Apollo Global Management, Inc. (new) · NYSE:APO
Apollo Global Management, Inc. (new) — Apollo Global Management — Investor Day (November 2023)
119 slides from Apollo Global Management, Inc. (new)'s investor day presentation, November 2023
Slide 1: Platform Origination Deep Dive
Platform Origination Deep Dive Apollo Global Management November 2023
Slide 2: Forward Looking Statements and Other Important Disclosures
Forward Looking Statements and Other Important Disclosures In this presentation, references to “Apollo,” “we,” “us,” “our” and the “Company” refer collectively to Apollo Global Management, Inc. and its subsidiaries, or as the context may otherwise require. This presentation may contain forward- look
Slide 3: Welcome Remarks
Welcome Remarks NOAH GUNN Global Head of Investor Relations
Slide 4: Apollo's North Star is Focused on a Singular Goal
Apollo’s North Star is Focused on a Singular Goal What? For Whom? Provide excess returns to A growing market driven our clients on a risk- by the need for alpha and adjusted basis retirement income 4
Slide 5: Key Objectives for Today's Presentation
Key Objectives for Today’s Presentation Illuminate Identify Illustrate Market trends leading Uses of excess return How origination to the proliferation of to power Athene, build drives excess return private credit market share, and split and creates value for with other investors shareholders 5
Slide 6: Platform Origination Deep Dive Agenda
Platform Origination Deep Dive Agenda TIME TOPIC PRESENTER ROLE 1:30 PM – 3:00 PM Welcome Remarks Noah Gunn Global Head of Investor Relations Origination Platform Strategy Chris Edson Global Co-Head of Apollo’s Financial Institutions Group MidCap Financial Howard Widra Global Head of Direct Originat
Slide 7: Origination Platform Strategy
Origination Platform Strategy CHRIS EDSON Global Co-Head of Apollo’s Financial Institutions Group (FIG)
Slide 8: Key Origination Platform Themes
Key Origination Platform Themes 1 2 3 Origination for Apollo There is an ongoing Apollo has spent helps power Athene & generational shift in 10+ years & billions of grow Apollo credit markets dollars building a large origination ecosystem 4 5 6 We are primarily focused on We have a long track We bel
Slide 9: What Do Origination Platforms Do For Apollo?
What Do Origination Platforms Do For Apollo? Equity Platform Equity Investments Targeting a Spread Related Deployment Downside-Protected Low-to-Mid Teens ROE Earnings (SRE) Debt Origination Ecosystem Creates “Flow” of Yield Spread Related Deployment Assets Targeting 100-200bps of Excess Spread Earni
Slide 10: Excess Spread Drives a Flywheel Effect for our Retirement Services Business
Excess Spread Drives a Flywheel Effect for our Retirement Services Business Increased origination with excess spread More Higher yields origination on annuity demand products Additional annuity originations 10
Slide 11: Apollo's Differentiated Model Positions Us to Manage Private Credit at Scale
Apollo’s Differentiated Model Positions Us to Manage Private Credit at Scale Long Duration ~$260B of AUM Liabilities Large Scale Balance + third-party domestic Sheet and global insurers, pensions, and other High-Grade Focus institutional investors Data as of September 30, 2023. 11
Slide 12: Clients are Seeking Fixed Income Replacement
Clients are Seeking Fixed Income Replacement Growing U.S. Retirement Age Population…1 …With Less Guaranteed Retirement Income 2 48% 48% % of U.S. retirement assets held in defined benefit pension plans 31% 35 MILLION 55 MILLION 80+ MILLION 2000 2020 2040E 2000 2Q'23 EMPOWERING THE GROWING POPULATION
Slide 13: Generational Shift Away from Traditional Banking Model
Generational Shift Away from Traditional Banking Model Strengths of the Traditional Financing Model Traditional Banking Model: Borrowers Lenders Low funding costs Provide critical client services – L ARGE deposits, cash management COMPANIES Efficient holders of short-term assets CAPITAL MARKETS Effi
Slide 14: What Is the New Model for Private Credit?
