Apollo Global Management, Inc. (new) · NYSE:APO
Apollo Global Management, Inc. (new) — Apollo Global Management — Merger or Acquisition (March 2021)
48 slides from Apollo Global Management, Inc. (new)'s merger presentation, Mar 15, 2021
Slide 1: Apollo-Athene Merger Through Our Lens
Apollo-Athene Merger Through Our Lens March 15, 2021 Exhibit 99.1
Slide 2: Agenda
Agenda Introduction Apollo Retirement Services Strategic Rationale Merger Valuation
Slide 3: Introduction
Introduction APOLLO 3
Slide 4: Leading Alternative Asset Manager
Retirement Services LPs / Strategic Accounts Public Vehicles Capital Markets / Syndication Retail Channels Leading Alternative Asset Manager Yield $340bn AUM¹ Hybrid $30bn AUM¹ Opportunistic $85bn AUM¹ Most important 1,700+² global relationships NYSE: ARI / Nasdaq: AINV / Closed End Funds Apollo Cap
Slide 5: Business is driven by positive macro trends
Business is driven by positive macro trends… ~35% of total U.S. invested assets expect to be transferred between Generations over next 2 decades ~3x Demographic Tailwinds Need for Income ‘Indexification’ Wealth Transfer 10-Year Treasury Source: Investment Company Institute, Federal Reserve Economic
Slide 6: Growth is generally not limited by capital or liabilities
Growth is generally not limited by capital or liabilities Key to growth is continuing to source excess return at every point along the risk-reward spectrum
Slide 7: Significantly scale our front end to originate more assets
Significantly scale our front end to originate more assets across Yield, Hybrid and Opportunistic investment strategies Derive as much value as possible from assets we originate in a way that is consistent with our long-term strategy Capital to drive transactions Move faster to secure investment opp
Slide 8: Apollo
APOLLO 8
Slide 9: Apollo Business Overview
Apollo Business Overview Profitability from Fee Related Earnings, Performance Fees and Balance Sheet Earnings Key to growth = Generate excess return at every point along the risk-reward spectrum Fee Related Earnings ($mm) Total Assets Under Management ($bn) CAGR SINCE APOLLO IPO = 21% CAGR SINCE APO
Slide 10: Retirement Services
Retirement Services APOLLO 10
Slide 11: What does Retirement Services do?
What does Retirement Services do? Retirement Services offers a suite of investment products that provide principal protection and income to individuals planning for retirement, enabling them to meet their retirement goals and achieve greater financial security Profitability from investment spread ea
Slide 12: Retirement Services (Athene) Business Overview
Retirement Services (Athene) Business Overview Reflects Gross Invested Assets. 2021E based on 2020 actual multiplied by consensus 2021E net invested asset growth Consensus as of 3/5/2021 based on average of available research analyst projections. Mid-teens or higher return profile – driven by alpha-
Slide 13: Investment Spread Earnings Generation
Investment Spread Earnings Generation Yield on Assets (~95% fixed income, ~5% Alts) – Cost of benefits to customers – Overhead & operating expenses = Net Investment Spread 1 2 3 Advantages of Model: Investment spread is generally established concurrent with product issuance Spread income continues i
Slide 14: Retirement Services Capitalization Stands Out
Retirement Services Capitalization Stands Out 1. Athene metrics are net of non-controlling interest in ACRA. AA-/A+ Rated Companies metrics as of September 30, 2020 per SNL Financial. AA-/A+ Rated Companies are: PFG (A+), PRU (AA-), MET (AA-) and GL (A+). 2. Refers to adjusted debt-to-capital ratio
Slide 15: Retirement Services Generates Leading Organic Growth
Retirement Services Generates Leading Organic Growth 1 Net withdrawals consist of full and partial policyholder withdrawals, death benefits, pension risk transfer benefit payments and funding agreement maturities, net of the ACRA NCI. 2 Net organic flows are calculated as gross organic inflows less
Slide 16: Athene is Capitalized for Growth
Athene is Capitalized for Growth Excess Equity Capital $3.5bn Incremental Debt Capacity¹ 12.7% debt / capital at 12/31/20 vs. AA-/A+ rated companies at 25.1% 2.5bn Undrawn Strategic 3rd Party Capital (ADIP) 1.7bn Deployable Capital 2 $7.7bn Incremental Alts Capacity 3 3.1bn Dry Powder $10.8bn Untapp
Slide 17: Strategic Rationale
Strategic Rationale APOLLO v
Slide 18: Alignment from Merger: Well Positioned to Accelerate Growth
