Investor Presentation June 2020 Unless otherwise noted, information - - PowerPoint PPT Presentation
A P O L L O I N V E S T M E N T C O R P O R A T I O N Investor Presentation June 2020 Unless otherwise noted, information as of March 31, 2020 It should not be assumed that investments made in the future will be profitable or will equal the
Unless otherwise noted, information as of March 31, 2020 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.
A P O L L O I N V E S T M E N T C O R P O R A T I O N
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. Words such as “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 investing including changes in business conditions and the general economy. Statements regarding the following subjects, among others, maybe forward looking: the macro- and micro-economic impact of the COVID-19 pandemic; the severity and duration of the COVID-19 pandemic; actions taken by governmental authorities to contain the COVID-19 pandemic or treat its impact; the impact of the COVID-19 pandemic on our financial condition, results of operations, liquidity and capital resources. For additional information about the COVID-19 pandemic and its potential impact on the Company’s results of operations and financial condition, please refer to the COVID-19 Developments section and additional disclosure in our Form 10-K for the period ended March 31, 2020. 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
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, Inc.; 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”) 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 and annual financial information for the Corporation refers to fiscal periods. All share and per share data shown herein is adjusted for the one-for-three reverse stock split of the Company’s common stock which took effect at the close of business on November 30, 2018.
2
3
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
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.
4
5
6
1 On a fair value basis. 2 As of March 31, 2020. 3 Apollo Investment Management, L.P. 4 See definition of AUM at beginning of presentation. 5 MidCap Financial refers to MidCap FinCo Designated Activity Company, 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, Inc., pursuant to an investment management agreement between Apollo Capital Management, L.P. and MidCap FinCo Designated Activity Company. 6 The Company announced that on April 4, 2018, its Board of Directors approved the application of the modified asset coverage requirements set forth in new Section 61(a)(2) of the Investment Company Act of 1940, as amended by The Small Business Credit Availability Act (“SBCAA”). As a result, the asset coverage ratio test applicable to the Company was reduced from 200% to 150% on April 4, 2019. 7 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. 8 As of June 1, 2020. 9 Most recent quarterly dividend annualized divided by share price. There can be no assurances that AINV’s dividend will remain at the current level. 10 Most recent quarterly dividend annualized divided by net asset value per share. There can be no assurances that AINV’s dividend will remain at the current level.
Specialty Finance Company Focused on Lending to US Middle Market Companies
regulated investment company (“RIC”)
Externally Managed by Apollo Global Management
approximately $316 billion of AUM 2,4 with expertise in private equity, credit and real assets
Competitive Advantages Apollo Affiliation
benefits
team with joint front engine across AINV and MidCap Financial (“MidCap”) 5 Well Positioned to Benefit from Increase in Regulatory Leverage 6
assets from existing Apollo Direct Origination platform
commitments while maintaining relatively small hold sizes given AINV’s receipt of exemptive relief to co-invest 7 Exemptive Relief to Co-Invest 7
competitive positioning
Current Market Information 8 Market capitalization $688 million Dividend yield at market price 9 17.3% Dividend yield at NAV 10 11.5%
All figures as of March 31, 2020 unless otherwise noted. Please refer to the beginning of this presentation for the definition of AUM. (1) AUM figures include funds that are denominated in Euros and translated into US dollars at an exchange rate of €1.00 to $1.10 as of March 31, 2020. Business segment AUM may not sum to total firm AUM due to rounding. (2) Headcount includes 3 Executive Officers as Private Equity Investment Professionals (3) Number may not be fully reflective of all Apollo affiliated office space worldwide
7
Key Attributes Global Footprint
Value-oriented, contrarian approach Opportunistic across market cycles Integrated platform across asset classes and geographies Deep industry knowledge
Private Equity
154 Investment Professionals2 $68 bn in AUM1
Credit Real Assets
235 Investment Professionals $210 bn in AUM1 104 Investment Professionals $38 bn in AUM1
New York Bethesda Houston Los Angeles London Madrid Frankfurt Luxembourg Delhi Mumbai Shanghai Hong Kong Singapore
Firm Profile
Founded: 1990 AUM: ~$316 bn1 Employees: 1,460 Offices Worldwide: 153
Tokyo San Diego
Commercial Real Estate Debt
Scott Weiner $24 billion in AUM 31 Professionals
8
Note: All strategies and leadership listed above reflect global coverage. AUM and headcount as of March 31, 2020. Please refer to the beginning of this presentation for the definition of AUM. AUM figures include funds that are denominated in Euros and translated into U.S. dollars at an exchange rate of €1.00 to $1.10 as of March 31, 2020. (1) Strategy headcounts excludes 18 global business professionals. (2) ISG manages $162bn in assets for affiliate insurance balance sheets, including those sub-advised by Apollo’s Credit, Private Equity, and Real Assets businesses. (3) In addition, serves as co-portfolio manager of the SCRF Funds and Partner, European Credit.