What Is the New Model for Private Credit? • Private Credit Providers include Insurance Companies, Pension Funds, & Other Institutional Investors • Typically have long-duration BANKS PRIVATE liabilities or are primarily equity CREDIT funded PROVIDERS • Do not take deposits or handle cash management /
Slide 15: Some Think of Private Credit as Leveraged Lending
Some Think of Private Credit as Leveraged Lending… “ “ Total private-debt AUM exceeded The boom in private credit, a fast-growing $1.2 trillion as of the end of 2022, and $1.5 trillion corner of Wall Street born during firms raised more than $200B for new funds an era of ultralow interest rates, is
Slide 16: We View Private Credit as A Much Larger Market
…But We View Private Credit as A Much Larger Market Fund Finance Supply Chain Finance Music Royalties Corporate Loans Equipment Finance Inventory Finance Auto Loans ~$ 1.5 Private ~$40 Home Improvement Middle Market Residential Mortgages Credit TRILLION Sponsor THEN NOW TRILLION ADDRESSABLE CRE Debt
Slide 17: Private Credit Takeaways
Private Credit Takeaways The Private Credit Market is Large – We are Focused on Areas with Attractive Risk / Reward The Majority of Private Credit Across Apollo is Investment Grade Origination Ecosystem is Primarily Focused on Asset-Backed Finance 17
Slide 18: Asset Backed-Finance Historical Loss Performance
Asset Backed-Finance Historical Loss Performance Market Losses by Asset Class (2001-2020)1 RATING PUBLIC CORPORATES CLO OTHER ABS PRE-CRISIS (2001-2010) AAA 0.00% 0.00% 0.00% AA 0.05% 0.00% 0.03% A 0.11% 0.02% 0.08% BBB 0.32% 0.22% 0.63% BB 0.85% 0.31% 2.57% B 3.00% 1.60% 9.75% POST-CRISIS (2011-202
Slide 19: Key Characteristics of Asset-Backed Finance
Key Characteristics of Asset-Backed Finance Diversified Self- Typically Amortizing Multiple Collateral Pool Liquidating Bankruptcy Structure Covenants Remote & Triggers 19
Slide 20: Apollo's Asset-Backed Finance Franchise
Apollo’s Asset-Backed Finance Franchise Key Differentiators of Apollo’s 13+ years $200B+ 28+ 200+ Diversity Flexibility of ABF investing asset-backed origination total with asset types including with varying strategies ABF Franchise experience originations to date1 partnerships origination relations
Slide 21: Apollo Has A Demonstrated Track Record Investing in Asset-Backed Credit
Apollo Has A Demonstrated Track Record Investing in Asset-Backed Credit Cumulative Annualized Asset-Backed Pillar Deployment Loss Rate1 Consumer Finance $4 billion 0.4bps Residential Mortgage $44 billion 0.5bps Commercial Mortgage $64 billion 2.0bps Hard Assets $24 billion 1.6bps Financial Assets $7
Slide 22: What Is An Origination Platform?
What Is An Origination Platform?
Slide 23: Components of An Origination Platform
Components of An Origination Platform Platform Building Blocks Finished Product Balance Sheet / Standalone Funding Company Structure Repeatable Origination of Yield Value-Add Established Products Track Record Assets with Excess Return on a Risk- Established Employee Base Adjusted Basis – Credit: Ori
Slide 24: What Type of Products Do Origination Platforms Offer?
What Type of Products Do Origination Platforms Offer? Homes Travel Commute Financed by Aircraft Financed Mortgages Financing with Fleet Leases Food Purchases Offices Technology Franchise Consumer Point-of-Sale / Financed by Commercial Inventory Finance Home Improvement Real Estate Debt Financing 24
Slide 25: Definition of a Platform Investment
Definition of a Platform Investment Traditional Fund Investments Apollo Platform AAA Third-Party Debt sold to AA We invest in all Financing third parties A tranches of debt BBB and the equity BB Only invest in EQUITY EQUITY equity tranche Transitory fund Permanent capital / long-duration Dependent o
Slide 26: Platforms Help Us to Manufacture Excess Spread
Platforms Help Us to Manufacture Excess Spread in a World Where Alpha is Scarce Investment Grade Investment Universe current on the margin spreads (bps) Apollo Direct Origination Platforms ~100-200bps of Excess Spread ~150 PUBLIC IG ATL AS SP PK AIRFINANCE ELIANT MIDCAP WHEELS AQUA FINANCE 1 CORPORA
Slide 27: Apollo Has Spent 10+ Years and Billions Building a Platform
Apollo Has Spent 10+ Years and Billions of Dollars Building a Platform Origination Ecosystem DRIVERS OF SECULAR CHANGE Bank De-Levering Asian Real Estate Market Rising Interest Rates Non-Core Assets Dislocation and Distress Continued Stress Among and Increasing Incumbent Insurers and Bank Regulation
Slide 28: Apollo's Origination Platforms
Apollo’s Origination Platforms 16 proprietary asset ~$8B equity capital invested ~$130B AUM 30+ product offerings across ~3,900 origination origination into platforms over across the full breadth of our platform platforms past decade platforms1 origination capabilities employees Note: Represents all
Slide 29: Portfolio Comprised of Sixteen Individual Origination Platforms
Portfolio Comprised of Sixteen Individual Origination Platforms Origination Platform Description 1. MIDCAP US-focused middle market lender Warehousing and securitized products platform Commercial 2. ATL AS SP 3. REDDING RIDGE CLO & structured finance platform & Trade Finance 4. ELIANT Trade finance
Slide 30: Global Ecosystem of Asset-Backed Originators
Apollo Has Built an Attractive Global Ecosystem of Asset-Backed Originators An expansive platform of origination, providing world class services to our customers, policyholders and partners ~3,900 Today, the origination platforms have almost 4,000 employees, originating and servicing GL OBAL MANAGEM
Slide 31: Apollo Has Over One Thousand Employees Involved in the Origination Ecosystem
Apollo Has Over 500 Employees Involved in the Origination Platform Ecosystem One • M&A • Credit Research • Asset Experts • Credit Structuring • Credit Ratings • Operations and Technology • Insurance Solutions • Insurance Regulatory • Government Solutions • Tax • Legal • Hedging • Accounting • Client
Slide 32: How Do We Think About Risk?
APOLLO How Do We Think About Risk?
Slide 33: What Are the Key Risks and What Has Gone Wrong in the Past?
