Athene Holding Ltd. · NYSE:ATH/PA
Athene — Merger or Acquisition (March 2021)
36 slides from Athene's merger presentation, Mar 8, 2021
Slide 1: Apollo and Athene to Merge in All Stock Transaction
March 8, 2021 Apollo and Athene to Merge in All Stock Transaction March 8, 2021 Unless otherwise noted, information as of March 2021. It should not be assumed that investments made in the future will be profitable or will equal the performance of the investments shown in this document. To the extent
Slide 2: Athene & Apollo Have Had a Long and Successful Relationship
Athene & Apollo Have Had a Long and Successful Relationship Founding 2009 2013 2018 2019 2020 IPO 2016 Hybrid Value Fund I Strategic Transaction ADIP Platforms Apollo-Athene Merger Seeded Notes: For illustrative and discussion purposes only. Represents the views and opinions of Analysts. Financial s
Slide 3: Athene is the Preeminent Platform in the Retirement Services Industry
With Apollo’s partnership, Athene has been able to act as a solutions provider to retirees and institutions, supplying capital to an industry that continues to undergo significant restructuring Athene is the Preeminent Platform in the Retirement Services Industry #1 Retail Fixed Annuity Issuance #1
Slide 4: Athene's superior operating performance has not been reflected in its valuation
2016 2017 2018 2019 2020 Athene’s superior operating performance has not been reflected in its valuation Substantial Earnings Growth Industry-Leading Growth at Strong Returns Operating Performance vs. Stock Performance $54.30 Stock Price Six Months Following IPO1 2016 IPO 12.2x P/E Ratio Six Months
Slide 5: Athene is a Tremendous Success Story Producing Consistent Excellence
Athene is a Tremendous Success Story That Has Produced Consistent Excellence Over More Than a Decade +6% Life Insurers CAGR +16% Athene CAGR Adjusted Book Value Per Share Source: Athene documents. Note: Life insurers include key public comparables: AEL, AIG, LNC, MET, PFG and PRU.
Slide 6: Transaction Summary
Transaction Summary Apollo and Athene to merge through an all-stock, tax-free transaction1 Apollo plans to convert to a Full C-Corp, with a One Share / One Vote Structure2 Accelerates strategic plan Substantially financially accretive Larger market capitalization Transparent, diverse, best-in-class
Slide 7: Transaction Highlights
Transaction Highlights ~$2.5bn+ 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 managed by Apollo Fully Aligne
Slide 8: Transaction Rationale
Transaction Rationale This is about harnessing Apollo’s unique ability to generate excess returns at every point across the risk / reward spectrum (yield, hybrid, opportunistic) for the benefit of our insurance and asset management clients.
Slide 9: ATH & APO are Growth Companies Providing Products and Services in High Demand
ATH & APO are Growth Companies Providing Products and Services that are in High Demand: Investment Returns and Retirement Income $455 Fee Related Earnings (FRE) ($mm) Total Assets Under Management ($bn) Total Gross Invested Assets ($bn) Adjusted Operating Income ($mm) CAGR SINCE IPO = 21% CAGR SINCE
Slide 10: Powerful Market and Demographic Trends Power Both Businesses
Powerful Market and Demographic Trends Power Both Businesses Guaranteed Income Investment Returns Yield Hybrid Opportunistic ~35% of total U.S. invested assets expect to be transferred between Generations over next 2 decades ~3x 1 Demographic Tailwinds Need for Income ‘Indexification’ Wealth Transfe
Slide 11: Limit on Growth is Availability of Excess Return Across Risk / Reward Spectrum
Limit on Growth is Availability of Excess Return Across Risk / Reward Spectrum, Not Capital or Liabilities Merger creates capital and alignment to scale origination and rationalizes ownership of existing unique Platforms CRE Debt Origination CLO Origination Large Cap Origination Private Fixed Income
Slide 12: Merger, Not an Investment in an Insurance Business
Merger, Not an Investment in an Insurance Business Availability of Excess Investment Returns Powers the System Athene / Athora Most important, 1,500+ global relationships ARI / Closed End Funds / AINV AGS TRF / Athene $27bn of organic new business in 2020 Yield $340bn AUM Hybrid $30bn AUM Opportunis
Slide 13: Merger Will Allow More Value to be Derived from Originated Assets
In a World Where Assets are Scarce and Liabilities/Capital are Plentiful, the Merger Will Allow More Value to be Derived from the Assets We Originate Yield Business - Illustrative Business Model Note: Portfolio, capitalization and returns assumptions intended as an illustrative example of Athene’s b
Slide 14: Both Businesses have Plenty of White Space in Addition to Base Growth
Both Businesses have Plenty of White Space in Addition to Growth in Base Businesses Origination Platforms Global Large Cap Lending Core Real Estate in U.S. & Europe Infrastructure Debt & Equity Secondaries Growth Equity / Technology $650 bn $500 bn U.S. Fixed & Fixed Indexed Annuities U.S. Pension R
Slide 15: Other Benefits
Other Benefits Simpler Regulatory Profile Enhanced Credit / Rating Profile: Alignment of interests All stock transaction Management continuity Diversification Accretive transaction Significant capital accumulation Greater Float and Share Liquidity Simpler Corporate Structure
Slide 16: Low Integration Risk
