Apollo Global Management, Inc. (new) · NYSE:APO
Apollo Global Management, Inc. (new) — Apollo Global Management — Morgan Stanley Financials Conference 2014
25 slides from Apollo Global Management, Inc. (new)'s conference presentation, Jun 11, 2014
Slide 1: Morgan Stanley Financials Conference
Morgan Stanley Financials Conference June 11, 2014 Information contained herein is as of March 31, 2014 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 future will be
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: Agenda
Agenda 1. Apollo Today 2. Overview of the Current Environment 3. Investment Opportunities in the Current Environment 2
Slide 4: Apollo Global Management, LLC
Apollo Global Management, LLC Apollo Global Management, LLC is a leading global alternative investment manager in private equity, credit and real estate Ticker (NYSE) APO Market Capitalization(1) $10.7 billion Total Assets Under Management(2) $159.3 billion AUM CAGR (2004 – 1Q’14) 33% LTM Dividend Y
Slide 5: Apollo's Global Platform
Apollo’s Global Platform Firm Profile (1) Principal Investment Businesses(1) Founded: 1990 Private Equity Credit (3) Real Estate AUM: $159bn(2) $48bn AUM $101bn AUM $9bn AUM Employees: 761 U.S. Performing Credit Residential and commercial Opportunistic buyouts Inv. Prof.: 302 Distressed buyo
Slide 6: Significant Growth and Diversification
Significant Growth and Diversification Apollo’s Total AUM Has Grown Significantly Over the Last Decade ($ in billions) Total AUM: $159bn(1) Private Equity Credit Real Estate Unallocated Strategic Accounts $8.9 Dramatically different business today vs. at IPO AUM CAGR: 32% $8.8 $101.2 U.S. Performing
Slide 7: Agenda
Agenda 1. Apollo Today 2. Overview of the Current Environment 3. Investment Opportunities in the Current Environment 6
Slide 8: Global Growth is Slowly Improving
Global Growth is Slowly Improving Global (1) 16% Global GDP = $71.7T(2) 14% Forecast GDP GDP % change, constant prices 12% 10% 8% LT Average: 2.6% 6% 4.0% 4.0% 4.0% 3.0% 2.8% 3.1% 4% 2.2% 2.1% 1.6% 2% -2.4% 0% -2% 2006 2007 2008 2009 2010 2011 2012 2013E 2014 2015 -4% United States (1) Euro Zone (1)
Slide 9: U.S. Labor Market Showing Positive Trends
U.S. Labor Market Showing Positive Trends Unemployment Wage Growth(2) Although the U.S. has added 6 million jobs since the recession, Continued job growth of ~180k / month expected to drive over 20 million people are truly unemployed(1) YoY acceleration of wage growth vs. less than 14 million before
Slide 10: Corporate Growth is Picking Up
Corporate Growth is Picking Up Profit margins and CapEx are back up to and exceeding pre-recession highs, and M&A has stabilized That said, fundamentals continue to lag market technicals – Apollo’s portfolio companies, which represents approximately 0.35% of U.S. GDP, grew revenue ~1% over the p
Slide 11: Is Risk Being Appropriately Discounted?
Is Risk Being Appropriately Discounted? Easy monetary policy has boosted valuations and driven volatility to historic lows As the Fed begins to tighten, volatility is likely to pick back up, causing valuations to abate – Geopolitical risk is not priced into the market Volatility of the S&P 500 8
Slide 12: Markets are Priced to Perfection
Markets are Priced to Perfection Public Markets at High Valuations(1) Yields Near Historic Lows(2) 25 S&P 500 Index (TEV / LTM EBITDA) Barclays U.S. Corporate High Yield 13.0x 12.0x 20 11.0x Current: 10.3x +1 Std. Dev: 10.2x 10.0x 15 Average: 9.1x +1 Std. Dev: 12.5 9.0x Average: 9.6 8.0x 10 -1 Std.
Slide 13: Where Do We Go From Here?
