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Valuation Framework – Apollo Global Management, Llc

Apollo Global Management, Llc · Mar 12, 2019 · 16 slides

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Slides

  1. Valuation Framework – Apollo Global Management, Llc – slide 1
    APOLLO GLOBAL MANAGEMENT, LLC (NYSE: APO) Apollo Global Management Valuation Framework March 2019
  2. Valuation Framework – Apollo Global Management, Llc – slide 2
    Valuation Framework: Sum-of-the-Parts (SOTP) FEE RELATED EARNINGS (FRE) VALUE Value FRE at a target price-to-earnings multiple that reflects growth & margin profile 1 90% of fee related revenues from management fees Growing base of…
  3. Valuation Framework – Apollo Global Management, Llc – slide 3
    1 FRE is a Predictable and Growing Earnings Stream (FRE1, mns) FRE margin 800 771 90% 700 CAGR 80% 23% 624 Elevated deployment- 600 related fees and continued 70% platform growth 530 500 60% Full year impact of 446 54% 420…
  4. Valuation Framework – Apollo Global Management, Llc – slide 4
    1 FRE Fundamentals Outperform Perceived Comparables Traditional Active Asset Managers1 Strong growth Revenue Growth (5-Yr CAGR: LTM 4Q13 LTM 4Q18)2 10% 2% AUM Growth (5-Yr CAGR: LTM 4Q13 LTM 4Q18) 12% 2% Longer dated and…
  5. Valuation Framework – Apollo Global Management, Llc – slide 5
    1 Triangulating an Appropriate P/E Multiple for FRE The fundamental metrics of Apollos Fee Related Earnings closely compares with sectors of the financial services landscape valued at much higher price-to-earnings (or P/E) multiples…
  6. Valuation Framework – Apollo Global Management, Llc – slide 6
    1 Valuing Fee Related Earnings 2019E Based on an average of sellside 2019E estimates for Consensus FRE per share1 2.11 each component of FRE1 Apollo expects FRE tax rate2 of approximately 15% Tax Rate 15% range over a multi-year…
  7. Valuation Framework – Apollo Global Management, Llc – slide 7
    2 Valuing the Balance Sheet Selected Component Balance Per Share at 12/31/18 (millions) Cash1 1,003 Debt (1,360) Preferred Equity (554) Net Debt (911) GP Investments in Funds2 1,129 Athene/AAA3 762 Total Investments4…
  8. Valuation Framework – Apollo Global Management, Llc – slide 8
    3 Performance Fees are a Series of Cash Flows with Value Key Points to Consider: We believe valuing performance fee cash flows in a discounted cash flow construct is the most appropriate valuation approach Over 28 years,…
  9. Valuation Framework – Apollo Global Management, Llc – slide 9
    3 Performance Fees Modeling Dashboard Below is a set of key assumptions that can be used to value Apollos performance fee income potential in a discounted cash flow construct Performance Fee Perf. Terminal Base Case Gross Profit…
  10. Valuation Framework – Apollo Global Management, Llc – slide 10
    3 Sensitizing Key Assumptions Provides Range of Perf. Fee Values Private Equity Performance Fee Value: 10 - 16 per share Combined Segments Private Equity Return / Gross IRR Assumption Return / Gross IRR Assumption 17% 20% 23% 26%…
  11. Valuation Framework – Apollo Global Management, Llc – slide 11
    Sum-of-the-Parts (SOTP) Valuation Summary FEE RELATED EARNINGS (FRE) VALUE 1 1.79 FRE per share after-tax 36 - 41 20-23x P/E multiple based on fundamentals Apollo deems comparable BALANCE SHEET VALUE 2 Net debt/cash plus…
  12. Valuation Framework – Apollo Global Management, Llc – slide 12
    Reconciliation of GAAP to Non-GAAP Measures ( in thousands) FY'14 FY'15 FY'16 FY'17 FY'18 GAAP Net Income (Loss) Attributable to Apollo Global Management, LLC Class A 168,229 134,497 402,850 615,566 (42,038) Shareholders Preferred…
  13. Valuation Framework – Apollo Global Management, Llc – slide 13
    Reconciliation of GAAP Net Income Per Class A Share to Non-GAAP Per Share Measures ( in thousands, except per share data where noted) FY'14 FY'15 FY'16 FY'17 FY'18 Net Income (Loss) Attributable to AGM Class A Shareholders 168,229…
  14. Valuation Framework – Apollo Global Management, Llc – slide 14
    Endnotes & 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…
  15. Valuation Framework – Apollo Global Management, Llc – slide 15
    Endnotes & Definitions EI represents segment income (loss) before income tax provision excluding transaction-related charges arising from the 2007 private placement, and any acquisitions. Transaction-related charges includes equity-based…
  16. Valuation Framework – Apollo Global Management, Llc – slide 16
    Endnotes & Definitions Net IRR of a real assets fund represents the cumulative cash flows in the fund (and not any one investor in the fund), on the basis of the actual timing of cash inflows received from and outflows paid to investors…

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