APOLLO GLOBAL MANAGEMENT, INC (NYSE: APO) Apollo Global Management 2019 Investor Day November 7, 2019
Investor Day Agenda Thursday, November 7, 2019 Time Topic Presenter Gary Stein 8:00AM 8:05AM Introduction Head of Investor Relations Leon Black 8:05AM 8:25AM Welcome Remarks Founder, Chairman & Chief Executive Officer Scott…
Investor Day Agenda Thursday, November 7, 2019 Time Topic Presenter 10:45AM 11:05AM Break Scott Weiner & Skardon Baker 11:05AM 11:25AM Real Assets Senior Real Assets Partners Gary Parr & Gernot Lohr 11:25AM 11:45AM Insurance…
Welcome Remarks Leon Black 6
Strategically Well Positioned For Growth 1 2 3 4 5 Exceptional Integrated Unparalleled Proven Deep bench investment global permanent product of talent and financial platform capital vehicles innovation performance 7
Strong Record of Investment Performance 39% 8% 12% Gross IRR in Private Equity Since 1990 Gross Return in Credit Since 2010 Gross IRR In Real Assets Since 2009 (Net 25%) (Net 7%) (Net 10%) 25% 19% 8% 7% 12% 13% 5% 6% 7%…
Permanent Capital Vehicles are a Significant Competitive Advantage Permanent Capital Vehicles % Total AUM 83% +33% Long-Dated Capital 50% 17% 13% 10% Peer A Peer B Peer C Peers A, B and C represent publicly traded…
Innovation and Product Expansion Remains a Priority 2014 2019 42% AUM from new funds and strategies AUM AUM 164bn 323bn 58% AUM from funds and strategies which existed at 2014 Investor Day Note: 2014 as of 9/30/2014.…
Deep Bench of Talent Across the Firm 1,352 Employees in 15 Offices Across Our Integrated Global Platform Executive Committee 6 Professionals Management Committee 14 Professionals Leadership Advisory Forum 48 Professionals 78…
The Next 5 Years: Diversified Growth Fueled by Strong Fundraising and Strategic Initiatives 600 billion AUM Goal +20% AUM CAGR 323 billion AUM 250-300 164 billion AUM 70 billion AUM 2011 Apollo IPO 2014 Apollo…
Key Messages to Take Away from Today 1 2 3 APO sits squarely Our growth We are at the intersection trajectory of the significantly of value, growth last 5 years is undervalued and yield replicable over the next 5 years 14
Apollo Overview Scott Kleinman & Jim Zelter 15
Apollo Formula for Success 1 2 3 Secular Trends Favor Alternative Assets + Unique Business Model + Strong Execution by a Winning Team = Compelling Long-term Stockholder Returns 16
Financial Ecosystem: Yesterday Investors Capital Borrowers Pension Funds Corporations Endowments Growth Companies Foundations Financial Sponsors Family Offices Banks Hedge Alternative Funds Managers 17
Evolution of Three Macro Themes 1 2 3 Global Thirst for Evolution of Deleveraging of Yield Regulation Financial Balance Sheets 18
Financial Ecosystem: Today Investors Capital Borrowers Pension Funds Corporations Endowments Growth Companies Alternative Foundations Managers Financial Sponsors Family Offices Banks Banks Hedge Banks Hedge Funds Funds…
Search for Yield Global yields have fallen dramatically over the past 30+ years US 10-year German 10-year 14% 12% 10% 8% 6% 4% 2% -% (2%) 1985 1988 1992 1995 1998 2002 2005 2009 2012 2016 2019 Source: Bloomberg 20
Demographic Trends Accelerating Demand for Yield Average Funded Ratios 2001-2018 120% 110% 98% 100% 91% 92% 74% 80% 55% 60% 40% Top Third Middle Third Bottom Third 20% 0% 2001 2007 2013 2018 Source: Public…
Alternatives Have Outperformed Credit Equity 5 Year 10 Year 16% 13% 11% 11% 8% 9% 8% 5% 3% 4% Barclays Corporate Private Public Private 2 3 4 5 Agg 1 HY Credit Equities Equity Note: Bloomberg as of October 2019. 1…
Pensions Continue to Increase Allocations To Alternatives 26% 19% 7% 1998 2008 2018 Willis Towers Watson Global Pension Assets Study 2019; % of total assets within Alternatives represented above. Alternatives defined as…
