Apollo Global Management, Inc. (new) · NYSE:APO
Apollo Global Management, Inc. (new) — Apollo Global Management — Bernstein Strategic Decisions Conference 2015
27 slides from Apollo Global Management, Inc. (new)'s conference presentation, May 27, 2015
Slide 1: Bernstein Strategic Decisions Conference
Bernstein Strategic Decisions Conference May 27, 2015 Information contained herein is as of March 31, 2015 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
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,” “we,” “us,” “our”). This presentation does not constit
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: $162.9bn(2) $40.5bn AUM $112.9bn AUM $9.5bn AUM Opportunistic buyouts U.S. Performing Credit Residential and commercial Employees: 869 Opport
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 this trend is likely to continue $250-300+ RE Billion Credit $163 Billion PE RE +$9bn RE $9bn Successor Scale Existing Credit PE Funds Strategies $41bn +$112bn $11 Acquisitions New Prod
Slide 5: Apollo / Industry Outperformance Is Still Not Fairly Valued
Apollo / Industry Outperformance Is Still Not Fairly Valued S&P 500 Traditional Mgrs(7) Alt Asset Mgrs(8) APO AUM CAGR(1) NA 7% 14% 24% Mgmt. Revenue CAGR(2) 4% 9% 15% 20% Dividend Yield (2016E)(3) 2.2% 2.8% 7.0% 9.2% Cumulative Cash Returns(4) 9% 14% 32% 55% P/E Multiple (2016E)(5) 16.0x 16.0x 10.3
Slide 6: Observations within the current market environment
Observations within the current market environment
Slide 7: Year in Review: Current Macro Dynamics Here to Stay?
Year in Review: Current Macro Dynamics Here to Stay? 2015 Forecasts: One Year Ago vs. Today United States Europe Asia World 3.0% 2.8% 1.5% 1.4% Japan: 1.3% 0.9% GDP Growth 3.6% 2.9% (Incl. UK: 1.8% 1.7%) China: 7.3% 7.0% Headline: 2.0% 0.2% 1.2% 0.1% Japan: 1.7% 0.8% Inflation 2.8%
Slide 8: Easing Goes Global and Accelerates
Easing Goes Global and Accelerates The US has proven itself as the leader in monetary policy through swift, effective and sizable QE – ECB’s QE rivals the size of the Fed’s easing programs relative to GDP Recent Easing Programs Central Banks Inject Unprecedented Liquidity $ Trillions To date, majo
Slide 9: QE Has Worked in the U.S.
QE Has Worked in the U.S. Consumer confidence is strong and has surpassed its pre-crisis peak Momentum in the housing market continues, although it remains 35% below long-term levels as well as below the pre-crisis peak(1) Consumer Confidence at Record Highs Housing is Recovering Consumer Confid
Slide 10: QE Projected to Stimulate European Economy
QE Projected to Stimulate European Economy To combat deflation, the ECB has begun easing with bond purchases starting in March 2015, with the effect of depreciating the Euro to generate exports – To date, the Euro trade-weighted index has declined ~15% over the past year, and is projected to decli
Slide 11: QE is Working in Europe
QE is Working in Europe Europe remains fragmented, with relatively stronger fundamentals in some economies (e.g., UK and Germany) offset by prolonged periods of contraction or no growth in weaker economies (e.g., France, Spain, Italy, Greece) GDP Growth Unemployment Inflation 2014 2015E 2014 2015E
Slide 12: The Fed's Conundrum
The Fed’s Conundrum Raise Rates: Delay Raising Rates: Risk Derailing Economic Recovery? Cause a Bubble? OR 11
Slide 13: The Fed's Conundrum (continued)
The Fed’s Conundrum (continued) On One Hand… …Yet on the Other Hand Strong Job Adds Accelerate Path to Full Employment(1) The Dollar Has Appreciated Over 10% in the Past Year(1) At the Current Rate of Job Adds, the U.S. is Projected to Reach Full Employment Index: The Stronger Dollar is Expected to
Slide 14: Market Conclusion: Zero Real Rate Environment Could Continue for Years