What Are the Key Risks and What Has Gone Wrong in the Past? Liquidity Credit Risk Risk Near-Term Longer-Term Impact Impact 33
Slide 34: Mitigating Liquidity Risk With Long-Duration Insurance Liabilities
Mitigating Liquidity Risk With Long-Duration Insurance Liabilities Traditional Model Apollo Strategy ~5-10 Years ~5-10 Years ~5-10 Years Short-Term ASSET ASSETS LIABILITY LIABILITIES ASSET ASSETS LIABILITY LIABILITIES DURATION DURATION DURATION DURATION Commercial Paper Long-Term Insurance Liabiliti
Slide 35: Credit Loss Experience Has Been Minimal Over Long Periods of Time
Credit Loss Experience Has Been Minimal Over Long Periods of Time ANNUALIZED PLATFORM TRACK RECORD 1 CREDIT LOSSES 2 Why have losses been so low? 15+ years < 1 bp High-grade focus 22 years 9 bps Over-collateralization Credit documentation control 20 years 16 bps Full due diligence access 20+ years <
Slide 36: Comprehensive Risk Monitoring for Origination Platforms
Comprehensive Risk Monitoring for Origination Platforms A broad network of risk officers and credit professionals who monitor Apollo origination platforms, supplementing Credit Risk Team dedicated CROs within each company Platform Chief Risk Officer Portfolio Risk Checklist Match funded balance shee
Slide 37: Where Do We Go From Here?
APOLLO Where Do We Go From Here?
Slide 38: Platforms Are an Important Component of Our Debt Origination Capabilities
Platforms Are an Important Component of Our Debt Origination Capabilities Debt Origination Volume ~$150B+ ~$95B ~$80B ~$35 ~$50B ~$40 ~$15 ~$25 ~50% ~$15 ~$5 ~$45 ~$20 ~$25 LTM 2Q'20 INVESTOR DAY 2023E 2-3 YEAR TARGET (LTM 2Q'21) (2026E) PLATFORMS HIGH-GRADE ALPHA TRADITIONAL Note: Previously commun
Slide 39: Platforms Are in Different Stages of the Growth Curve
Platforms Are in Different Stages of the Growth Curve $ 0-2 B AUM $ 2 B - $ 10 B AUM $ 20 B+ AUM ORIGINATION VOLUME AND EQUITY VALUE Note: Represents total assets managed at the origination platform level, which may deviate from total assets reported in Apollo’s Assets Under Management. 39
Slide 40: Growth Opportunity From Scaling Our Existing Portfolio is Significant
The Growth Opportunity From Scaling Our Existing Portfolio is Significant ORIGINALLY 1 TODAY FUTURE ~$3B ~$48B of AUM (2013) of AUM ~$2B ~$9B of AUM (2020) of AUM Significant $0B ~$2B of AUM (2021) of AUM Organic ~$60B ~$40B 2 Growth of AUM (2021) of AUM Opportunity $0B ~$23B of AUM (2016) of AUM De
Slide 41: Plenty of Potential Avenues of Platform Growth Ahead
There Are Plenty of Potential Avenues of Platform Growth Ahead Commercial Transportation Trade and Supply Consumer & Finance Chain Finance Financial Services Floorplan finance, vendor finance, Accounts receivable, Residential mortgages, leveraged & asset-backed, Fleet / other transportation supply c
Slide 42: Three Key Reasons Institutions Invest Alongside Us
Three Key Reasons Institutions Invest Alongside Us Alignment Track Record Risk / Reward “25% of everything Low historical Generating excess 100% of nothing” credit losses return per unit of risk 42
Slide 43: Our Business Complements the Banking System
Our Business Complements the Banking System Apollo Banks “ASSET FOCUSED” “CLIENT FOCUSED” Originating & Holding • Strong Origination Long-Duration Assets • Deposit Taking Generating Excess Spread • Client Retention • Attractive Funding for Short-Term Assets • Product Cross-Sell Relationships … with
Slide 44: The Apollo Ecosystem Benefits From Participation Across the Board
The Apollo Ecosystem Benefits From Participation Across the Board Executed scaled capital solution with speed and certainty for PacWest amid a regional banking crisis with ATLAS SP Sales leads generation Origination from MidCap & Wheels Platform for Capteris Network of aviation Large Direct relation
Slide 45: Apollo Remains Only a Small Part of the Global Credit Ecosystem
Apollo Remains Only a Small Part of the Global Credit Ecosystem Select Financial Company Assets $ TRILLIONS ~14X $10 APOLLO’S SIZE $9.1 ~7X $8 $7.2 APOLLO’S SIZE $6 OF WHICH $4 $4.6 ~$450B IS $4.4 CREDIT $3.6 $2 $2.4 $1.9 $1.7 $1.7 $0.6 $1.4 $1.0 -- BlackRock Vanguard J.P. Morgan Fidelity Bank of Ci
Slide 46: Key Takeaways
Key Takeaways 1 Private credit is a large market that is not just direct lending, but includes the broader economy 2 Apollo has spent 10 years building an origination ecosystem involving ~3,900 platform employees 3 We are focused on IG assets and asset-backed finance; Apollo has a long track record
Slide 47: MidCap Financial
MidCap Financial HOWARD WIDRA Global Head of Direct Origination, Apollo, and Co-Founder, MidCap
Slide 48: MidCap is a Leading Specialty Finance Company Serving the Middle Market
MidCap is a Leading Specialty Finance Company Serving the Middle Market Business Highlights $48B $14B+ 20+ yrs 2008 Middle market-focused specialty finance firm that provides senior debt solutions Commitments Assets Originated Senior Leadership FOUNDED to companies across multiple industries Managed
Slide 49: How Did MidCap Enter Apollo's Ecosystem?
