Apollo Investment Corporation Investor Presentation

48 Pages·2017·2.14 MB·English

Apollo Investment Corporation
Investor Presentation
May 2017
Information is as of March 31, 2017 except as otherwise noted.
It should not be assumed that investments made in the future will be profitable or will equal the performance of investments in this document.
Disclaimers, Definitions, and Important Notes
Forward-Looking Statements
We make forward-looking statements in this presentation and other filings we make with the Securities and Exchange Commission (“SEC”) within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are subject to substantial risks and uncertainties,
many of which are difficult to predict and are generally beyond our control. These forward-looking statements include information about possible or assumed future results of our
business, financial condition, liquidity, results of operations, plans and objectives, including information about our ability to generate attractive returns while attempting to mitigate risk.
When used in this release, the words “believe,” “expect,” “anticipate,” “estimate,” “plan,” “continue,” “intend,” “should,” “may” or similar expressions, are intended to identify forward-
looking statements. Statements regarding the following subjects, among others, may be forward-looking: the return on equity; the yield on investments; the ability to borrow to finance
assets; and other risks associated with changes in business conditions and the general economy.
The forward-looking statements are based on our beliefs, assumptions and expectations of our future performance, taking into account all information currently available to us. Forward-
looking statements are not predictions of future events. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known
to us. Some of these factors are described in the company's filings with the SEC. If a change occurs, our business, financial condition, liquidity and results of operations may vary
materially from those expressed in our forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made. New risks and uncertainties arise over
time, and it is not possible for us to predict those events or how they may affect us. Except as required by law, we are not obligated to, and do not intend to, update or revise any forward-
looking statements, whether as a result of new information, future events or otherwise. This presentation may contain statistics and other data that in some cases has been obtained from
or compiled from information made available by third-party service providers.
Past Performance
Past performance is not indicative nor a guarantee of future returns, the realization of which is dependent on many factors, many of which are beyond the control of Apollo Global
Management, LLC (“AGM”); Apollo Investment Management, L.P.; and Apollo Investment Corporation (collectively “Apollo”). There can be no assurances that future dividends will
match or exceed historic ones, or that they will be made at all. Net returns give effect to all fees and expenses. Unless otherwise noted, information included herein is presented as of the
date indicated on the cover page and may change at any time without notice. Apollo Investment Corporation (the “Corporation” or “AINV” or the “Fund”) is subject to certain
significant risks relating to our business and investment objective. For more detailed information on risks relating to the Corporation, see the latest Form 10-K and subsequent quarterly
reports filed on Form 10-Q.
Financial Data
Financial data used in this presentation for the periods shown is from the Corporation’s Form 10-K and Form 10-Q filings with the SEC during such periods. Unless otherwise indicated,
the numbers shown herein are rounded and unaudited. Quarterly financial information about the Company refers to fiscal quarters. The Company’s fiscal year 2017 ended March 31,
2017.

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Disclaimers, Definitions, and Important Notes (cont.)
AUM Definition
Assets Under Management (“AUM”) refers to the investments AGM manages or with respect to which it has control, including capital it has the right to call from its investors pursuant
to their capital commitments to various funds. AGM’s AUM equals the sum of: (i) the fair value of its private equity investments plus the capital that it is entitled to call from its
investors pursuant to the terms of their capital commitments plus non-recallable capital to the extent a fund is within the commitment period in which management fees are calculated
based on total commitments to the fund; (ii) the net asset value of AGM’s capital markets funds, other than certain senior credit funds, which are structured as collateralized loan
obligations or certain collateralized loan obligation and collateralized debt obligation credit funds that have a fee generating basis other than mark-to-market asset values, plus used or
available leverage and/or capital commitments; (iii) the gross asset values or net asset values of AGM’s real estate entities and the structured portfolio vehicle investments included
within the funds AGM manages, which includes the leverage used by such structured portfolio vehicles; (iv) the incremental value associated with the reinsurance investments of the
portfolio company assets that AGM manages; and (v) the fair value of any other investments that AGM manages plus unused credit facilities, including capital commitments for
investments that may require pre-qualification before investment plus any other capital commitments available for investment that are not otherwise included in the clauses above.
AGM’s AUM measure includes AUM for which it charges either no or nominal fees. AGM’s definition of AUM is not based on any definition of AUM contained in its operating
agreement or in any of its Apollo fund management agreements. AGM considers multiple factors for determining what should be included in its definition of AUM. Such factors include
but are not limited to (1) its ability to influence the investment decisions for existing and available assets; (2) its ability to generate income from the underlying assets in its funds; and (3)
the AUM measures that it uses internally or believes are used by other investment managers. Given the differences in the investment strategies and structures among other alternative
investment managers, AGM’s calculation of AUM may differ from the calculations employed by other investment managers and, as a result, this measure may not be directly
comparable to similar measures presented by other investment managers.