Regulatory Environment Is Also a Tailwind For Alternatives Bank % Share of Leveraged Loan Market 60.0% Dodd-Frank Large Bank 52% / Volcker Supplementary Rule Leverage Ratio 50.0% Solvency II 40.0% 30% 30.0% Basel III…
Within Alternatives, Consolidation To Top Managers LPs have deepened their relationships with Apollo 5 Years Ago Today 90 170 LPs with 5 or more LPs with 5 or more fund mandates fund mandates 25
We Have A Differentiated Business Model and Investing Style What makes our culture Apollo-esque Value for investors Contrarian Collaborative Innovative 26
Finding Value Across Market Cycles to Drive Innovation 20072009 20102013 20142019 Global Financial Crisis Bank Regulation, Shrinking Balance Evolving Markets & Capital Requirements, & Bank De-leveraging Sheets, Compressed Yields…
Capabilities to Dynamically Pivot Based on Market Conditions PUBLIC PRIVATE PRIMARY SECONDARY ORIGINATION 28
Firmwide All-Weather Approach To Create Value Across Cycles Early Mid Cycle Late Cycle Recession Cycle Economic Output below potential, Output near potential, Output above potential, Backdrop Output contracting rising rising…
Integrated Platform Drives Growth and Innovation Retained tight-knit culture from PE-focused origins through Collaborative Culture growth into leading global asset manager Leverage Institutional Culture encourages sharing of…
Product Innovation Has Been Instrumental to Our Growth (AUM in billions) CAGR 323 20% 280 249 192 161 160 170 113 75 54 68 44 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 3Q19 and prior Hedge CLO Closed-end…
Access to Permanent Capital Vehicles Drives A Virtuous Circle of Growth Assets + Demand Insurance Platforms Origination Platforms Grow Expand Insurance Yield Platforms Origination Capabilities PK Air1 Franchise Growth + M&A…
Corporate Structure Reflects The Critical Role of Collaboration Executive Committee Management Committee Cross representation among committees to support communication across the platform for investing activities, strategic…
Extensive Management Experience & Mentorship Model Apollo knowledge and experience transfer through mentorship model Successful expansion into adjacent areas through targeted senior hiring 36 Years 31 Years 26 Years Executive…
What Defines Apollo Culture Senior Disciplined Proven ability to Integration across Opportunistic Leadership has investment and embrace all products and culture 25+ average firm operations complexity where geographies committed to…
Elevating and Attracting Great Talent at Apollo Recent Promotions Recent Senior Hires Matt Nord David Sambur Matthew Breitfelder Lauren Coape- Dylan Foo Jeffrey Jacobs Aaron Miller Co-Lead Partner, Private Co-Lead Partner, Private…
Alignment Is Central To Our Business 1 Alignment with LPs Co-invest & Performance Fees 2 Alignment with Stockholders Stock Ownership 3 Alignment across the Platform Global Carry Program 37
Apollo Formula for Success 1 2 3 Favorable Secular Trends for Alternatives + Unique Business Model + Strong Execution by a Winning Team Compelling Long-term Stockholder Returns Sustainable AUM growth Industry-leading…
Apollo As A Solutions Provider Marc Rowan 39
Apollos Businesses Can Be Viewed Through a Yield and Opportunistic Perspective Yield Portfolio Opportunistic Capital Liquid Credit Private Equity Structured Credit Opportunistic Credit Direct Origination Real Estate Equity…
Apollos Shift Trade Finance Real Assets Superior Market Credit Aircraft High Yield Bonds Equipment Finance Net Lease Leveraged Loan Corporates Consumer Mortgage Performing Liquid 41
Why Do We Like Origination Current On The Margin Spreads8 Direct Origination Advantages 280 250-300 bps bps Senior secured 200-275 bps Full due diligence access Control over credit documentation / 125-175 covenant protections…
Trend is our Friend Employee dissatisfaction Required Limited Competition at big banks Skillset Bank 1 Ownership of 18,000 planned origination business job cuts vs. + Bank 2 Cutting 90m Apollo PE track record Expenses in…