How Did MidCap Enter Apollo’s Ecosystem? Since then, MidCap has transformed into one of the largest capital providers to the Originally acquired in middle market, driven by: 2013 as a core alternative • Apollo, Athene and 3rd party investors have committed ~$3 billion of equity since inception inves
Slide 50: MidCap's Competitive Advantages
MidCap’s Competitive Advantages Scaled operations: Proven management Access to sourcing, underwriting, team with strong diversified and portfolio management credit track record scalable funding 50
Slide 51: MidCap Manages a Scaled and Diversified Portfolio of Middle Market Loans
MidCap Manages a Scaled and Diversified Portfolio of Middle Market Loans Total Managed Commitments ($B) Funded Assets on Balance Sheet ($B) $18.5B commitments, of Asset Based which $13.3B funded Lending Third Parties 15% Commitments on Lender Finance $15.8B MidCap Balance 9% $13.3B Leveraged $48.4B
Slide 52: Strong Credit Track Record
Strong Credit Track Record Aggregate Total Cumulative Net Losses3 Funded Assets ($M)1 Net Losses ($M)2 Since 2008 Leveraged Loans $26,283 $80 30 bps Asset Based Loans $7,955 $35 44 bps Real Estate Loans $4,415 $6 12 bps Life Sciences & Tech Loans $3,259 $3 9 bps Lender Finance $3,059 $5 16 bps Franc
Slide 53: Scaled Operating Platform Led by Experienced Senior Management Team
Scaled Operating Platform Led by Experienced Senior Management Team 25 Due Diligence & 10 Executive Other Team HOWARD STEVE DAVID WILL JOSH Support WIDRA CURWIN MOORE GOULD GROMAN Co-Founder & Apollo Partner CEO & Co-Founder CFO & Co-Founder President, Specialty Finance & Head Deputy CIO 15 yrs at M
Slide 54: Industrial Scale Origination & Underwriting Processes
“Industrial Scale” Origination & Underwriting Processes Pipeline generated by MidCap team from 2008 – 3Q 2023 28,974 Opportunities Identified 23.3% Issued Term Sheets 6,761 Deals 10.7% Underwritten 3,093 Deals 7.9% Approved 2,292 Deals ROBUST PIPELINE & PROCESS 6.9% 51 employees dedicated to origina
Slide 55: Historical Growth in Managed Commitments and Proven Leadership in Industry
Historical Growth in Managed Commitments and Proven Leadership in Industry MidCap Outstanding Managed Commitments ($B) Middle Market Lending League Table1 Rank Lender Deal Count $48.4 $45.9 1 MIDCAP 39 $39.6 2 Twin Brook 36 ~ 19X $29.8 3 Antares 33 $26.8 4 Churchill 31 $19.7 5 Barings 21 $15.0 6 Are
Slide 56: Diversified & Scaled Funding Sources
Diversified & Scaled Funding Sources How does MidCap fund new loan originations? 2013 3Q 2023 ~19x increase in managed commitments, driven by balance Total Managed Commitments $2.6B $48.4B sheet growth and creation of sidecar management business On MidCap Balance Sheet Grew and diversified bank faci
Slide 57: Highly Consistent Spread Generation Over Time
Highly Consistent Spread Generation Over Time Illustrative MidCap portfolio spreads1: 6.4% 6.4% 6.6% 6.7% 6.4% 6.5% 6.5% 6.3% LOAN FEES & OID 5.6% 5.6% 5.5% 5.7% 5.8% 5.6% 5.6% 5.5% COUPON SPREAD 2 2016 2017 2018 2019 2020 2021 2022 2023 1. Reflects MidCap retained portfolio yields relative to base
Slide 58: MidCap's Economic Model
MidCap’s Economic Model MidCap generates income from (1) net interest income from on-balance sheet portfolio, and (2) other operating income from originating, syndicating, and administering loans plus MidCap has outperformed in 2023, generating management fees from sidecars a ~17% return on equity 3
Slide 59: Multiple Levers of Downside Protection
Multiple Levers of Downside Protection Direct Lending Strategy MidCap Franchise & Platform ~100% 1st lien, senior secured Experience managing loan workouts through stress Control over documentation Significant earnings contribution from fee income (MidCap is agent on Servicing capabilities and infra
Slide 60: MidCap Generates Substantial Investments for Apollo Affiliated Insurance Companies
MidCap Generates Substantial Investments for Apollo Affiliated Insurance Companies TOTAL INVESTMENTS include whole loans, rated lending facilities, rated unsecured debt, rated securitization debt, and equity Equity Total Multiplier Platform Invested Investments of Equity Capital + ~$1B ~$6B ~6x Asse
Slide 61: MidCap's Product Set Positioned Within Vast Segments of Financing Marketplace
MidCap’s Product Set Positioned Within Vast Segments of Financing Marketplace ESTIMATED MIDCAP COMMITMENTS DESCRIPTION MARKET SIZE & % MARKET SHARE Leveraged Senior secured cash flow-based loans to $38.1B primarily sponsor-backed middle market ~$1.3T Loans companies ~3% share Asset Based Revolvers a
Slide 62: Key Takeaways