Alignment from Merger: Well Positioned to Accelerate Growth Two Separate Public Companies One Company, Fully-Aligned Model Strategic Partnership Fiduciaries to separate shareholder constituencies Meaningful time expended to navigate possible conflicts of interest Employee incentives heavily tied to
Slide 19: Win, Win, Win for Athene Customers, Apollo LPs and Shareholders
Win, Win, Win for Athene Customers, Apollo LPs and Shareholders Examples Leveraging Athene Participation 12/31/20 3rd Party AUM Run-Rate 3rd Party FRE Revenue1 Funds ~$11bn ~$60m Platforms ~$89bn ~$148m Products ~$11bn ~$113m Total ~$111bn ~$320m Hybrid Value Structured Credit Fund Family Financial
Slide 20: Strategic Acceleration
Strategic Acceleration Hybrid Value Infra Equity Structured Credit Financial Credit MidCap Redding Ridge Haydock Total Return High Grade Alpha ~$100bn of originations from 2019-2020 Athora Catalina Royalties Platforms Railcar Equipment Leasing Consumer Supply Chain Finance Funds Apollo Origination P
Slide 21: Apollo
APOLLO a
Slide 22: Apollo Issues Shares in Merger
Apollo Issues Shares in Merger 166m Apollo Share Price (Pre-Announcement 3/5/21) x $49.56 Consideration Value, gross $8.2bn Apollo Equity Held by Athene ($1.4bn) Apollo Stock Issuance, net $6.8bn Receive 100%¹ of Athene Retirement Services Earnings ÷ $1.1bn² ÷ $1.4bn² Implied Acquisition P/E Multipl
Slide 23: Unlocking Valuation Discount for All Shareholders
Unlocking Valuation Discount for All Shareholders ~$2.5bn¹+ of value generating $0 earnings (Athene Stake) Fully Consolidated Earnings Athene contract generates ~40% of AUM & ~30% of FRE revenue Fully Aligned Complex structure & governance Simple Structure Best-in-Class Governance ~100% of assets ma
Slide 24: Financial Accretion
Financial Accretion 2020A Consensus 2021E Standalone includes payment from Apollo to AOG unit holders in lieu of corporate tax. Pro forma assumes 18% tax rate and no corporate tax payment to AOG unit holders. Athene adjusted operating income excludes earnings on stake in Apollo. Pro forma consensus
Slide 25: Merger: What's Not Changing?
Merger: What’s Not Changing? Business as usual, with greater alignment than ever before Apollo Remains a Leading Alternative Asset Manager Apollo / Athene contract will remain in place Apollo’s 3rd party asset management business remains critically important LPs continue to remain the vast majority
Slide 26: Merger: What Is Changing?
Merger: What Is Changing? Before Pro Forma Apollo Aligned Growth Two separate growth businesses Accelerated growth, driven by front end + capital Apollo / Athene Contract Stability Perceived uncertainty Contract certainty 3rd Party Float¹ $9bn APO, $6bn ATH Greater liquidity: $15bn public float Mark
Slide 27: Anticipated Reporting Structure
Anticipated Reporting Structure Current Standalone Anticipated Pro Forma
Slide 28: Valuation
Valuation APOLLO 28
Slide 29: Sum-of-the-Parts Valuation Framework
Sum-of-the-Parts Valuation Framework Pre Merger Post Merger Fee Related Earnings Balance Sheet Performance Fees + + Fee Related Earnings Balance Sheet Performance Fees + + Retirement Services Earnings ATH Stake +
Slide 30: Analyst Estimate Pre-Merger Sum-of-the-Parts
Analyst Estimate Pre-Merger Sum-of-the-Parts Consensus 2021E¹ Metric ($m) Analyst Target Multiple Range Analyst Median for APO (21x)2 Analyst Median for Alternatives Industry (25x)3 Notes Fee Related Earnings (post-tax) $928 21-25x $19bn $23bn Average APO analyst multiple – average industry analyst
Slide 31: Apollo Comparison to Alternative Asset Managers
Apollo Comparison to Alternative Asset Managers Note: Market data as of 3/5/2021 1. Represents disclosed Fortitude AUM. 2. Indicates satisfying S&P 500 index single common share class requirement without use of super-voting preferred. 3. Represents median of selected available research analyst multi
Slide 32: Apollo Comparison to Alternative Asset Managers
Apollo Comparison to Alternative Asset Managers Represents disclosed Fortitude AUM Represents median of selected available research analyst multiples. Based on reports from Bank of America, Wells Fargo, Goldman Sachs, Morgan Stanley, Citi, and Deutsche Bank. Where applicable, 2021E FRE multiples are
Slide 33: Entire Industry is Undervalued
Entire Industry is Undervalued 2015 – 2020 Earnings¹ CAGR LTM EBITDA or FRE Margin2 Average * Market Data as of 3/5/2021 Source: Capital IQ Represents FRE for Apollo. Last twelve months ended 12/31/2020. Current* Trading P/E Multiple (2021E)
Slide 34: Where Should Retirement Services Be Valued?
