Apollo Global Management, Inc. (new) · NYSE:APO
Apollo Global Management, Inc. (new) — Apollo Global Management — Citi Financial Services Conference 2012
41 slides from Apollo Global Management, Inc. (new)'s conference presentation, Mar 8, 2012
Slide 1: Citi Financial Services Conference
Citi Financial Services Conference Marc Rowan – Senior Managing Director March 8, 2012
Slide 2: Forward Looking Statements and Other Important Disclosures
Forward Looking Statements and Other Important Disclosures This presentation may contain forward looking statements that are within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements include, but are not limited to, discu
Slide 3: Apollo Global Management, LLC
Apollo Global Management, LLC Apollo is a leading global alternative investment manager APOLLO in private equity, credit-oriented capital markets, real estate and natural resources Ticker: APO Exchange: New York Stock Exchange Trading Price (March 7, 2012): $13.85 Market Capitalization $5.0 billion
Slide 4: Agenda
Agenda 1. Apollo Opportunity 2. Market Opportunity 3. Client Opportunity 4. Appendix 3
Slide 5: Apollo Global Management Overview
Apollo Global Management Overview Founded in 1990, Apollo is a contrarian, value-oriented investor with the ability to invest in all economic environments We have approximately $75 billion of assets under management (1) Integrated private equity, capital markets, real estate and natural resour
Slide 6: We Have Performed Well over a Long Period of Time
We Have Performed Well over a Long Period of Time Historical Returns for Selected Asset Classes 39% 25% 18.5% 19.6% 16.4% 11.6% 13.0% 6.5% 5.8% 6.5% 7.9% 8.1% 8.1% 8.1% 2.9% 3.1% -0.2% Barclays Aggregate S&P 500 Index (1) NCREIF (2) All Private Equity (3) Estimated Top Apollo PE Apollo PE Fixed Inco
Slide 7: Significant Growth and Diversification
Significant Growth and Diversification Consistent Growth and Diversification ($ in millions) Scale Existing Businesses $75,222 % $67,551 $7,971 : 31 New Product AGR $6,469 Development C AUM $53,609 o oll $31,867 Geographic Ap $44,202 $22,283 Expansion $40,860 $19,112 $10,533 $15,108 Expand 1990-2002
Slide 8: Apollo's Global Platform Today
Apollo’s Global Platform Today Apollo Global Management, LLC Since 1990 Apollo has operated an open platform investing across the capital structure Strategic Partnership Private Equity Segment Capital Markets Segment Lighthouse - Traditional buyouts - Senior credit funds Partners(3) - Distressed b
Slide 9: Agenda
Agenda 1. Apollo Opportunity 2. Market Opportunity 3. Client Opportunity 4. Appendix 8
Slide 10: Markets Have Improved...
Markets Have Improved… S&P 500 & DJIA Prices(1) Levered Loan and High Yield Performance(2) 9/30/11 – Current % Change 9/30/11 – Current % Change +7% +12% 400 +21% +19% JPMorgan High Yield Index Daily Prices S&P Leveraged Loan Index Daily Prices 1,625 375 S&P 500 Daily Prices DJIA Daily Prices 1,575
Slide 11: ...But Uncertainty Still Remains
…But Uncertainty Still Remains “The economic and political costs of a breakdown of the Eurozone Impact of Sovereign Insolvencies would be so large that one has to hope for better.” — Financial Times (1/18/12) “Many of the countries that use the euro as their currency appear to be confronting a renew
Slide 12: Four Key Macro Trends That Inform Our Investing Strategy
Four Key Macro Trends That Inform Our Investing Strategy Shrinking of global financial system Shortage of illiquid capital Return destruction in traditional (and traditional alternative) asset classes Above average uncertainty and volatility against backdrop of potential global recession 11
Slide 13: Broad Deleveraging of the Global Banking System
Broad Deleveraging of the Global Banking System United States Europe GDP $15 trillion $18 trillion 2012 GDP Growth Forecast +2.1% +1.0% Size of Banking System (Total Assets) $12 trillion $65 trillion Size of Capital Markets for Corp. Lending $5 trillion $1 trillion Banks % of Total Corporate Lending
Slide 14: Financial Crisis Has Created Destruction in Market
