Apollo Global Management, Inc. (new) · NYSE:APO
Apollo Global Management, Inc. (new) — Apollo Global Management — Barclays conference 2011
25 slides from Apollo Global Management, Inc. (new)'s conference presentation, Sep 12, 2011
Slide 1: The Opportunity in Front of Us
Strictly Confidential The Opportunity in Front of Us Marc Rowan – Co-Founder and Senior Managing Director September 12, 2011 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
Slide 2: Forward Looking Statements and Other Important Disclosures
Forward Looking Statements and Other Important Disclosures ! "# " $ # % &&'( # ( ) * + ,- # " . / ! / # ( # " #" * # " !0 " +# * " ,+ ",+ " ,+ " ,+ , / ! # * / #" * * * # ! #1 " !0 # * # # +2 , 3 ' ( 2 )#- ' )+ ',- % 4" 4 " # '" # '( # ! ! *! # * # 1 ' !0 # # * / " " * ! +$ 522, * * / * # * ) 6 * *+
Slide 3: Apollo Global Management, LLC Overview
Apollo Global Management, LLC Overview Founded in 1990 by Leon Black, Josh Harris and Marc Rowan Apollo is a contrarian, value-oriented investor with the ability to invest in all economic environments We have approximately $72 billion of assets under management(1) Integrated private equity, capital
Slide 4: Apollo Global Platform
Apollo Global Platform Apollo Global Management, LLC Since 1990 Apollo has operated an open platform investing across the capital structure Private Equity Capital Markets Traditional buyouts Senior credit funds 40% Distressed buyouts & debt investments Mezzanine funds Ownership on “as Corporate part
Slide 5: Significant AUM Growth at Apollo
Significant AUM Growth at Apollo Consistent Growth and Diversification $72 Billion Total ($ in millions) $7,600 Scale Existing $6,469 Businesses $495 3 % New Product :3 $23,684 GR $22,283 Development CA UM oA o ll $19,112 Ap Geographic Expansion $10,533 $15,108 Expand 1990-2002: Distribution PE Only
Slide 6: Contrarian Approach Has Led to Significant Outperformance During Every Downturn
Contrarian Approach Has Led to Significant Outperformance D uring Every D ow nturn 1,500 3Q07 - Present 1990 - 1993 2001 - 3Q03 $15.5 bn invested $3.4 bn invested $1.6 bn invested 1,250 S&P 500 Index 1,000 45% 37% 29% 20% 17% 750 14% 9% 9% 11% 10% 6% 6% 4% 2% -2% 500 I, II, MIA Fund IV Fund V (2001)
Slide 7: Growth has come from "Small Office Down the Hall"
Growth has come from “Small Office Down the Hall” Portfolio Allocations to Alternatives Have Historically, Alternative Asset Class has Not Been a Continued to Increase (1) Prominent Part of Institutional Programs… 12% Alternatives Dept. +67% 10% 10% Portfolio Allocation % 9% 8% 6% 6% 4% 2006 2008 20
Slide 8: Growth Drivers
Growth Drivers Client Opportunity Market Opportunity Vehicle Opportunity 7
Slide 9: The Institutional CIO Should be Standing Tall!