Apollo Global Credit $210 Billion in AUM & 235 Investment Professionals (1)
Fixed Income $58 billion in AUM 32 Professionals Corporate Credit $47 billion in AUM 61 Professionals Direct Origination $24 billion in AUM 42 Professionals Insurance Solutions Group (ISG) (2) 44 Professionals
Leadership
Jim Hassett Brigitte Posch Joseph Moroney John Zito Howard Widra Tanner Powell Gary Rothschild Justin Sendak Bret Leas Nancy De Liban Rob Graham Jeff Jacobs Jamshid Ehsani Jim Galowski (3) Matt O’Mara Jasjit Singh
Strategies
bonds
placements
loans
direct lending
loans
finance
side sourcing
solution capital
securities
estate – RMBS & whole loans
loans & ABS
CMLs
construction & asset allocation
management
capital efficiency Structured Credit & ABS $18 billion in AUM 17 Professionals Consumer & Residential Credit $16 billion in AUM 21 Professionals Hybrid Capital
Robert Ruberton Matthew Michelini $9 billion in AUM 27 Professionals
Infrastructure and Energy Credit
Various $1 billion in AUM 9 Professionals
European Principal Finance
Skardon Baker $7 billion in AUM 25 Professionals
Other Credit Related Strategies
9
1 As of March 31, 2020. 2 Apollo Investment Management, L.P. (AIM), the investment adviser to Apollo Investment Corporation, is a non-controlling member of CION Investment Management, LLC (CIM), the investment adviser to CION Investment Corporation (CION). AIM performs sourcing services for CIM, which include, among other services, (i) assistance with identifying and providing information about potential investment opportunities for approval by CIM’s investment committee; (ii) providing (a) trade and settlement support; (b) portfolio and cash reconciliation; (c) market pipeline information regarding syndicated deals, in each case, as reasonably requested by CIM; and (d) monthly valuation reports and support for all broker-quoted investments. AIM has a limited role as a member of CIM and does not provide advice, evaluation, or recommendation with respect to the CION’s investments. All of CION’s investment decisions are the sole responsibility of, and are made at the sole discretion of, CIM.
Apollo Investment Corporation MidCap CION Investment Corporation 2
under the Investment Company Act of 1940 that has elected to be treated as a regulated investment company (RIC) for federal income tax purposes
solutions to US middle market companies
Market
152 companies 1
directly sourced middle market senior debt
leveraged loans, real estate and venture lending
affiliated with Apollo Global
management, of which MidCap holds $12.9 billion, of which $9.4 billion are funded and outstanding 1
a RIC for federal income tax purposes
solutions to US middle market companies
134 companies 1
Additional capacity in select opportunistic credit accounts
Encompasses an array of origination verticals and a comprehensive suite of products
Origination Channels Product Capabilities
Leveraged Lending
intermediaries
core investments
Niche Markets
10
$0.5 $3.2 $3.6 $3.9 $0.7 $11.9 $0.2 $1.0 $1.0 $1.3 $0.2 $3.7
$0.8 $4.2 $4.6 $5.1 $0.9 $15.6 0% 5% 10% 15% 20% 25% 30% 35% $- $2 $4 $6 $8 $10 $12 $14 $16 $18 2016 2017 2018 2019 2020 Total Apollo Global Commitment, excluding AINV AINV Commitment
Apollo Global Management Co-Investment Volume 1
1 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.
Direct Origination platform
maintain relatively small hold sizes given AINV’s receipt of exemptive relief to co-invest in 2016) 1
200+ Investment Professionals Globally
Volume Team
11
$ in billions
12
13
On a fair value basis December 31, 2016 December 31, 2017 December 31, 2018 December 31, 2019 March 31, 2020 Exposure to core assets 1, 2 66% 74% 80% 88% 90% Exposure to non-core assets and legacy 2,3 34% 26% 20% 12% 10% Exposure to first lien debt 4 29% 38% 62% 82% 85% Exposure to floating rate debt 4,5 84% 92% 100% 100% 100% Investments made pursuant to co- investment order 4,6 5% 33% 59% 76% 76% Borrower concentration 4 $21.3 m $19.7 m $15.9 m $16.4 m $15.8 m
1 Core assets include corporate lending and aviation. Corporate lending portfolio includes leveraged lending, life sciences, asset based and lender finance. 2 Percentage based on total investment portfolio. 3 Non-core assets include
excludes aviation, oil and gas, structured credit, renewables, shipping, commodities and investments on non-accrual status. 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.