Yield Business Built Around Permanent Capital Vehicles and Client and Yield Solutions AUM billions 178 117 85 64 71 60 60 16 9 1 2 1 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 YTD Athene Athora ADIP 1…
Industry Looking to Shed Liabilities While Also Increasing Risk to Achieve Returns Rapid pace of divestitures while dividends have increased 12.6 in billions Reinsurance of 13bn of annuities Total Dividends and Sale of Aegon…
Total Equity Raised by Insurance Industry billions 5.7 5.4 1.8 1.6 1.0 0.8 0.4 0.1 0.0 0.0 0.1 0.1 2014 2015 2016 2017 2018 2019 Apollo Insurance Capital US and European Primary Equity Issuance Source: Bloomberg,…
Athene and Athoras Future: Poised for Growth Invested Assets billions - Athene - Athora - Vivat 788 & Invested Assets 246 193 178 126 1 Swiss Re Apollo Zurich Munich Re Berkshire Hathaway Note: As of September 30,…
Financials Overview Martin Kelly 48
The Apollo Financial Story 1 2 3 4 5 Consistent Recurring, Exceptional Strong liquidity C-Corp growth across durable and margin and free cash conversion economic diversified expansion flow facilitates cycles earnings generation…
We Have Grown at a Robust Pace Since Our IPO Asset Under Management ( in bn) Fee-Generating AUM ( in bn) 323 21% 20% 243 CAGR CAGR 75 58 2011 3Q19 2011 3Q19 FRE Revenues ( in mm) FRE Per Share ( per share) 1,611 24%…
Management Fee Revenue Anchored By Permanent Capital Vehicles and Long-Dated Capital 83% of Our AUM is in Permanent Capital Vehicles or is Long-Dated billions Permanent Capital Vehicle AUM 7+ Year Duration 5-7 Year…
Management Fees Have a Very Low Sensitivity to Certain Market Movements 50% 50% no sensitivity to market movements some sensitivity to market movements APO Annualized Impact on Management Fees Market Move % of Management Fees1…
Management Fee Streams Are Expected To Be Resilient Through a Recession 83% AUM Fee permanent Potential 50% of fees not sensitive Fee capital Fee Duration vehicles or Impact to markets Sensitivity long-dated Recession Impacts…
Advantages of Permanent Capital Vehicles 1bn Capital 10bn Investments 35mm Management Fees 300mm+ Value Focus on investing and New capital additive from No forced liquidity recycling capital first dollar 56
We Have Grown FRE at 24% CAGR Since 2011 CAGR Key Drivers: 1,611 13% FRE Revenues 24% FRE 1,423 Operational 1,148 1,218 excellence 1,032 999 ROI focused 856 794 Margin driven 608 7% Comp 172 5% Non-Comp…
Significant Margin Expansion Across Segments FRE Margin 2011 LTM 2019 Increase in Margin Private Equity 37% 58% +21% Credit 26% 59% +33% Real Assets -4% 42% +46% Past performance is not indicative, nor a guarantee, of…
Non-Comp Has Driven Operating Leverage As Well FRE Non-Comp Ratio1 Managing Costs and Achieving Synergies Leveraging Technology 29% Expense Accountability 16% Non-US Strategy 2011 2012 2013 2014 2015 2016 2017 2018 LTM…
Robust Business Planning Approach Drives Visibility In Financial Performance Collaborative effort, bottoms up approach 1 2 3 Long-Term Plan Annual Budgeting Monthly 5-year planning Process Reforecasting cycle Zero-based cost Firm…
FRE Has Become A Greater Proportion of Earnings FRE % Pre-Tax DE 35% 34% 16% 31% 69% 83% 63% 81% 91% Normalized through 917 realization cycle: 771 60-70% 624 530 446 420 300 299 172 FRE(1) 2011 2012 2013 2014 2015 2016…
Performance Fees Should Also Expand Meaningfully Through A Realization Cycle 131bn Performance Fee 60bn Eligible AUM 2010 Q3'19 1.75 - 2.25 1.28 Average Annual Net Realized Performance Fees Per Share 2011-2018 2020E -…
Strong Liquidity and Free Cash Flow Generation Earnings Profile Underpinned by Growing Fee Related Earnings Realized Performance Distributable Earnings Fee Related Earnings Income AUM Growth Realized Performance Fees Drives…