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Agenda
 Overview of Apollo Investment Corporation
 Market Opportunity
 Investment Strategy
 Portfolio Review
 Conclusion
 Appendices

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Overview of
Apollo Investment Corporation
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Introduction to Apollo Investment Corporation (“AINV”)
 Publicly traded (NASDAQ: AINV) business development company (“BDC”) treated as a regulated investment
company (“RIC”) for tax purposes
Middle Market  Primarily provides debt solutions to U.S. middle market companies with a focus on direct origination
Lender  Since IPO in April 2004 and through March 31, 2017, invested $17.0 billion in 398 portfolio companies
 $2.32 billion portfolio across 86 companies (average portfolio company investment $26.9 million) and 25 different
industries, spanning a broad range of asset types (1) (2)
Externally
 Externally managed by an affiliate (3) of Apollo Global Management, LLC, a leading alternative asset manager with
Managed by approximately $197 billion of AUM (2) (4) with expertise in private equity, credit and real estate
Apollo Global
 Apollo Global Management, LLC was founded in 1990
Management
Apollo Affiliation Flexible Mandate Exemptive Relief to Co-Invest (6)
 Apollo affiliation provides  Generally able to invest in all  Expected to improve AINV’s
significant benefits levels of the capital structure – competitive positioning
Competitive
Advantages  Large and diverse direct flexible mandate  E x p e c t e d t o i n c r e a s e d e a l flow
origination team with joint front  Broad product offering
engine across AINV & MidCap  Experienced management team
Financial (“MidCap”) (5)

(1) On a fair value basis. (2) As of March 31, 2017. (3) Apollo Investment Management, L.P. (4) See definition of AUM at beginning of presentation. (5) MidCap Financial refers to MidCap FinCo Limited, a private limited
company domiciled in Ireland, and its subsidiaries, including MidCap Financial Services, LLC. MidCap Financial is managed by Apollo Capital Management, L.P., a subsidiary of Apollo Global Management, LLC, pursuant to
an investment management agreement between Apollo Capital Management, L.P. and MidCap FinCo Designated Activity Company. (6) On March 29, 2016, the Company received an exemptive order from the SEC permitting
greater flexibility to participate in co-investment transactions with certain of its affiliates where terms other than price and quantity are negotiated, subject to the conditions included therein. 5
AINV Key Differentiators
Strong External Manager
Large and Diverse
Broad Product Offering
Direct Origination Team
Commitment To
Significant Scale
Repurchase Stock
Co-investment
Active Investor
Exemptive Relief
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Strong External Manager
Firm Profile(1) Business Segments
Founded: 1990 Credit Private Equity Real Estate
AUM: $197bn $141bn AUM $45bn AUM $12bn AUM
Employees: 989  Drawdown  Opportunistic buyouts  Commercial real estate
 Liquid / Performing  Distressed buyouts and debt  Global private equity and debt
 Permanent Capital Vehicles: investments investments
Inv. Professionals: 371
-Athene -MidCap -BDCs  Corporate carve-outs  Performing fixed income
-Closed-End Funds (CMBS, CRE Loans)
Global Offices: 16  Advisory
Investment Approach Global Footprint

Value-oriented

Toronto
Contrarian
Chicago
Toronto London Frankfurt
Chicago New York Luxembourg
Integrated investment platform Los Angeles Bethesda Madrid
Houston Delhi Shanghai

Mumbai Hong Kong
Opportunistic across market
Bethesda
Singapore
cycles and capital structures

Focus on nine core industries (2)
(1) As of March 31, 2017. See definition of AUM at the beginning of the presentation. AUM components may not sum due to rounding. (2) Apollo’s core industry sectors include chemicals, natural resources, consumer and retail,
distribution and transportation, financial and business services, manufacturing and industrial, media and cable and leisure, packaging and materials and the satellite and wireless industries. 7
Portfolio Snapshot
Selected Financial Data (1) Portfolio by Security Type(1) (2)
Preferred Common

Investment Portfolio (2) $2.32 bn Structured Equity Equity and
Products and 1% Warrants
# of Portfolio Companies 86 10%
Other
7%
Debt Outstanding $0.85 bn
Unsecured
Net Assets $1.48 bn 7%
1st Lien
45%
Net Leverage Ratio (3) 0.55x 2nd Lien
30%
Net Asset Value Per Share $6.74
Most Recent Quarterly Dividend (4) $0.15
Market Information (5) Portfolio by Strategy(1) (2)
Life Sciences
Other
Market Capitalization $1.38 bn & Asset
5%
Based
Share Price $6.26 2%
(8)
Price-to-Book 0.93x Existing
Specialty Corporate
Dividend Yield at Share Price (6) 9.6% Verticals Lending
25% 51%
Dividend Yield at NAV (7) 8.9% Aircraft
Leasing
18%
(1) As of March 31, 2017. (2) On a fair value basis. (3) Net leverage ratio is defined as debt outstanding plus payable for investments purchased, less receivable for investments sold, less cash, less foreign currencies at fair
value, divided by net assets. (4) On May 17, 2017, the Board of Directors declared a dividend of $0.15 per common share to shareholders of record as of June 21, 2017 payable on July 6, 2017. (5) As of May 19, 2017. (6) Most
recent quarterly dividend annualized divided by share price. There can be no assurances that AINV’s dividend will remain at the current level. (7) Most recent quarterly dividend annualized divided by net asset value per share.
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There can be no assurances that AINV’s dividend will remain at the current level. (8) Existing specialty verticals includes oil & gas, renewables, shipping and structured credit.
Apollo Direct Origination Capabilities
Premier U.S. Private Debt Platform
AGM is a Leading Alternative Credit Manager with
Permanent Capital Vehicles
Focused on Direct Origination
+
AINV is a business
MidCap is a full service
development company or
finance company focused on
“BDC” focused on middle
middle market senior debt
market debt
~ $7.1 Billion Portfolio (1)
$2.3 Billion Portfolio (1)
Best-in-Class Middle Market Loan
Originator
(1) As of March 31, 2017. 9