Key Takeaways 1 Transformed from a <$2B healthcare lender into a leading multi-product franchise in the middle-market 2 Led by an experienced team with a strong credit track record 3 Scaled origination of middle market loans with excess spread vs. broadly syndicated 4 Diversified capital structure s
Slide 63: Wheels
Wheels SHLOMO CRANDUS Chief Executive Officer, Wheels
Slide 64: Wheels Is a Leading Fleet Management Company
Wheels Is a Leading Fleet Management Company . . . Business Highlights 1939 Inception Date First Fleet Management Company in the US ~ $ B 9 ~$ 4B 10YR + Average Customer Vehicle Assets Assets Originated 3Q’23 LTM 3Q’23 Relationship 2022 Combination of Donlen, 800K Wheels and LeasePlan USA 1M 1BP Re-
Slide 65: Created Through Complementary & Synergistic Combinations
. . . Created Through Complementary & Synergistic Combinations FOUNDED 1965 FOUNDED 1939 FOUNDED 1983 (US) ACQUIRED NOV 2020 ACQUIRED OCT 2021 ACQUIRED DEC 2022 RELAUNCHED 2022 $ B 2 $ B4 $ B2 Organic Growth ~$ 9B LEASED ASSETS 100K 300K 300K Organic Growth ~ 800K MANAGED FLEET • Middle Market Prese
Slide 66: A Best-In-Class Management Team with Deep Industry Expertise
A Best-In-Class Management Team with Deep Industry Expertise CEO Committee (Board Level) Management Team SHLOMO C RAND US MATT D YER TOM C ALLAHAN JOE HANLON Chief Executive Officer Executive Advisor Strategic Advisor Chief Financial Officer SHLOMO CRANDUS MATT DYER TOM CALLAHAN Current CEO Former L
Slide 67: Fleet Management Companies Are Critical Partners for Corporations
Fleet Management Companies Are Critical Partners for Corporations What’s the Value-Add to Corporations? Full Suite of Services Provided at Scale • The administrative burden to manage a fleet of vehicles creates significant regulatory and cost challenges for corporations, VEHICLE ACQUISITION & UPFITT
Slide 68: Strong Growth & Profitability Across Economic Cycles
Strong Growth & Profitability Across Economic Cycles ($M) Gross Profit/ Net Revenue $635 $645 $483 $507 $349 $399 $270 $272 $280 $305 $321 $212 $218 $237 $262 $181 $198 $208 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023E 2023B GLOBAL FINANC IAL COVID -19 C
Slide 69: Wheels Is the Leader at the Unique Intersection of Vast Addressable Markets
Wheels Is the Leader at the Unique Intersection of Vast Addressable Markets Automotive Vehicle Acquisition Finance & Disposals ~$2 TRILLION TAM ~$2 TRILLION TAM ~$9B Funded Assets Vehicle & ~800K Vehicles ~1M Drivers¹ Business & Maintenance Services Fleet Logistics ~$0.5 TRILLION TAM ~$1 TRILLION TA
Slide 70: Wheels Has a Strong Competitive Position
Wheels Has a Strong Competitive Position 84-Year Operating Leading Scale with Wide Vendor Advanced Logistics History Global Reach Network Built Over and Technology Decades Systems 70
Slide 71: High-Quality and Highly Diversified Customer Base
High-Quality and Highly Diversified Customer Base Clients by Credit Rating1 Clients by Industry2 Nature of Relationships: 21% 11% 5% 12% 10% • Service mission-critical 9% fleets that drive revenue 21% 57% 6% generation, not “perk” 42% 6% vehicles or executive cars • Highly integrated with B- to B+ B
Slide 72: Long-Term Relationships Developed from Business-Critical Service Offering
Long-Term Relationships Developed from Business-Critical Service Offering Long-Standing Blue-Chip Clients Clients By Length of Relationship¹ CLIENT INDUSTRY START DATE Pfizer 1939 Pharmaceutical 1957 20% Financial Services 1963 Food & Beverage 1967 80% Construction Materials 1970 Agriculture 1978 Mo
Slide 73: Wheels Generates Strong Investment Grade Asset Origination Volume
Wheels Generates Strong Investment Grade Asset Origination Volume Annual vehicle asset origination volume1 ($B) Highlights $4.7 • Consistent growth of investment grade origination volume $3.5 • Organic growth from existing fleet $2.6 $2.6 $2.6 growth, vehicle price inflation, and new client wins • O
Slide 74: Long Track Record Demonstrates De Minimis Credit Loss Experience
Long Track Record Demonstrates De Minimis Credit Loss Experience Legacy Wheels Charge-Offs (bps) Why Are Losses So Low? 0.4 0.1 0.1 0.1 0.3 0.0 – 0.0 6.2 – – 0.3 – – – – – – Credit losses only occur when there is both a customer default and residual value loss on the 2006 2007 2008 2009 2010 2011 20
Slide 75: Key Takeaways
Key Takeaways Highly synergistic and complementary roll-up strategy, created through unique Apollo balance sheet and 1 M&A capabilities 2 Annuity-like earnings with strong growth and profitability across economic cycles 3 Leading market position with strong customer value proposition and customer re
Slide 76: 10-minute break
10-minute break
Slide 77: ATLAS SP Partners
ATLAS SP Partners JAY KIM Chief Executive Officer, ATLAS SP
Slide 78: ATLAS SP Partners is a Leading Asset-Backed Finance Platform