14
Proactive Portfolio Management
(COVID-19) pandemic
loan documentation, add covenants and secure additional equity capital
Supporting Existing Borrowers
lender on much of AINV’s corporate lending portfolio and given the SEC’s recent temporary and conditional co-investment relief 1
necessary flexibility in the current environment Sufficient Liquidity
Facility (the “Facility”) as of March 31, 2020 2
Additional Current Areas of Focus
Apollo Global Management, Inc. Affiliation
1 The Securities and Exchange Commission issued an order on April 8, 2020, providing relief to business development companies whose operations may be affected by the COVID-19 coronavirus outbreak (Order). The Order expands the existing scope of co-investment relief that many BDCs have received, in order to permit certain affiliated private funds of a BDC that has a co-investment exemptive relief order to jointly invest in follow-on investments, even though conditions of such exemptive relief order might otherwise prohibit those affiliated private funds from doing so. The relief provided by the Order is limited to the period from April 9, 2020 to the earlier of (i) December 31, 2020 and (ii) the date by which the BDC elects to no longer rely on the Order. 2 As of March 31, 2020, aggregate lender commitments under the Senior Secured Facility totaled $1.81 billion and there were $1.449 billion of outstanding borrowings under the Facility and $6.2 million of letters of credit issued under the Facility. Accordingly, there was $354 million of unused capacity under the Facility as of March 31, 2020, which is subject to compliance with a borrowing base that applies different advance rates to different types of assets in the Company’s portfolio. As of March 31, 2020, the Company had immediate access to $224 million under the Facility based on the Company’s borrowing base. 3 On March 19, 2020, the Company announced that it was temporarily suspending its stock repurchase program, including amounts allocated to Rule 10b5-1 repurchase plans. The Company retains the right to reinstate the stock repurchase program.
15
1 Effective April 1, 2018. 2 The Company announced that on April 4, 2018, its Board of Directors approved the application of the modified asset coverage requirements set forth in new Section 61(a)(2) of the Investment Company Act of 1940, as amended by the SBCAA. As a result, the asset coverage ratio test applicable to the Company decreased from 200% to 150%, effective April 4, 2019. 3 The calculation of the incentive fee with the total return requirement began on January 1, 2019. The incentive fee rate and performance threshold remain 20% and 7% respectively. There was no change to the catch-up provision. For the period between April 1, 2018 through December 31, 2018, the incentive fee rate was waived to 15%, subject to the 7% annualized performance threshold. 4 Since the inception of the share repurchase program and through May 20, 2020. Inclusive of commissions. 5 As of May 20, 2020. On March 19, 2020, the Company announced that it was temporarily suspending its stock repurchase program, including amounts allocated to Rule 10b5-1 repurchase plans. The Company retains the right to reinstate the stock repurchase program.
Fee Structure Closely Aligns the Incentives of the Manager with the Interests of the Shareholders
assets to
Share Repurchase Program
$223.1 million 4
16
Strategy Fair Value as of March 31, 2020 % of non-core and legacy Shipping $138 million 52% Oil & Gas $64 million 24% Renewables $29 million 11% Legacy & Other $35 million 13% First Lien % 85% Floating Rate % 100% Sponsored % 88% Pursuant to co-investment order % 76% Average Borrower Exposure $15.8 mn Median EBITDA 4 $37mn Weighted Average Net Leverage 4, 5, 6, 7 5.48 x Weighted Average Attachment Point 4, 6, 7 0.9x Interest Coverage 4, 6, 7 2.8 x
17
1 On a fair value basis. 2 On debt investments. Based on average of beginning of period and end of period portfolio yield. On a cost basis. Exclusive of investments on non-accrual status. 3 Corporate lending includes leveraged lending, life sciences, asset based and lender finance. Excludes Merx Aviation and non-core and legacy investments. 4 Source: Company data. 5 Through AINV position. 6 Excludes select investments where metric is not relevant or appropriate or data is not available. 7 Weighted average by cost. Current metric.