Where Should Retirement Services Be Valued?
Slide 35: Retirement Services vs. Asset Lite & Asset Heavy Investment Product Specialists
Retirement Services vs. Asset Lite & Asset Heavy Investment Product Specialists AUM Growth (2016 – 2020 CAGR) EPS Growth (2016 – Consensus* 2021E CAGR) Average * Market data as of 3/5/2021. Athene consensus estimates per available research analyst reports. Investment product specialist consensus est
Slide 36: Athene vs. Other Financial Services Companies
1 Net organic growth for Athene defined as net organic inflows divided by average net invested assets. Note: Traditional Asset Managers include AMG, BEN, BLK, IVZ, FHI & TROW, Universal Banks include BAC, C, JPM, WFC, Trust Banks include BK, NTRS, STT, P/E Multiple based on Capital IQ estimates as o
Slide 37: Case Study: Athene Comparison to Global Atlantic
Case Study: Athene Comparison to Global Atlantic Business Mix (By Risk)1 Gross Invested Assets Growth 3 2020A Gross Organic Volumes 2 (1) Spread risk for Global Atlantic includes fixed rate annuities, fixed indexed annuities and funding agreements. Insurance risk includes life and separate account p
Slide 38: Case Study: Athene Comparison to Global Atlantic (cont'd)
Case Study: Athene Comparison to Global Atlantic (cont’d) Financial Strength Ratings & Operating Metrics1 2 Financial Leverage2 Asset Leverage2 (1) AM Best /S&P / Fitch. (2) Athene based on 12/31/20 or 2020. Global Atlantic based on 9/30/20 or YTD Q3 2020 annualized (latest reporting). (3) Adj. Oper
Slide 39: Conclusions
Conclusions APOLLO 39
Slide 40: Valuation Conclusion
Valuation Conclusion Bottom Line Two undervalued businesses, with three opportunities for re-rating Immediately financially accretive Combination accelerates growth Strong alignment, and best-in-class governance Meaningful strategic and growth uplift, with three opportunities for re-rating: Apollo i
Slide 41: Appendix
Appendix
Slide 42: Illustrative Example: Yield Business Model
Illustrative Example: Yield Business Model 1 1 Does not consider Athene scale. 2 Capitalization and returns assumptions intended as an illustrative example of Athene’s business model. There is no assurance that Apollo will achieve the results indicated. Asset Management Retirement Services 1 2 2
Slide 43: Definitions
Definitions Apollo discloses the following financial measures that are calculated and presented on the basis of methodologies other than in accordance with generally accepted accounting principles in the United States of America (“Non-GAAP”): “Segment Distributable Earnings”, or “Segment DE”, is the
Slide 44: Definitions
Definitions “Assets Under Management”, or “AUM”, refers to the assets of the funds, partnerships and accounts to which we provide investment management, advisory, or certain other investment-related services, including, without limitation, capital that such funds, partnerships and accounts have the
Slide 45: Definitions
Definitions Adjusted operating income (loss) available to common shareholders is a non-GAAP measure used to evaluate our financial performance excluding market volatility and expenses related to integration, restructuring, stock compensation, and other expenses. Our adjusted operating income (loss)
Slide 46: Disclaimers
Disclaimers About Apollo Apollo is a leading global investment manager with assets under management of approximately $455 billion as of December 31, 2020 in credit, private equity, and real assets funds. For more information about Apollo, please visit www.Apollo.com. About Athene Athene, through its
Slide 47: Disclaimers
Disclaimers No Offer or Solicitation This presentation is for informational purposes only and not intended to and does not constitute an offer to subscribe for, buy or sell, the solicitation of an offer to subscribe for, buy or sell or an invitation to subscribe for, buy or sell any securities or th
Slide 48: Disclaimers
Disclaimers Ratings Information. Apollo, its affiliates, and third parties that provide information to Apollo, such as rating agencies, do not guarantee the accuracy, completeness, timeliness or availability of any information, including ratings, and are not responsible for any errors or omissions (
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