ATLAS SP Partners is a Leading Asset-Backed Finance Platform Business Highlights 20+ Track record as a leading asset- ~$40B ~$10B ~24 yrs backed credit franchise YEARS Funded AUM at Assets Originated Since Average Industry Experience Launch (Feb ’23) Acquisition in Feb‘231 of Executive Team 2023 Acq
Slide 79: ATLAS SP was Built on a Business with a Strong Track Record
ATLAS SP was Built on a Business with a Strong Track Record 2013-2021 Apollo announces substantial first close of transaction and Feb 2023 Market leading franchise; launch of ATLAS SP #1 in US Securitizations1 June 2023 Nov 2022 Nov 2023 Pre 2011 Credit Suisse Securitized Product Apollo agrees to ac
Slide 80: ATLAS SP Launched as a Scaled Platform with Infrastructure and People In Place
ATLAS SP Launched as a Scaled Platform with Infrastructure and People In Place ATLAS SP 15 14 150+ 25+ Team EXECUTIVES BUSINESS LEADERS INVESTMENT PROFESSIONALS PORTFOLIO MANAGEMENT ~24 yrs avg. industry ex perience ~20yrs avg. industry ex perience ~9yrs avg. ATL AS SP tenure ~11yrs avg. ATL AS SP t
Slide 81: Asset-Backed Credit is the Lifeblood of Global Businesses and Consumers
Asset-Backed Credit is the Lifeblood of Global Businesses and Consumers Purchases Homes Offices Financed by Credit Cards Financed by Mortgages Multifamily Properties and Office Space financed by Commercial Real Estate Debt Commute Produce Food Listen Public Transport financed by Heavy machinery used
Slide 82: ATLAS SP is a Finance Company that Lends to Other Finance Companies
ATLAS SP is a Finance Company that Lends to Other Finance Companies ATLAS SP VALUE CHAIN Illustrative Loan Warehouse Capital Originators Facility Securitization Markets Senior Secured Investment Grade Debt Mezzanine Equity Originators lend to end-borrowers With strict terms in place, the Loans accum
Slide 83: Providing Originators with Flexible Capital at Favorable Attachment Point
Providing Originators with Flexible Capital at Favorable Attachment Point Illustrative Warehouse to Securitization Risk What is a Warehouse? Asset Loan Warehouse Risk ABS • A line of credit given to originators and / or sponsors that generates contractual, predictable cashflows (i.e., the house) (i.
Slide 84: Asset-Backed Credit is a Growing and Diverse Market
Asset-Backed Credit is a Growing and Diverse Market $ 20+ ~$ 12 TRILLION ~2X TRILLION IN 2022 IN 2012 US CLO EUR CLO Infrastructure Debt Trade Finance US CRE Debt US Consumer US Residential Aircraft Finance Equipment Finance Fleet Finance Music Royalties Source: SIFMA, JP Morgan, Apollo Analysts, Fi
Slide 85: ATLAS SP Offers a Full Suite of Lending Solutions to Originators
ATLAS SP Offers a Full Suite of Lending Solutions to Originators Product FINANCING Financing and direct lending CAPITAL MARKETS Providing clients access to the public PORTFOLIO SOLUTIONS Strategic advisory and access to Set customized to meet business needs throughout a company’s life and private as
Slide 86: Vertical Integration Leads to Less Leakage and Excess Return per Unit of Risk
Vertical Integration Leads to Less Leakage and Excess Return per Unit of Risk Yield is enhanced by full spectrum platform and expertise… …driving ~200bps+ of excess spread for similar credit risk Credit Capability ATLAS SP Funds C R E D I T A S S E T L I F E C YC L E Asset Sourcing ECONOMIC Warehous
Slide 87: ATLAS SP's Portfolio is Inherently High Grade and Low Risk
ATLAS SP’s Portfolio is Inherently High Grade and Low Risk Other Residential Mortgages Equipment, Royalties, Agency, Non-QM, Investor Key Portfolio Stats Small Business, Whole Loans, NPL/RPL, MSRs, Rental, Business, Timeshare & Second Lien, REO, EBO more • Single-A / BBB credit 40 equivalent ~$ • Av
Slide 88: ATLAS SP's Portfolio is Structurally Protected with Near-Zero Loss Rates
ATLAS SP’s Portfolio is Structurally Protected with Near-Zero Loss Rates Very low historical impairments and Risk Mitigating Features modeled portfolio stress Consistent underwriting process Rigorous stress testing Contractual protections <1bp <1 % Substantial credit enhancement in aggregate in mode
Slide 89: ATLAS SP Serves as the Ideal Partner to Banks, Credit Funds, and Borrowers
ATLAS SP Serves as the Ideal Partner to Banks, Credit Funds, and Borrowers Value Proposition Partnership Offering DISTINCT CAPABILITY SET Combination of flexible capital with scaled infrastructure Credit Funds / Alternatives Capital Flexibility UNIQUE POSITIONING Utility provider to bank and credit
Slide 90: Select ATLAS SP Case Studies Showcase Breadth of Capabilities