Where Do We Go From Here? The Fed has kept rates at historical lows, but expectations for higher rates have shifted forward significantly as growth has returned Historically Low Rates Short Term and Long Term Rate Projections Previous cycles hiked rates at ~200-300 bps per The Fed has been effecti
Slide 14: PE is Flush with Capital & Deals Appear Fully Priced
PE is Flush with Capital & Deals Appear Fully Priced Sponsor Dry Powder is Plentiful Valuations Remain High Despite Underlying Uncertainty ($ in billions) Buyout Funds(1) U.S. LBO Purchase Price Multiples(2) Global North America 83% Correlation Discount / Premium to S&P Between Leverage and 500 Valu
Slide 15: While Shy of Peak Levels, LBO Activity is Picking Up
While Shy of Peak Levels, LBO Activity is Picking Up LBO Activity ($ in billions) Historical Averages $450 150 $409 Transactions Per Year 59 $400 Transaction Value Per Year $126 billion Equity Invested Per Year $43 billion 125 $350 Aggregate Value of Transactions Number of Transactions $300 100 $250
Slide 16: In Today's Market, We Continue to be Net Sellers
In Today’s Market, We Continue to be Net Sellers Apollo Private Equity Fund V, VI, VII, VIII Activity: 2012 – Q1 2014 Total Proceeds $21bn at YE 2011 $47bn at Q1 2014 Fully exited 13 portfolio companies at an Average Exit Multiple of 9.4x Executed 15 IPOs $17bn in from secondary sales / bl
Slide 17: Agenda
Agenda 1. Apollo Today 2. Overview of the Current Environment 3. Investment Opportunities in the Current Environment 16
Slide 18: The Shale Revolution: Upstream & Downstream Opportunities
The Shale Revolution: Upstream & Downstream Opportunities Increased production has created a surplus of energy available for a variety of outputs at cost effective and competitive price points Energy (Upstream) Chemicals (Downstream)(2) Abundance of natural gas from shale has dramatically lowere
Slide 19: Distressed Opportunity: Beginning to See Cracks?
Distressed Opportunity: Beginning to See Cracks? Overhang of $1.7 Trillion in Debt Maturities(1) High Priced LBOs Completed 2011 – 2014 YTD 500 $405 12x 10.2x 9.8x 400 $318 10x 8.8x 8.8x 9.5x 9.1x 9.0x 9.5x 8.0x Dollars (billions) 300 $259 $239 8x $178 6x 200 $112 4x $82 $77 100 $18 $37 2x 0x 0 6) )
Slide 20: Ability to Deploy Capital at Attractive Valuations
Ability to Deploy Capital at Attractive Valuations Apollo Creation Multiple vs. Industry Multiple Apollo Creation Multiple Industry Average(1) 12x (average purchase multiple - EV/EBITDA) 10x 9.5x 9.5x 9.1x 9.0x 8.8x 8.0x 8x 6.7x 6.1x 6.2x 6.0x 6x 5.4x 5.0x 4x 2x 0x (2) 2009 2010 2011 2012 2013 2014
Slide 21: 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 $112 trillion Japan $30tn China $23tn $63 trillion SWF $5tn + Six Other Public Insurance $
Slide 22: Apollo's Credit Platform Is At the Crossroads of Global Credit
Apollo’s Credit Platform Is At the Crossroads of Global Credit Global Credit Themes Impact of secular change in De-leveraging of Investor demand for yield & financial re-regulation global financial balance sheets opportunistic credit Risk driven out of financial Shrinking of Europe: Fill in gaps whe
Slide 23: Apollo's Credit Offerings Seek to Outpace Today's Yields
Apollo’s Credit Offerings Seek to Outpace Today’s Yields Apollo’s Unconstrained Credit Strategies Seek to Trade Complexity and Illiquidity for Incremental Rate of Return Apollo Investment Focus Apollo Target Non-Performing Loans: 20% 20% Gross Returns 18% Illiquid Opportunistic Credit: 15%+ 16% 15.0
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Slide 25: Definitions
Definitions Assets Under Management (“AUM”) Definition – refers to the investments we manage or with respect to which we have control, including capital we have the right to call from our investors pursuant to their capital commitments to various funds. Our AUM equals the sum of: (i) the fair value
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