued to increase
( Historically, alternative asset class has not been a prominent part of institutional program… …Yet Portfolio Allocations to Alternatives Have Continued to Increase (1) 12% Alternatives Dept. +67% 10% 10% Portfolio Allocation % 9% 8% 6% 6% 4% 2006 2008 2010 1. Source: Pensions & Investments Online.
Slide 15: Distressed for Control, Europe, Natural Resources
- #$ 3 ) % Distressed for Control Europe Natural Resources 14
Slide 16: Apollo acts opportunistically on distressed opportunities across market cycles
& 3 Apollo Apollo acts acts opportunistically opportunistically to to capitalize capitalize on on distressed distressed opportunities opportunities across across market market cycles cycles (bps) Key Distressed 4,800 Examples: BofA Merrill Lynch CCC or Below 4,400 Option Adjusted Spreads 4,000 • Apo
Slide 17: Apple is Now More Valuable than All of European Banks Combined
- % # ! Apple is Now More Valuable than All of European Banks Combined Apple vs. EuroStoxx Banks Index - Market Capitalizations 1,200.0 1,000.0 Market Capitalization ($ in bn) 800.0 600.0 400.0 200.0 0.0 2005 2006 2007 2008 2009 2010 2011 EuroStoxx Banks Index Apple Source: Bloomberg 16
Slide 18: European banks' balance sheets relative to GDP forcing divestitures
# ! 4 ! Size of European banks’ balance sheets relative to home country GDP is forcing bank divestitures… Top European Banks: Total Assets to Home Country GDP(1) Belgium France Germany Italy Spain Switzerland United Kingdom United States 297% 300% 278% 250% 200% 161% 150% 127% 109% 120% 103% 106% 90
Slide 19: Integrated platform pursues less traditional opportunities with less competition
Apollo leverages its integrated platform to pursue opportunities that may be less traditional and have less competition as a result – Select examples include: Residential Residential Loans Loans NN PLs PLs CCredit redit CCard ard Receivables Receivables Shipping Shipping AA ssets ssets Portfolio Por
Slide 20: Commodities Super Cycle
, 4 - Commodities Super Cycle Inflation Hedge Uncorrelated Returns to Other Traditional Asset Classes (i.e., equities and fixed income) Significant Asset Divestitures from Major Commodity Companies 19
Slide 21: Total AUM in Commodities = $447 billion
5 % & , Total AUM in Commodities = $447 billion for institutional and retail investments as of August 31, 2011 84% of total AUM invested in commodity indices and exchange-traded products (ETPs) Total AUM in Commodities Other (Active) 16% Index & ETPs (Passive) 84% 20 Source: Barclays Capital. “The C
Slide 22: Commodity ETFs have generally underperformed spot commodity prices
#) 6 + 7 Commodity ETFs have generally underperformed spot commodity prices. This is due to the inefficiencies of owning futures contracts versus the physical commodity, particularly when commodities are in a positive up-trend and the futures market is in contango Oil – WTI/USO Natural Gas – NYMEX/N
Slide 23: Ability to Buy Right
& , #/ % Ability to Buy Right Private Asset Purchases Distressed Environments Nimble and Opportunistic Direct ownership of physical Commodities are cyclical and Major companies continue to assets at discount to the prices in volatile by nature dispose non-core, under- the financial markets managed a
Slide 24: Apollo
APOLLO 23
Apollo Global Management — BofA Merrill Lynch Conference 2011 on 6ix