Corporate Lending 3 $2.185 billion1 or 78.4% of portfolio Weighted Average Yield 8.5% 2 Non-Core and Legacy $267 million1 or 9.6% of portfolio Weighted Average Yield 7.7% 2
Total Portfolio $2.79 bn1 Weighted Average Yield 8.9% 2
81 aircraft (78 narrowbody) 10 aircraft types 40 lessees in 27 countries Weighted average age of aircraft ~9.3 years Weighted average lease maturity ~4.9 years
Merx Aviation $334 million1 or 12.0% of portfolio Weighted Average Yield 12.0% 2
Fair Value / Cost by Strategy Change
($ in millions, except per share data) Gain (Loss) Total Gain (Loss) Per Share Gain (Loss) % of Total Leveraged lending ($61.4) ($0.93) 33% Life sciences ($5.8) ($0.09) 3% Asset based and lender finance ($6.6) ($0.10) 4% Fx Gain (loss) on corporate lending $9.2 $0.14
Corporate lending portfolio ($64.5) ($0.97) 35% Merx Aviation ($29.3) ($0.44) 16% Core portfolio ($93.9) ($1.42) 50% Oil & Gas ($52.3) ($0.79) 28% Renewables ($14.0) ($0.21) 8% Shipping ($1.5) ($0.02) 1% Legacy & Other ($24.8) ($0.37) 13% Fx Gain (loss) Non-Core $0.5 $0.01 0% Non-core and legacy ($92.2) ($1.39) 50% Total investment portfolio ($186.0) ($2.81) 100% ($ in millions) Fair Value / Cost 12/31/19 Fair Value / Cost 3/31/20 Change in Fair Value / Cost Leveraged lending 98.8% 95.6%
Life sciences 100.1% 95.2%
Asset based and lender finance 99.7% 97.0%
Corporate lending portfolio 99.0% 95.7%
Merx Aviation 113.3% 104.2%
Core portfolio 100.8% 96.8%
Oil & Gas 58.9% 32.4%
Renewables 77.4% 52.2%
Shipping 91.0% 90.0%
Legacy & Other 75.1% 44.6%
Non-core and legacy 73.7% 54.8%
Total investment portfolio 96.5% 90.2%
18
Note: Numbers may not sum due to rounding
Realized and Change in Unrealized Gains (Losses) by Strategy For the Three Months Ended March 31, 2020
19
81 aircraft 10 aircraft types 40 lessees in 27 countries Weighted average age of aircraft ~9.3 years Weighted average lease maturity ~4.9 years Merx Portfolio1 Number of Aircraft by Type1 Aircraft by Region1,3 Staggered Lease Maturity1 Aircraft Value by Lessee1,2
33 25 1 7 2 5 1 5 11
737-800 A320-200 777-200F A321-200 A321neo A319-100 A330-200 737-700 737-900ER 787-8
34% 23% 22% 10% 4% 4% 3% Asia Europe North America Latin America Africa Australia Middle East 2 7 8 15 13 14 10 6 1 4 1 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 # of leases maturing by year 9% 7% 6% 6% 5% 4% 4% 4% 4% 3% 3% 3% 3% 3% 3% 2% 2% 2% 2% 2% 23% 20 Lessees Each < 2% 1 As of March 31, 2020 2 On a fair value basis. 3 Based on base value. For more information about Merx, please visit www.merxaviation.com.
Represents 12.0% of AINV’s investment portfolio 1, 2
Portfolio Diversification
16.7% 12.9% 12.5% 12.3% 6.1% 4.4% 3.5% 3.2% 2.7% 2.6% 2.3% 2.3% 2.3% 2.2% 1.7% 1.6% 1.6% 1.5% 1.5% 1.2% 1.1% 1.0% 2.8%
Healthcare & Pharmaceuticals Business Services Aviation and Consumer Transport High Tech Industries Transportation – Cargo, Distribution Consumer Services Beverage, Food & Tobacco Consumer Goods – Non-durable Consumer Goods – Durable Diversified Investment Vehicles, Banking, Finance, Real Estate Chemicals, Plastics & Rubber Energy – Oil & Gas Insurance Automotive Retail Manufacturing, Capital Equipment Aerospace & Defense Advertising, Printing & Publishing Media – Diversified & Production Education Environmental Industries Construction & Building Other
2
20
1 As of March 31, 2020. On a fair value basis 2 Other includes: Telecommunications; Energy – Electricity; Food & Grocery; Wholesale; Containers, Packaging & Glass; Hotel, Gaming, Leisure, Restaurants.