Financial Crisis Has Created Destruction in Market Bank C&I Lending Has Declined (1) $1,750 $1,584 -16% C&I Loans ($ in billions) Total US Banks $1,500 $1,433 $1,337 $1,291 $1,220 $1,250 $1,000 2007 2008 2009 2010 2011 Issuance of Asset Backed Securities (2) $1,500 $1,255 $1,250 ($ in billions) $1,0
Slide 15: The Herd has Moved
The Herd has Moved Flight to Safety…. …Has Decimated Yields 25% 200,000 Monthly Cumulative Fund Flows 160,000 $160 B 20% 120,000 80,000 40,000 15% $26 B ($ in millions) Yield 0 (40,000) 10% 8.21% (80,000) 8.16% (120,000) 5% 4.27% (160,000) (200,000) $ (233) B 0% (240,000) 09/08 03/09 09/09 03/10 09/
Slide 16: Understanding Current Risk/Reward Dynamics
Understanding Current Risk/Reward Dynamics Spread is no longer about risk, but about simple, easy explanations… 4.1% 2.3% 2.2% 2.7% 1.8% 10 Year UST 3.625% Notes ’21 4% Notes ‘21 5.75% Notes ‘21 5.3% Notes ‘21 Source: Bloomberg. As of January 31, 2012. Equity Markets are Not Providing Returns Eith
Slide 17: Certain Segments of Investment Grade Have Been Left Behind
Certain Segments of Investment Grade Have Been Left Behind Underlying For Similar Amounts of Risk, Not All Yields are Created Equal Investment Claims Grade Paying Risk 10% European Bank “B/BB” Loans: 8.3% (6) 8% ILS: “A” 8.0% (4) US Bank Loans: 6% 7.3% (5) “B/BB” Yield US CLO: “A” 4% 6.6% (3) CMBS:
Slide 18: Actionable Opportunities Today
Actionable Opportunities Today Filling Filling the the Focus Focus on on Complexity, Complexity, Avoiding Avoiding The The Herd Herd “Funding “Funding Hole” Hole” Illiquidity Illiquidity and and Distress Distress Asset Distressed • European Levered Loans • Non-Performing Loans • Non-Agency RMBS • Li
Slide 19: Fixed Income Credit
Fixed Income Credit We believe changes in the financial system have created compelling opportunities for other providers of long-dated capital Structural factors expected to continue to create excess returns in credit vs. traditional fixed income – Regulation (Basel III) – Risk aversion of ban
Slide 20: European Leveraged Loan Opportunity Then vs. Now
European Leveraged Loan Opportunity Then vs. Now “Then” (2007) Selected Senior Secured Loans and Bonds “Now” (2012) Selected Senior Secured Loans and Bonds Issuer Issuer Spread Spread 222 bps 162 bps 222 bps 169 bps 546 bps 576 bps 966 bps 566 bps to Exit to Exit Issuer Issuer Spread Spread 197 bps
Slide 21: Liquidation of European Bank Assets
Liquidation of European Bank Assets Capital Support Withdrawal of Liquidity Repayments Support Central Bank funding Agreements with the EU withdrawal: ECB / BOE - Competition Commission to Special Liquidity Scheme repay Capital State Aid (Shrinking balance sheets) €1 trillion European NPLs11 Basel
Slide 22: Diverse Spectrum of Opportunities
Diverse Spectrum of Opportunities 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 NPLs NPLs Credit Credit Card Card Receivables Receivables Portfol
Slide 23: Investment Example: Dali
Investment Example: Dali Global banks retreating from consumer lending businesses abroad Exclusive transaction with the selling institution Operating platform €486 million of Spanish including performing credit card loans approximately 300 employees €111 million of charged- €22 million o
Slide 24: Contrarian Approach Has Led to Outperformance in Downturns
Contrarian Approach Has Led to Outperformance in Downturns 1,500 3Q07 – 2Q 2011 1990 - 1993 2001 - 3Q03 $15.5 bn invested $3.4 bn invested $1.6 bn invested 1,250 S&P 500 Index 1,000 44.3% 36.7% 30.5% 20.9% 23.5% 21.7% 750 12.8% 10.4% 8.9% 5.7% 10.0% 5.2% 6.9% 2.0% 2.0% 500 I, II, MIA Fund IV Fund V
Slide 25: Apollo Captures Value when Markets are in Distress
Apollo Captures Value when Markets are in Distress 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
Slide 26: Examples of the Embedded Value in our Funds
Examples of the Embedded Value in our Funds LyondellBasell LyondellBasell Charter Charter Communications Communications Total Investment: $6.9 billion (1) Total Investment: $2.0 billion (1) $50 $70 $45 $60 $40 $35 $50 $30 $40 $25 $20 $30 $15 $20 $10 $10 $5 $0 $0 Apr-10 Aug-10 Dec-10 Apr-11 Aug-11 De
Slide 27: Unfavorable Risk-Reward for Leveraged Buyouts