Balance Sheet Light With Ample Liquidity Balance Sheet and Liquidity 2.1 billion Balance Sheet Light GP & Other Balance Sheet Investments A/A Rated by S&P and Fitch Highly Rated 1.8 billion Total Cash, Cash Equivalents and…
C-Corporation Conversion and Index Inclusion Expectation Potential Passive Ownership1 Post-Conversion Our Shareholder Base is Transforming (as We Expected). Index Family New institutional investors CRSP (Vanguard) 6-7% Large,…
Our Shareholder Base Has Changed Meaningfully Since C-Corp Conversion 54% Increase in Share Ownership from Long Only and Passive Investors Since Conversion June 30, 2019 October 25, 2019 Passive 10% Broker / Broker / Swap…
The Apollo Financial Story A scaled franchise with Strong financial management durable capital and resilient creates exceptional operating fee streams leverage High cash flow yield off strong Innovation and ability to pivot…
Private Equity Matt Nord & David Sambur 70
Apollo is an Established Leader in Private Equity Private equity has been a cornerstone of Apollos business since its founding in 1990 160+ Natural Resources 6.0 Hybrid Capital 9.1 portfolio companies since inception 78bn…
The Business is Well-Positioned for Continued Growth Industry Geographic Innovation in AUM & FRE Growing Flagship Business + = Strategies Expansion New Products Growth ANRP AION Fund VII 14.7 billion (Natural Resources) (India)…
With a Longstanding Track Record of Industry Leading Returns Flagship Private Equity Fund Performance: 39% Gross & 25% Net IRR Since Inception (1990) 39% 20% 19% 25% 18% 16% 16% 13% 11% 12% 10% 5% 3% 4% Barclays…
Achieved Through our Differentiated Investment Approach Assist in Integrated Conservative Ability To Willingness to Improving Model Across Underwriting Invest Across Tackle Company Private Equity, and Focus on the Cycle /…
We Utilize Multiple Strategies to Source Opportunities Across Market Cycles Flagship Private Equity, Natural Resources, AION Hybrid Value Opportunistic Buyouts Corporate Carve-Outs Distressed Capital Solutions and Structured Equity…
Proven Toolkit To Drive Value Creation Post-Acquisition Help with Portfolio Ability to Attract Implementing Business Focus on Technology Help to Optimize Management & Leading Management Optimization and Cost and Innovation across…
Apollo has a Longstanding Commitment to ESG Apollo has been an institutional leader of ESG for more than a decade 815,230,095 21,000+ 375+ Number of Portfolio Companies Reporting donated by portfolio companies individual ESG data…
Economic Contribution of U.S. Private Equity Sector Employment 8.8 million workers employed (6% of total workforce) 623 billion in wages and benefits in aggregate Wages & Benefits 71,000 average wages and benefits earned 36…
Investments are Created at Lower Multiples and Utilize Less Leverage Fund VIII Snapshot Fund VIII Was Bought Well Fund VIII Created at Attractive Multiples Total Fund 5x 18.4 Billion 10.5x Commitments Discount to Market Vintage…
Downside-Protected Value Creation for Fund VIII Creation Multiple Net Leverage MOIC 5.7-6.5x 3.5x 1.0x At Creation TEV / Adj. EBITDA Net Debt / Adj. EBITDA At Entry Invested Capital Post / Pre-Cost Savings Conservative 0.5x of…
Our Largest Private Equity Portfolio is Entering the Monetization Cycle Early Days, But Fund VIII Monetization is Underway August 14, 2019 Announced pending sale to BC Partners October 4, 2019 July 18, 2019 March 10, 2017 IPO at…
We Are Strategically Expanding, While Staying True To Our Value Orientation At IPO in 2011 2019 Future Growing Flagship Fund VII Fund VIII Fund IX Flagship Flagship Private Equity Funds 14.7 billion 18.4 billion 24.7 billion…
Apollos Market Leading Private Equity Business Well- Differentiated Longstanding Growing Strong, Positioned, Investment and Platform with Consistent Defensive Strategy and Experienced Expansion into Track Record Portfolio with…