Average Position Size 3, at fair value ($ in millions)
Rank Portfolio Company Fair Value % of Portfolio 1 ChyronHego Corporation 70 $ 3.2% 2 Genesis Healthcare, Inc. 44 2.0% 3 Simplifi Holdings, Inc. 38 1.7% 4 Telestream Holdings Corporation 37 1.7% 5 RA Outdoors, LLC (Active Outdoors) 37 1.7% 6 NFA Group 34 1.6% 7 Medical Guardian 34 1.6% 8 IPS 34 1.5% 9 MAKS 34 1.5% 10 PSI Services, LLC 33 1.5% Top Ten Corporate Lending Portfolio 395 $ 18.1% Other 1,790 81.9% Total Corporate Lending Portfolio 2,185 $ 100.0%
$15.5 $15.7 $16.3 $16.4 $15.8 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20
Fair Value % of Portfolio Leveraged Lending 1,836 $ 66% Life Sciences 112 4% Asset Based and Lender Finance 237 9% Total Corporate Lending Portfolio 2,185 $ 78% Aviation 334 12% Total Core Assets 2,518 90% Non-Core and Legacy 267 10% Total Portfolio 2,785 $ 100%
21
1 Based on corporate lending portfolio. Top ten portfolio companies based on market value as of March 31, 2020. 2 AINV sold $65 million of the position subsequent to quarter end to achieve its desired hold size. 3 Based on corporate lending portfolio.
Portfolio by Origination Strategy ($ in millions) Top Ten Corporate Lending Portfolio Companies1 ($ in millions)
Median LTM EBITDA
1.9 x 1.7 x 1.3 x 0.9 x 0.9 x Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 2.4 x 2.4 x 2.5 x 2.5 x 2.8 x Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 5.45 x 5.43 x 5.50 x 5.27 x 5.46 x Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 $54 $42 $37 $35 $37 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20
Source: Company data. 1 Based on corporate lending portfolio. Excludes select investments where metric is not relevant or appropriate or data is not available. Weighed average by cost. Current metric.
Net Leverage through AINV Position 1 Total Cash Interest Coverage 1 AINV Attachment Point 1
22
As of March 31, 2020, 5.1% of total investments at amortized cost, or 1.7% of total investments at fair value, were on non-accrual status.
23
Note: Numbers may not sum due to rounding ($ in thousands) 4Q'20 3Q'20 2Q'20 1Q'20 4Q'19 Mar-20 Dec-19 Sep-19 Jun-19 Mar-19 Investments on Non-Accrual Status Non-accrual investments at amortized cost $158,694 $60,243 $60,756 $67,240 $72,003 Non-accrual investments/total portfolio, at amortized cost 5.1% 2.0% 2.1% 2.5% 2.9% Non-accrual investments at fair value $48,668 $20,707 $26,682 $45,300 $56,853 Non-accrual investments/total portfolio, at fair value 1.7% 0.7% 1.0% 1.7% 2.4% Investments on Non-Accrual Status as of March 31, 2020 Industry Cost Fair Value Crowne Automotive Automotive 1,329 1,036 Garden Fresh Hotel, Gaming, Leisure, Restaurants 2,500 2,425 Glacier Oil & Gas Corp. (f/k/a Miller Energy Resources, Inc.) Energy – Oil & Gas 36,926 14,711 KLO Holdings, LLC Consumer Goods – Durable 13,491 2,148 Magnetation, LLC Metals & Mining 581 Solarplicity Group Limited (f/k/a AMP Solar UK) Energy – Electricity 7,637 3,787 Spotted Hawk Energy – Oil & Gas 89,378 22,495 ZPower, LLC High Tech Industries 6,853 2,066 Total $158,694 $48,668
24
25
Notes: Reflects the views of Apollo. For detailed information on risks relating to AINV, see the latest 10-K and subsequent quarterly reports on Form 10-Q, filed with the SEC.