T he Institutional CIO Should be Standing T all! 8
Slide 10: Unfortunately…
U nfortunately… “Wall Street's volatility has hit state pension funds just as they were beginning to recover from the recession” — Wall Street Journal (8/10/11) “The funded status of the typical corporate pension plan fell 5.6 percentage points in August to 78 percent” — Bloomberg (9/7/11) “Fixing t
Slide 11: Today, Our Clients have an Issue…
Today, Our Clients have an Issue… …the last thing State budgets need is another $25 - $50 billion liability… A Pension Plan’s Need for Yield Historical Returns by Asset Class $200 Billion Asset Fund 19.9% 18.9% 10.8% 9.8% Assuming a 40 Year Even Annuity 7.6% 8% Discount Rate Deficit 6.6% 5.7% 8% $0
Slide 12: Investors are Challenged – Rates Have Crashed
Investors are Challenged – Rates Have Crashed “Then” “Now” Change March 31, 2007 September 7, 2011 CD Rate (1 year) 4.94% 0.83% -83.2% Money Market Rates 3.76% 0.56% -85.1% U.S. 5-Year Treasury 4.53% 0.90% -80.1% LIBOR (3 month) 5.35% 0.34% -93.6% Investment Grade 5.79% 4.30% -25.7% S&P 500 Total Re
Slide 13: Equity Markets are Not Providing Returns Either
Equity Markets are Not Providing Returns Either Equity markets are increasingly volatile… 50 40 30 VIX 20 10 Recent Impact of 0 Equity Market Decline Jun-11 Jul-11 Aug-11 Sep-11 Assume: …and continue to trend down • $200 billion pension plan 1,400 • 40% allocation to equities 1,350 • Equity markets
Slide 14: Current Allocation Schemes are Broken
Current Allocation Schemes are Broken Historical Asset Class Returns Apollo (4) (6) 2007 2011 15 Year 10 Year 5 year Projected (3) Cash, Other; 5% Equities (2) 41% 6.5% 2.7% 2.9% 5-7% (N/A) $5.3 Lighthouse Partners strategic partnership Typical Pension Allocation Scheme(1) Fixed Income(2) 35% 6.3% 5
Slide 15: Crisis Created "Holes" in Financial System
Crisis Created “Holes” in FinancialSystem 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 $
Slide 16: Fixed Income Credit
Fixed Incom e Credit Structural factors expected to continue to create excess returns in credit vs. traditional fixed income – Regulation (Basel III) – Risk aversion of banks globally – Exit of traditional players (CIT) – Upcoming corporate maturities – Reconstitution of the securitization market –
Slide 17: Credit is a Bottom-up Process
Credit is a Bottom-up Process Significant growth opportunities exist for alternative credit managers relative to large traditional asset managers Selected Managers1 AUM1 ($bn) Blackrock $3,659 Traditional asset managers Fidelity Investments $1,629 often take “top down” Revenue Breakdown by approach
Slide 18: Examples of the Kinds of Assets We are Buying
Exam ples of the K inds of Assets W e are B uying Apollo leverages its integrated platform to pursue opportunities that may be less traditional and have less competition as a result – Select examples include: RR esidential esidentialLoans Loans NN PLs PLs Credit Credit Card Card RR eceivables eceiva
Slide 19: Institutional Investors are the "New Banks"
Institutional Investors are the “New Banks” Strategic Partnerships enable institutional investors to be more opportunistic and well- positioned to capture value in today’s market Select Apollo Strategic Partnerships Large State Large State Large Sovereign Pension Plan Pension Plan Wealth Fund $800 m
Slide 20: "Total Solutions Provider" via Integrated Platform
“Total Solutions Provider” via Integrated Platform We believe Apollo’s fully integrated business model spanning private equity, capital markets, real estate and natural resources positions the firm and its investors to be opportunistic in volatile markets Industry Insights Management Relationships I
Slide 21: Apollo's Core Industry Expertise
Apollo’s Core Industry Expertise Financial & Consumer Distribution & Manufacturing Media, Cable Packaging & Satellite & Chemicals Business Commodities & Retail Transportation & Industrial & Leisure Materials Wireless Services ATHLON ENERGY Note: The listed companies are a sample of Apollo private eq
Slide 22: Track Record Launching Permanent Capital Vehicles
Track Record Launching Permanent Capital Vehicles Approximately $8 billion of AUM in our permanent capital vehicles All leverage Apollo’s core platform and reinforce consistent themes NASDAQ: AINV NYSE: AFT Private Equity APOLLO Real Estate Capital Markets NYSE: AMTG Euronext: AAA NYSE: APO ed ag In
Slide 23: Simple Business Model
Simple Business Model Total Revenues: 100% Comp Expenses: (41%) Non-Comp Expenses: (9%) Economic Net Income: 50% Note: Percentages above based on combined segment financial results for the six months ended June 30, 2011, which do not guarantee future results. Total revenues include net gains from in
Slide 24: Manager Selection Where it Counts
M anager Selection W here it Counts Industry Average vs Top Quartile Changing Asset Allocations (10 Year Returns) Traditional Alternative Managers Managers 18.9% YYield ield 10.8% OO pportunity pportunity 5.3% 6.1% 6.4% 2.7% Liquidity Liquidity Equity (1) Core Fixed Private Equity(3) Income (2) RRea
Slide 25: APO NYSE
APO NYSE