Credit Anthony Civale & John Zito 84
Apollos Credit Business Has Grown At An Exceptional Pace Assets Under Management ( billions) Fee Related Earnings ( millions) 30% 35% CAGR CAGR 208 471 28 46 2011 9/30/2019 At IPO - FY '11 LTM Q3'19 Past performance is not…
Growth Has Been Diversified And Has Created Significant Scale Diversified Scale Assets Under Management ( billions) 28 Distinct Asset Top 5 Classes Insurance Counterparty Advisory / 4,000+ Covered Other 28 Corporate Issuers…
Strong Outperformance Across Asset Classes Annualized Gross Returns vs. Market Indices from January 1, 2010 to Today Market Indices Apollo 8% Total Apollo Credit Platform Returns1 8% 5% Gross Return3 300bps of Outperformance…
Risk Mitigation Is Key to Our Outperformance Annualized Historical Credit Losses Given Default CLO Liabilities 0 bps RMBS + RMLs 1 bps Emphasis on Capital Corporate Fixed Income 1 bps Preservation While Apollo CRE Debt 8 bps…
What Makes Apollo Credit the Leading Alternative Yield Investor 1 2 Breadth & Scaled, Flexible, Proprietary Patient Capital Origination Direct Origination 3 4 Unrivaled Growth & Team Innovation 89
Most Of The Assets We Manage Target 10% Returns Or Less Yield AUM 124bn 90% of Credits AUM is 184bn of 60bn comprised of yield Yield AUM 24bn investment strategies < 5% 5% - 10% 10% Liquid Apollos Yield Capabilities Originated /…
Origination Engines: A Strategic Differentiator Origination Engines: A Strategic Differentiator Commercial Finance Structured Credit & Residential Aviation Finance Real Assets Joint Ventures Bank JVs PK Air 1…
Patient, Flexible Capital at Scale Allows Apollo to Invest Across the Entire Credit Risk-Return Diversity of Capital Spectrum Full suite of financing solutions NAIC Regulated Capital < 4% Target Returns 15%+ Capital Structure…
Apollo Culture Permeates Credit Business Credit Partners average 27+ years Integration with PE and Real of investing experience Assets professionals Deep sector expertise and global Disciplined Investment Process network of…
Innovation is in Apollos DNA Multi-Sector Credit Origination Platforms Market Opportunity / Persistent, Low Rate Environment Changes in banking business creating Catalyst Driving Investor Search for Yield opportunity for non-bank…
Seizing Market Opportunity Ability to Maintain Value-Oriented Approach to Investing and Tackle Market Complexity Market Opportunity / Catalyst Innovation Driving Growth Strategic Growth ( billions) Growth of CLO Franchise 30…
Looking Ahead 96
Key Themes Driving Apollo Today 1 2 Risk Management is Focus on Growth: Paramount: Emphasis on Insurance and Private Capital Preservation Credit 97
Risk Management: Focus on Capital Preservation 64% Permanent Capital Vehicles Liquidity 8bn+ of Dry Powder 4,000+ Issuers Covered Diversification No Single Issuer 37bps1 No Single Sector 4.6%1 78%+ Senior Secured Structure 60%…
Power of the Platform Innovative Alternative Yield Investor Best-in-Class Yield Asset Origination Fuels Our Ability to Grow Strategic Increasing into New Businesses Relationship Permanent With Capital Vehicle Competitive…
The Privatization of the Credit Markets Should Remain A Tailwind Size of Market 2014 2019 Est. 2024 Direct Lending 200bn 400bn 1tn+ Investment Grade Private Placement 60bn 100bn 200bn+ Structured Credit 500bn 1.1tn 2.5tn+…
Looking Forward How Apollo is Innovating and Creating Alpha in Todays Market 2019 Private Credit: Direct Insurance Origination Platforms Lending Market Continued insurance Increase in low cost capital Credit market…
Conclusion Largest Captive and Alternative Patient and Deep Bench Financial Differentiated Proven Credit Flexible of Credit Discipline Origination Product Platform with Capital Professionals and Focus on Strategies Innovation…
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