1 Affiliation with Apollo Global Management Inc., a leading global alternative investment manager 2 Highly differentiated origination platform 3 Well-diversified senior corporate lending portfolio which we believe will withstand current volatility 4 Well-situated to support existing borrowers 5 Adequate liquidity and no near-term debt maturities 6 Fee structure closely aligns the incentives of the manager with the interests of shareholders
26
27
Asset Based
loans against fixed assets or as supported by cash flow
borrowing base monitoring capabilities and complex cash dominion structures
Life Sciences
(e.g., biotech companies) or early commercialization
Lender Finance
collateral
corporate and/or personal recourse with various restrictive covenants
underlying collateral
Franchise Finance
28
Notes: Numbers may not sum due to rounding. 1 The Company’s net leverage ratio is defined as debt outstanding plus payable for investments purchased, less receivable for investments sold, less cash and cash equivalents, less foreign currencies, divided by net assets. 2 Based on commitments for core portfolio and non-core and legacy investments. ($ in thousands, except per share data) 4Q'20 3Q'20 2Q'20 1Q'20 4Q'19 Mar-20 Dec-19 Sep-19 Jun-19 Mar-19 Financial Highlights Net investment income per share $0.59 $0.54 $0.53 $0.50 $0.47 Net realized and change in unrealized gains (losses) from investments and foreign currencies per share ($2.81) ($0.54) ($0.36) ($0.16) ($0.01) Net realized loss on extinguishment of debt per share – – (0.06) – – Earnings (loss) per share ($2.22) $0.00 $0.10 $0.35 $0.46 Net asset value per share $15.70 $18.27 $18.69 $19.00 $19.06 Distribution recorded per common share $0.45 $0.45 $0.45 $0.45 $0.45 Net leverage ratio 1 1.71 x 1.43 x 1.24 x 1.03 x 0.83 x Investment Activity Commitments 2 Gross commitments made $153,442 $491,440 $378,707 $451,100 $230,396 Exits of commitments (212,483) (309,485) (145,689) (141,965) (52,746) Net investment commitments made ($59,041) $181,955 $233,018 $309,135 $177,650 Funded Investment Activity Gross fundings, excluding Merx Aviation and revolvers $209,775 $399,385 $357,804 $312,423 $164,140 Net fundings, including Merx Aviation and revolvers $7,675 $170,912 $207,057 $214,997 $98,051
29
1 Corporate lending includes leveraged lending, life sciences, asset based and lender finance. Excludes Merx Aviation and non-core and legacy investments. 2 Non-core assets include oil & gas, structured credit, renewables, shipping and commodities. 3 Based on average of beginning of period and end of period portfolio yield. On a cost basis. Exclusive of investments on non-accrual status. ($ in thousands) 4Q'20 3Q'20 2Q'20 1Q'20 4Q'19 Mar-20 Dec-19 Sep-19 Jun-19 Mar-19 Portfolio by Strategy, at fair value ($) Leveraged lending $1,835,702 $1,839,711 $1,627,004 $1,421,556 $1,196,426 Life sciences 112,105 132,165 119,322 115,726 121,660 Asset based and lender finance 236,892 273,871 269,905 256,242 203,147 Corporate lending portfolio 1 $2,184,700 $2,245,746 $2,016,231 $1,793,524 $1,521,233 Merx Aviation 333,747 363,060 362,997 380,915 425,481 Core portfolio $2,518,446 $2,608,806 $2,379,228 $2,174,438 $1,946,713 Non-core and legacy 2 266,987 358,391 425,532 445,874 461,419 Total investment portfolio $2,785,433 $2,967,197 $2,804,760 $2,620,312 $2,408,132 Portfolio by Strategy, at fair value (%) Leveraged lending 66% 62% 58% 54% 50% Life sciences 4% 4% 4% 4% 5% Asset based and lender finance 9% 9% 10% 10% 8% Corporate lending portfolio 1 78% 76% 72% 68% 63% Merx Aviation 12% 12% 13% 15% 18% Core portfolio 90% 88% 85% 83% 81% Non-core and legacy 2 10% 12% 15% 17% 19% Total investment portfolio 100% 100% 100% 100% 100% Weighted Average Yield on Debt Investments, average 3 Corporate lending portfolio 1 8.5% 9.0% 9.4% 9.9% 10.3% Merx Aviation 12.0% 12.0% 12.0% 12.0% 12.0% Core portfolio 8.9% 9.4% 9.8% 10.3% 10.7% Non-core and legacy 2 7.7% 7.4% 7.3% 7.3% 8.4% Total investment portfolio 8.9% 9.2% 9.6% 10.0% 10.4% Number of portfolio companies, at period end 152 151 139 129 113
30