Low Integration Risk Continuity of established, tenured management Strong relationship already exists, along with constant communication No consolidation, both entities maintained Combined Company
Slide 17: Employees: This Transaction is About Coordination, Not Consolidation
Employees: This Transaction is About Coordination, Not Consolidation Vision. Deep sense of purpose to protect the livelihoods of retirees around the world Culture. Complete continuity of leadership and teams. Shared commitment to building a modern, high-performing culture Growth. Accelerates investm
Slide 18: Highly Accretive Transaction
Highly Accretive Transaction Apollo is consolidating 100% of Athene’s earnings for 73% increase in ownership Existing investment represented $0.68 per share of unrecognized earnings in 2020 Full merger creates accretion of $1.38 per share or 68% on 2020 combined after-tax earnings Combined company e
Slide 19: A Credit Positive Combination
A Credit Positive Combination A A- Rating1 Rating2 A A A Benefits of Merger 1 2 Simpler Regulatory Profile Enhanced Credit / Rating Profile Greater float and Share Liquidity Simpler Corporate Structure 3 4 1 Apollo credit rating from independent rating agencies (S&P, Fitch). 2 Financial strength rat
Slide 20: Tax-Free Combination
Tax-Free Combination The merger is intended to qualify as a tax-free transaction for U.S. federal income tax purposes for all Apollo and Athene common shareholders Shareholders will have basis in New TopCo shares equal to their basis in their existing Apollo or Athene shares A shareholder’s holding
Slide 21: Pro-Forma Tax Profile
Pro-Forma Tax Profile Tax Rate1 Combined Tax Rate2 Tax Rate Approximately 10% (12% in 2020) Mid to high teens post PTP to C-Corp conversion (16% in 2020) Mid to high teens % Approximately 10% tax dilution in Athene earnings 1 Rates are based on effective tax rates. 2 Assumes US corporate tax rates o
Slide 22: Value Highlights
Value Highlights Significant combined earnings power; highly accretive transaction Balance sheet strength will enable further growth Higher, more predictable growth Complete alignment: best-in-class governance, employees will own ~1/3 of the company Attractive cash yield; dividend will be set at $1.
Slide 23: Appendix
Appendix APOLLO 2B
Slide 24: Apollo Fee Related Earnings
Apollo Fee Related Earnings 1 Transaction-related charges include contingent consideration, equity-based compensation charges and the amortization of intangible assets and certain other charges associated with acquisitions, and restructuring charges. 2 Excludes certain performance fees from business
Slide 25: Apollo Reconciliation of GAAP to Non-GAAP Financial Measures
Apollo Reconciliation of GAAP to Non-GAAP Financial Measures ($ in thousands) FY’14 FY’15 FY’16 FY’17 FY’18 FY’19 FY’20 GAAP Net Income (Loss) Attributable to Apollo Global Management, Inc. Class A Common Stockholders $168,229 $134,497 $402,850 $615,566 ($42,038 ) $806,537 $119,958 Preferred dividen
Slide 26: Apollo Reconciliation of GAAP to Non-GAAP Financial Measures – Cont.
Apollo Reconciliation of GAAP to Non-GAAP Financial Measures – Cont. 1 See prior page for reconciliation of Net Income (Loss) Attributable to Apollo Global Management, Inc. Class A Common Stockholders, Income (Loss) Before Income Tax (Provision) Benefit, Distributable Earnings and Fee Related Earnin
Slide 27: Apollo Reconciliation of GAAP to Non-GAAP Financial Measures
Apollo Reconciliation of GAAP to Non-GAAP Financial Measures ($ in thousands) 4Q'19 1Q'20 2Q'20 3Q'20 4Q'20 FY'19 FY'20 Total Consolidated Revenues (GAAP) $914,772 ($1,469,086 ) $1,508,335 $1,018,274 $1,296,496 $2,931,849 $2,354,019 Equity awards granted by unconsolidated related parties, reimbursab
Slide 28: Apollo Total Segment Revenues, Expenses and Other Income (Loss)
Apollo Total Segment Revenues, Expenses and Other Income (Loss) ($ in thousands) 4Q'19 1Q'20 2Q'20 3Q'20 4Q'20 FY'19 FY'20 Management fees $387,764 $382,368 $401,822 $426,452 $437,322 $1,491,070 $1,647,964 Advisory and transaction fees, net 56,206 36,732 61,749 72,362 80,677 122,890 251,520 Performa
Slide 29: Athene Non-GAAP Measure Reconciliations
Athene Non-GAAP Measure Reconciliations Reconciliation of book value per common share to adjusted book value per common share Reconciliation of basic earnings per Class A common shares to adjusted operating earnings per common share 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Book va
Slide 30: Athene Non-GAAP Measure Reconciliations
Athene Non-GAAP Measure Reconciliations Reconciliation of basic weighted average Class A common shares to weighted average common shares outstanding - adjusted operatin g (In millions) 2016 2017 2018 2019 2020 Basic weighted average common shares outstanding – Class A 52.1 107.7 160.5 153.9 184.9 Co
Slide 31: Apollo Non-GAAP Financial Information & Definitions
Apollo Non-GAAP Financial Information & 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 Distribu
Slide 32: Apollo Non-GAAP Financial Information & Definitions - Continued
Apollo Non-GAAP Financial Information & Definitions - Continued “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
Slide 33: Athene Non-GAAP Financial Information & Definitions
Athene Non-GAAP Financial Information & 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 expense
Slide 34: 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 35: 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 36: 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 (