Select ATLAS SP Case Studies Showcase Breadth of Capabilities PacWest Bank Sunnova KKR ~$780M Acquisition $3B Guarantee Program Debt Advisor Class A Lender Financing Residential Solar Loans September 2023 Acquisition of KMR II Portfolio October 20211 $1.4B Bridge Sole Structuring Agent Term Loan and
Slide 91: Key Takeaways
Key Takeaways 1 One-of-a-kind asset-backed finance business and operational infrastructure 2 Building on 20+ years of business management and operations with exceptional expertise Capital partner to institutional borrowers, banks, funds and investors aligned to a large and growing 3 asset-backed cre
Slide 92: Translating Origination to Earnings Power
Translating Origination to Earnings Power MARTIN KELLY Chief Financial Officer
Slide 93: Revisiting Key Strategic Benefits of Apollo-Athene Merger
Revisiting Key Strategic Benefits of Apollo-Athene Merger Today’s Focus 1 2 3 4 Full Alignment Significant Owning Means of Enhanced Accelerates Cross Platform Production via Capital Efficiency Growth and Product Origination Platforms and Flexibility Creates a Better Development Creates Differentiate
Slide 94: Origination Platforms Help Drive Alpha and Earnings
Origination Platforms Help Drive Alpha and Earnings Proprietary Alpha Generation Increasing Asset Origination For Clients Earnings Power Generated through Apollo’s Excess return / spread Helps drive incremental FRE portfolio of origination generated for Retirement and SRE for shareholders platforms
Slide 95: Originated Assets Have Multiple Homes Across Apollo
Originated Assets Have Multiple Homes Across Apollo Retirement PARTIAL ALLOCATION Services Balance Sheets Third-Party PARTIAL ALLOCATION Funds and Managed Accounts PARTIAL ALLOCATION Capital Solutions Originated Asset 95
Slide 96: Illustrative Allocation for an Originated Asset
Illustrative Allocation for an Originated Asset ~25% ~50% ~25% Retirement Services Third-Party Funds Syndication via Balance Sheets and Managed Accounts Capital Solutions We want “25% of everything and 100% of nothing” For illustrative and discussion purposes only. 96
Slide 97: Origination Creates Several Avenues of Earnings Generation
Origination Creates Several Avenues of Earnings Generation EQUITY MANAGEMENT FEES SYNDICATION DEBT / FLOW DEPLOYMENT ON DEBT / EQUITY FEES DEPLOYMENT THROUGH AAA Fees Fees on Downside-Protected ~100–200bps on Origination and Low-to-Mid Excess Deployment Distribution Teens ROE Asset Yield FEE RELATED
Slide 98: Illustrative Example of Value Creation from a Single Platform
Illustrative Example of Value Creation from a Single Platform FEE RELATED EARNINGS SPREAD RELATED EARNINGS EQUITY INVESTMENT $10M $140M annual management fees annual Alts investment income ~ $1B into platform assuming 1% fee rate on equity invested assuming 14% return DEBT $15M $30M $105M ORIGINATIO
Slide 99: Origination is Fueling Growth in Fee Related Revenues
Origination is Fueling Growth in Fee Related Revenues Yield management fees Capital solutions fees mix 16% 27% 21% CAGR ~$1.6B 45% ~$1.4B ~$1.2B 73% 79% 55% 2021 2022 YTD 3Q'23 2021 2022 YTD 3Q'23 Annualized DEB T-RELA T E D F EES EQUITY -RELA T ED F EES 1 1. Includes monitoring and other fees. 99
Slide 100: Origination Enables Continued Growth in Third-Party Yield Business
Origination Enables Continued Growth in Third-Party Yield Business $220 $157 >4x $138 $117 $91 $62 $64 $52 2016 2017 2018 2019 2020 2021 2022 3Q'23 THIRD-PARTY YIELD AUM ($B) Note: Inclusive of gross assets related to ADIP I and ADIP II. 100
Slide 101: Originated Assets Also Provide Alpha to Athene's Investment Portfolio
Originated Assets Also Provide Alpha to Athene’s Investment Portfolio Originated Assets Within Athene ~$ 95B of directly originated assets within Athene’s 208 investment portfolio $ Assets from Traditional Origination, Platforms, of directly originated > 96% 1 High-Grade Alpha, and fixed income asse
Slide 102: Our Platform Origination Model is Highly Synergistic and Capital Efficient
Our Platform Origination Model is Highly Synergistic and Capital Efficient Platform Originated Asset Flow Capital Third-Party Funds and Managed Solutions Accounts Equity investment via Alts portfolio, third-party capital, and third-party co-invest Syndication partners 102
Slide 103: Investment Into Our Platform Ecosystem Has Been Substantial
Investment Into Our Platform Ecosystem Has Been Substantial YEAR OF CO-INVESTORS? PL ATFORM ACQUISITION 8 MidCap 2013 Redding Ridge 2016 Wheels PK AirFinance 2021 2019 ~$ B Foundation 2022 of equity invested Aqua Finance 2022 Petros PACE 2022 across platform Haydock 2017 origination MaxCap 2021 ecos
Slide 104: Athene's Alts Portfolio is an Efficient and Strategically Aligned Source of Capital