1 Corporate lending includes leveraged lending, life sciences, asset based and lender finance. Excludes Merx Aviation and non-core and legacy investments. Non-core assets include oil & gas, structured credit, renewables, shipping and commodities 2 Source: Company data. 3 Through AINV position. 4 Excludes select investments where metric is not relevant or appropriate or data is not available. 5 Weighted average by cost. Current metric. ($ in thousands) 4Q'20 3Q'20 2Q'20 1Q'20 4Q'19 Mar-20 Dec-19 Sep-19 Jun-19 Mar-19 Portfolio by Asset Class, measured at fair value ($) First lien $1,847,574 $1,847,797 $1,559,301 $1,277,535 $991,430 Second lien 328,709 388,820 450,495 509,716 525,493 Other 8,417 9,130 6,435 6,272 4,310 Total corporate lending portfolio $2,184,700 $2,245,746 $2,016,231 $1,793,524 $1,521,233 Portfolio by Asset Class, measured at fair value (%) First lien 85% 82% 77% 71% 65% Second lien 15% 17% 22% 28% 35% Other 0% 0% 0% 0% 0% Total corporate lending portfolio 100% 100% 100% 100% 100% Weighted Average Spread over LIBOR of Floating Rate Assets (in bps) First lien 595 606 611 609 640 Second lien 854 859 859 877 855 Weighted average spread 635 651 667 686 713 Weighted Average Net Leverage 2, 3, 4, 5 First lien 5.33 x 5.11 x 5.20 x 5.02 x 5.10 x Second lien 6.01 x 5.82 x 6.26 x 6.12 x 5.89 x Weighted average net leverage 5.48 x 5.27 x 5.50 x 5.43 x 5.45 x Interest Rate Type, measured at fair value Fixed rate % 0% 0% 0% 1% 0% Floating rate % 100% 100% 100% 99% 100% Sponsored / Non-sponsored, measured at fair value Sponsored % 88% 87% 88% 88% 86% Non-sponsored % 12% 13% 12% 12% 14% Other Metrics Pursuant to co-investment order % 76% 76% 74% 67% 63% Average borrower exposure $15,831 $16,392 $16,260 $15,733 $15,523 Interest coverage 2, 4, 5 2.8 x 2.5 x 2.5 x 2.4 x 2.4 x Attachment point 2, 4, 5 0.9 x 0.9 x 1.3 x 1.7 x 1.9 x
31
1 Corporate lending includes leveraged lending, life sciences, asset based and lender finance. Excludes Merx Aviation and non-core and legacy investments. Non-core assets include oil & gas, structured credit, renewables, shipping and
3 Excludes $40.5 million commitment to Chyron Hego Corporation. ($ in thousands) 4Q'20 3Q'20 2Q'20 1Q'20 4Q'19 Mar-20 3 Dec-19 Sep-19 Jun-19 Mar-19 Gross Commitments Made by Asset Class First lien $153,439 $490,386 $376,707 $449,816 $227,639 Second lien Other 1 1,055 1,284 463 Gross commitments made $153,440 $491,440 $376,707 $451,100 $228,102 Gross Commitments Made Information Number of portfolio companies 14 28 22 25 19 Average commitment size $10,960 $17,551 $17,123 $18,044 $12,005 Floating Rate % 100% 100% 100% 100% 100% Pursuant to co-investment order % 83% 85% 94% 96% 94% Weighted Average Spread over LIBOR of New Floating Rate Commitments (in bps) First lien 580 612 604 552 585 Second lien N/A N/A N/A N/A N/A Weighted average spread 580 612 604 552 585 Weighted Average Net Leverage of New Commitments 2 First lien 4.8 x 5.3 x 5.4 x 4.7 x 3.9 x Second lien N/A N/A N/A N/A N/A Weighted average net leverage 4.8 x 5.3 x 5.4 x 4.7 x 3.9 x Exits of Commitments by Asset Class First lien ($161,925) ($136,257) ($87,135) ($118,065) ($32,239) Second lien (49,489) (61,675) (57,547) (21,887) (2,450) Other (7) Exits of commitments ($211,414) ($197,933) ($144,689) ($139,952) ($34,689)
32
1 Excludes Merx Aviation and revolvers. ($ in thousands) 4Q'20 3Q'20 2Q'20 1Q'20 4Q'19 Mar-20 Dec-19 Sep-19 Jun-19 Mar-19 Fundings, excluding Merx Aviation and Revolvers Gross fundings 1 $209,775 $399,385 $357,804 $312,423 $164,140 Sales and syndications 1 (122,901) (14,930) (19,996) (9,562) (10,814) Repayments 1 (126,697) (212,333) (136,484) (66,864) (33,588) Net fundings, excluding Merx Aviation and revolvers ($39,823) $172,122 $201,324 $235,997 $119,738 Merx Aviation Gross Fundings $0 $0 $7,600 $5,500 $4,000 Repayments (2,000) (25,500) (51,500) (35,000) Net fundings, Merx Aviation $0 ($2,000) ($17,900) ($46,000) ($31,000) Revolvers, excluding Merx Aviation Gross Fundings $214,460 $130,656 $111,334 $117,336 $82,079 Sales and Syndications 266 Repayments (167,227) (129,866) (87,701) (92,336) (72,766) Net