Unfavorable Risk-Reward for Leveraged Buyouts In an uncertain economic environment, we do not believe that putting equity at the bottom of a capital structure makes much sense… Typical LBO Assumptions Return •• Implied Implied EV/LTM EV/LTM EBITDA EBITDA 19.3% entry multiple of 8x entry multiple o
Slide 28: Capturing Risk/Return in Today's Market
Capturing Risk/Return in Today’s Market 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 Hedged Natural Resources Non-cyclical/Idiosyncratic Acquire physical asse
Slide 29: Agenda
Agenda 1. Apollo Opportunity 2. Market Opportunity 3. Client Opportunity 4. Appendix 28
Slide 30: Current Allocation Schemes are Broken
Current Allocation Schemes are Broken Historical Asset Class Returns 20 Year 10 Year 5 year Projected (3) Cash, Other; 5% Equities (2) 7.9% 2.9% -0.2% 3-5% 41% Typical Pension Allocation Scheme(1) Fixed Income (2) 6.5% 5.8% 6.5% 2-4% 35% Alternatives (2) 13.0% 11.6% 8.1% 15+% 10% Real Assets (2) 8.1
Slide 31: Unfortunately, They have an Issue Today
Unfortunately, They have an Issue Today… …the last thing State budgets need is another $25 - $50 billion liability… A Pension Plan’s Need for Yield Current Allocation Schemes do Not Work Top 100 Pension Allocations(1) Short Term Securities, 1.1% $200 Billion Core Fixed Income, 25.6% Infl Protected,
Slide 32: Increased Allocations to Alternatives Plays to Apollo's Strengths
Increased Allocations to Alternatives Plays to Apollo’s Strengths Apollo Suite of Portfolio Allocations to Alternatives Continue to Increase (1) Alternative Products 17% 12% Private Equity +183% 10% Portfolio Allocation % 10% Distressed Credit 9% 8% Non-Performing Loans 6% 6% Real Estate 4% Natural
Slide 33: Apollo is Well-Positioned to Capitalize on New Opportunity Set
Apollo is Well-Positioned to Capitalize on New Opportunity Set Strategic Partnerships can enable institutional investors to be Dedicated Funds can provide targeted exposure to opportunity more opportunistic and well-positioned to capture value in sets that we believe are particularly attractive
Slide 34: Apollo's Credit Capabilities
Apollo’s Credit Capabilities JAMES ZELTER Managing Partner and CIO of Apollo Capital Management . Non- Senior Loans European U.S. Asia Distressed / Performing & CLO Credit Mezzanine Mezzanine RMBS Longevity Event Driven Loans CMBS(1) 18 Investment 6 Investment 16 Investment 8 Investment 6 Investment
Slide 35: Significant Growth in Capital Markets AUM
Significant Growth in Capital Markets AUM Capital Markets Segment Assets Under Management $50 Billion* ($ in billions) G R : 32% A UM CA r) $18.0 Ma rkets ne Towe tal Sto $31.9 Capi (before $8.8 $22.4 $19.1 $1.9 $1.9 $2.8 $15.0 $2.4 $2.0 $3.9 $2.1 $1.9 $4.5 $10.5 $4.3 $3.1 $4.2 $15.4 $9.3 $11.2 $5.3
Slide 36: Agenda
Agenda 1. Apollo Opportunity 2. Market Opportunity 3. Client Opportunity 4. Appendix 35
Slide 37: Apollo's Public Vehicles
Apollo’s Public Vehicles Symbol AINV ARI AMTG AFT AAA Exchange NASDAQ NYSE NYSE NYSE NYSE Euronext Amsterdam Market Cap1 (in millions) $1,395 $316 $198 $271 $902 Stock Price1 $7.08 $15.36 $19.29 $17.50 $10.00 52 week high / low $12.39 / $5.97 $17.07 / $11.79 $19.29 / $14.02 $20.09 / $15.01 $13.75 /
Slide 38: AGM's Financial Highlights
AGM’s Financial Highlights $ in millions Q4 2011 Q4 2010 FY 2011 FY 2010 Total Assets under Management Private Equity $35,384 $38,799 $35,384 $38,799 Capital Markets 31,867 22,283 31,867 22,283 Real Estate 7,971 6,469 7,971 6,469 TOTAL AUM $75,222 $67,551 $75,222 $67,551 Management Business Revenues
Slide 39: Overview of Carried Interest
Overview of Carried Interest % of Portfolio Marks Valued Using Exchange $ in millions As of 12/31/11 or Broker Quotes(1) as of 12/31/11 Carried Interest Receivable by Fund: Private Equity Fund VII $508.0 Private 59% Private Equity Fund VI -- Equity Private Equity Fund V 125.0 Private Equity Fund IV
Slide 40: AGM Key Balance Sheet Indicators
AGM Key Balance Sheet Indicators AGM Key Balance Sheet Indicators as of December 31, 2011 ($ in millions, except per share data) Cash and Cash Equivalents $ 739 G.P and L.P. Investments Held by AGM 354 Carried Interest Receivable 869 Net Carry Receivable Profit Sharing Payable 353 $516 Total Debt 73
Slide 41: APO NYSE
APO NYSE
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