Athene’s Alts Portfolio is an Efficient and Strategically Aligned Source of Capital ASSET EXAMPLES PORTFOLIO 1,2 Asset-Backed Finance Private IG Corporates INVESTMENT GRADE DEBT INVESTMENTS $247B IG Structured Credit Fixed ASSET ORIGINATION PLATFORMS 16 Origination Platform Ecosystem (incl. ATLAS SP
Slide 105: Platform Equity Ownership Evolves as the Businesses Scale
Platform Equity Ownership Evolves as the Businesses Scale 1 2 3 Initial investment Scale business Diversify ownership GOAL GOAL GOAL Source leading businesses Increase origination capacity Expand and diversify the capital `` that generate assets with excess through organic and base while maintaining
Slide 106: Three Distinct Pillars Driving Our Capital Solutions Business
Three Distinct Pillars Driving Our Capital Solutions Business Origination Capital Markets Syndication • Dedicated client coverage • Integrated execution and deal • Global investor coverage team teams • Product-agnostic origination • Apollo-anchored transactions • Deep structuring advice allocated to
Slide 107: Apollo Capital Solutions Facilitates Deployment Activity Across the Platform
Apollo Capital Solutions Facilitates Deployment Activity Across the Platform ~ 160 ~ 80 Transactions across FIG platforms (including ATLAS SP) TRANSACTIONS COMPLETED 3Q’23 YTD ~ 80 Transactions across Corporate & Sponsor Origination, Equity Co-Invest, and Hybrid Value 107
Slide 108: Breadth of Deployment Activity Driving Increasing and Durable Fee Generation
Breadth of Deployment Activity Driving Increasing and Durable Fee Generation ~55% IG 330M ~$ Debt-related fees ~25% non-IG 420M portfolio ~20% company ~$ ~$ 90M Equity-related fees1 financings CAPITAL SOLUTIONS FEES 3Q’23 YTD 10-20% Supported by balance sheet capital from strategic partner 80-90% No
Slide 109: Five Key Takeaways from Today's Presentation
Five Key Takeaways from Today’s Presentation 1 Origination platforms provide a recurring supply of proprietary private credit assets 2 We believe our ecosystem is a meaningful competitive advantage and is difficult to replicate 3 Credit loss experience across origination platforms has been minimal 4
Slide 110: Q&A Panel
APOLLO Q&A Panel
Slide 111: Appendix – Speaker Biographies
Appendix – Speaker Biographies
Slide 112: Speaker Bios
Speaker Bios NOAH GUNN HOWARD WIDRA Noah Gunn is the Global Head of Investor Relations for Apollo primarily Howard Widra is Partner and Head of Direct Origination, Credit, at responsible for leading the firm’s outreach effort to the investment Apollo, and has been with the Firm and/or its affiliates
Slide 113: Speaker Bios (continued)
Speaker Bios (continued) JAY KIM MARTIN KELLY Jay Kim is Chief Executive Officer of ATLAS SP. Jay leads the day-to-day Martin Kelly is Chief Financial Officer at Apollo, where he also oversees operations of ATLAS SP and is responsible for the overall strategic the Firm’s Technology, Operations, Risk
Slide 114: Important Information & Definitions
Important Information & Definitions
Slide 115: Reconciliation of GAAP to Non-GAAP Financial Measures
Reconciliation of GAAP to Non-GAAP Financial Measures ($ in millions) 3Q'23 Total investments, including related parties $ 214,953 Derivative assets (4,571) Cash and cash equivalents (including restricted cash) 11,214 Accrued investment income 1,792 Net receivable (payable) for collateral on derivat
Slide 116: Definitions
Definitions • “Segment Income”, or “SI”, is the key performance measure used by management in evaluating the • “Spread Related Earnings”, or “SRE” is a component of Segment Income that is used to assess the performance performance of the asset management, retirement services, and principal investing
Slide 117: Definitions (Continued)
Definitions (Continued) • “Apollo Aligned Alternatives", or "AAA“, refers to Apollo Aligned Alternatives Aggregator, LP Apollo uses AUM, Gross capital deployed and Dry powder as performance measurements of its investment activities, as well as to monitor fund size in relation to professional resourc
Slide 118: Definitions (Continued)
Definitions (Continued) • “Debt Origination” represents (i) capital that has been invested in new debt or debt like investments by • “Net Invested Assets” (continued): Athene includes the underlying investments supporting its assumed Apollo's yield and hybrid strategies (whether purchased by Apollo
Slide 119: Important Information
Important Information Estimates and Assumptions This presentation includes certain unaudited financial and business projections and goals on Apollo’s future outlook (the “Estimates”). The Estimates reflect the internal financial model that Apollo uses in connection with its strategic planning. The E
Apollo Global Management — Investor Day (November 2023) on 6ix