EFTA02623234.pdf

From: Richard Kahn < Sent: Thursday, September 27, 2018 1:26 PM To: Jeffrey Epstein Subject: Fwd: Apollo Global Management LLC: Management Meeting Takeaways Richard Kahn HBRK Associates Inc. 575 =exington Avenue 4th Floor New York, NY 10022 tel fan cel Begin forwarded message: From: =/b>"Morgan Stanley" < Subject: =/b>Apollo Global =anagement LLC: Management Meeting Takeaways Date: =/b>September 27, 2018 at 12:16:02 =M EDT To: qb>< > Reply-To: =/b><[email protected]> <http://www.morganstanley.com/img/cs/spacer.gif> <http://www.morganstanley.com/img/cs/spacer.gif> <http://www.morganstanley.com/img/cs/spacer.gif> <http://www.morganstanley.com/img/cs/spacer.gif> <http://www.morganstanley.com/> Wealth =anagement <http://www.morganstanley.com/img/cs/spacer.gif> Apollo Global =anagement LLC: Management Meeting Takeaways EFTA_R1_01832047 EFTA02623234 Michael J. Cyprys, CFA, CPA — Morgan Stanley September 27, 2018 4:01 AM =MT Our recent meeting with APO mgmt raises our confidence in =ash earnings ramp over next several years driven by Fund VIII portfolio =arvesting, new PE initiatives and significant growth potential in =redit that could see step function growth. Attractive valuation at =1.1x cash EPS; Overweight. 3 Key Takeaways (details =nside): 1) Next stage of growth to come from a range of PE and credit =nitiatives. In PE, Hybrid Value (a special situations fund), energy, =nd potentially a new longer-dated PE strategy to drive growth. In =redit, APO's permanent capital vehicles have excess capital =hat could support $85b of assets. While timing of credit deals is hard =o predict, the recent Voya transaction is resulting in increased =ialogue and mgmt sees a strong pipeline of potential activity. Further, =PO is building out origination capabilities to support additional =rowth. 2) We see termination risk of the Athene contract as highly =nlikely post last week's contract revision which removes an overhang =nd should support multiple expansion on APO's sticky management fee =tream on long duration/permanent capital. The contract was recently =enewed for a four year term and automatically renewed thereafter every =wo years. The new contract is positive for the stock and removes a key =nvestor concern. The fee rates under the new arrangement are neutral to =PS. Risk of termination in next four years is essentially a gross =egligence standard as it could only be for "cause". =hereafter, the contract could only be terminated because of poor =nvestment performance or if the fee rate is not a market rate; however, =PO has a two year cure period and termination requires a 2/3 vote of =he independent board members. 3) C-Corp conversion unlikely near-term =n our view, but we wouldn't be surprised if APO eventually converts =ssuming KKR's successful conversion remains the case. APO would =ncur a known economic cost, that is tax leakage, in amount of 15% of =arnings if they converted. The This alert is sent from: Andrew Atlas, You received this because =ou requested that you receive content and reports from: APOLLO =LORAL MANAGEMENT, LLC Please =ontact your FA if you want to unsubscribe from the alerts. <http://www.morganstanley.com/img/cs/spacer.gif> <http://www.morganstanley.com/img/cs/spacer.gif> <http://www.morganstanley.com/img/cs/spacer.gif> <http://www.morganstanley.com/img/cs/spacer.gif> Disclosures: Please see =he full report for risks, disclosures and other important =nformation. Important disclosures regarding the =elationship between the companies that are referenced in Morgan Stanley =esearch and Morgan Stanley Wealth Management research are available on =he Morgan Stanley Wealth Management disclosure website at https://www.morganstanley.com/online/researchdisclosures. 2 EFTA_R1_01832048 EFTA02623235 Morgan Stanley Wealth Management Not Acting as Municipal =dvisor Morgan Stanley Wealth Management is not acting as a municipal =dvisor to any municipal entity or obligated person within the meaning =f Section 158 of the Securities Exchange Act (the "Municipal Advisor =ule") and the opinions or views contained herein are not intended to =e, and do not constitute, advice within the meaning of the Municipal =dvisor Rule. Copyright The =opyright in materials provided by Morgan Stanley is owned by Morgan =tanley & Co. LLC. Morgan Stanley Wealth Management is the trade =ame of Morgan Stanley Smith Barney LLC, a registered broker-dealer in =he United States. © =018 Morgan Stanley Smith Barney LLC. Member SIPC. <http://www.morganstanley.com/img/cs/spacer.gif> <http://www.morganstanley.com/img/cs/spacer.gif> <http://www.morganstanley.com/img/cs/spacer.gif> <http://www.morganstanley.com/img/cs/spacer.gif> <http://www.morganstanley.com/img/cs/spacer.gif> <http://www.morganstanley.com/img/cs/spacer.gif> <http://www.morganstanley.com/img/cs/spacer.gif> 3 EFTA_R1_01832049 EFTA02623236