Market Conclusion: Zero Real Rate Environment Could Continue for Years To date, the Fed has kept rates at historical lows, and future hikes remain data dependent, with unemployment and inflation as key indicators Following the initial rate hike, expected in late 2015, the pace of hikes is expect
Slide 15: Globally, Rates are Low and Highly Correlated
Globally, Rates are Low and Highly Correlated Globally, rates remain at record lows, as three-quarters of world government bonds have negative real yields High correlation between global rates implies prolonged low-rate environment as global easing continues Global Real Yields… …Are Highly Corre
Slide 16: Buoyed by Low Rates, Equity Markets are Overvalued
Buoyed by Low Rates, Equity Markets are Overvalued… Valuations in the equity markets have surpassed their historical averages in the US and Europe, and are at or above their one standard deviation marks United States Europe 16x US Current: 12.3x 13x EU Current: 9.4x US Average: 10.5x EU Average: 8
Slide 17: And Credit Markets are at Record Lows
And Credit Markets are at Record Lows A rally in the credit markets has driven yields to all-time lows in the US and Europe – Yields have recently spiked given oil price volatility, although defaults have been benign United States Europe 25% US Current: 5.9% 25% EU Current: 4.5% US Average: 7.8% E
Slide 18: Private Markets Are Fully Priced
Private Markets Are Fully Priced Private Equity valuations have reached 2007/2008 levels LBO leverage levels have likewise recently peaked at 6x in the U.S., their highest levels since the financial crisis – Recent retreat to 5.5x is likely due to leveraged lending regulations U.S. LBO Purchase
Slide 19: Economic Recovery in the U.S. is Aging
Economic Recovery in the U.S. is Aging We are now ~6 years into an aging recovery Length of Prior U.S. Business Cycle Expansions 1945-1948 1949-1953 1954-1957 1958-1960 1961-1969 1970-1973 1975-1980 1980-1981 1982-1990 Average of Last Three Recoveries: 8 years 1991-2001 2001-2007 Current Expansion
Slide 20: So how is Apollo positioned within this backdrop?
So how is Apollo positioned within this backdrop?
Slide 21: Seeing Pockets of Opportunity in a Variety of Places
Seeing Pockets of Opportunity in a Variety of Places European banks pulling out of the U.S. market coupled with new regulatory rules are Europe creating opportunities to lend capital against both new and existing assets Commodities / Stress created from volatility in commodity prices as well as
Slide 22: Given the Market Environment, We Have Been Net Sellers
Given the Market Environment, We Have Been Net Sellers We have taken advantage of the market environment to actively monetize our portfolio while investing in attractive opportunities Apollo Private Equity Activity Since the Beginning of 2012 ($bn) Investing Harvesting 6.0x Average Creation Multip
Slide 23: We are Disciplined, Value-Oriented Buyers
We are Disciplined, Value-Oriented Buyers Apollo Private Equity Creation Multiple vs. Industry Multiple Investments and Commitments in 2014 – 1Q’15 Leighton Services 10.3x 9.9x (average purchase multiple) 9.5x 8.8x 9.1x 9.0x 8.0x 6.7x 6.1x 6.2x 6.0x 5.4x 5.7x 5.6x ($ bn) 2009 2010 2011 2012 2013 201
Slide 24: 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 $116 trillion Japan $30tn China $64 trillion $26tn + Six Other Public Alternative Asset Ma
Slide 25: In Credit, We're Creating Alpha Without Bearing Incremental Risk
In Credit, We’re Creating Alpha Without Bearing Incremental Risk Illustrative Apollo Investment Focus vs. Traditional Fixed Income 14% CLO Equity Apollo Investment Focus Traditional Fixed Income 12% Regulatory Capital Relief Opportunistic: Middle Market Trade Private Lending Loan 10% (B) US HY Bond
Slide 26: 25
25
Slide 27: 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
Apollo Global Management — Bernstein Strategic Decisions Conference 2015 on 6ix