fundings, revolvers $47,499 $790 $23,633 $25,000 $9,313 Total Funded Investment Activity Gross Fundings $424,235 $530,041 $476,738 $435,259 $250,219 Sales and Syndications (122,635) (14,930) (19,996) (9,562) (10,814) Repayments (293,924) (344,199) (249,685) (210,700) (141,354) Net fundings, including Merx Aviation and revolvers $7,675 $170,912 $207,057 $214,997 $98,051 Number of Portfolio Companies Number of portfolio companies, at beginning of period 151 139 129 113 103 Number of new portfolio companies 9 16 14 21 12 Number of exited portfolio companies (8) (4) (4) (5) (2) Number of portfolio companies, at period end 152 151 139 129 113
$15.70 $18.27 $18.69 $19.00 $19.06 $- $5 $10 $15 $20 Mar-20 Dec-19 Sep-19 Jun-19 Mar-19
Net Asset Value Per Share
33
Note: Numbers may not sum due to rounding. ($ in thousands, except per share data) 4Q'20 3Q'20 2Q'20 1Q'20 4Q'19 Mar-20 Dec-19 Sep-19 Jun-19 Mar-19 Per Share NAV, beginning of period $18.27 $18.69 $19.00 $19.06 $19.03 Net investment income 0.59 0.54 0.53 0.50 0.47 Net realized and change in unrealized gains (losses) (2.81) (0.54) (0.36) (0.16) (0.01) Net realized loss on extinguishment of debt per share – – (0.06) – – Net increase (decrease) in net assets resulting from operations (2.22) 0.00 0.10 0.35 0.46 Repurchase of common stock 0.10 0.02 0.04 0.04 0.02 Distribution recorded (0.45) (0.45) (0.45) (0.45) (0.45) NAV, end of period $15.70 $18.27 $18.69 $19.00 $19.06 Total NAV, beginning of period $1,215,882 $1,253,392 $1,290,710 $1,312,627 $1,316,605 Net investment income 38,786 36,220 35,733 34,534 32,552 Net realized and change in unrealized gains (losses) (186,033) (35,934) (24,291) (10,705) (708) Net realized loss on extinguishment of debt – – (4,375) – – Net increase (decrease) in net assets resulting from operations (147,247) 286 7,068 23,829 31,844 Repurchase of common stock (14,954) (7,850) (14,215) (15,123) (4,781) Distributions recorded (29,367) (29,946) (30,171) (30,624) (31,040) NAV, end of period $1,024,315 $1,215,882 $1,253,392 $1,290,710 $1,312,627
34
Note: Numbers may not sum due to rounding. ($ in thousands, except per share data) 4Q'20 3Q'20 2Q'20 1Q'20 4Q'19 Mar-20 Dec-19 Sep-19 Jun-19 Mar-19 Total investment income Interest income (excluding PIK) $64,782 $62,417 $63,760 $59,643 $54,905 Dividend income 2,380 3,237 2,769 381 3,846 PIK interest income 1,143 1,634 1,603 5,556 1,485 Other income 3,294 1,193 2,185 937 1,174 Total investment income $71,600 $68,482 $70,318 $66,516 $61,410 Expenses Management fees $10,289 $10,342 $10,190 $9,539 $8,881 Performance-based incentive fees – 71 1,911 – – Interest and other debt expenses 18,953 18,200 18,735 17,511 15,623 Administrative services expense 1,525 1,542 1,542 1,725 1,620 Other general and administrative expenses 2,185 2,205 2,304 3,305 2,757 Total expenses 32,952 32,360 34,683 32,079 28,881 Expense reimbursements (138) (99) (99) (98) (23) Net expenses $32,814 $32,262 $34,584 $31,982 $28,858 Net investment income $38,786 $36,220 $35,733 $34,534 $32,552 Net realized gains (losses) $20 $3,843 ($7,087) $1,282 $174 Net realized loss on extinguishment of debt – – (4,375) – – Net change in unrealized gains (losses) (186,053) (39,777) (17,203) (11,987) (882) Net realized and change in unrealized gains (losses) (186,033) (35,934) (28,666) (10,705) (708) Net increase (decrease) in net assets resulting from operations ($147,247) $286 $7,068 $23,829 $31,844 Additional Data Net investment income per share $0.59 $0.54 $0.53 $0.50 $0.47 Earnings (loss) per share ($2.22) $0.00 $0.10 $0.35 $0.46 Distribution recorded per common share $0.45 $0.45 $0.45 $0.45 $0.45 Weighted average shares outstanding 66,270,865 66,613,469 67,446,575 68,588,541 69,121,393 Shares outstanding, end of period 65,259,176 66,545,741 67,047,352 67,927,353 68,876,986 For the Three Months Ended
35
Note: Numbers may not sum due to rounding. 1 Other assets include cash collateral on option contracts, dividends receivable, deferred financing costs, variation margin receivable on options contracts and prepaid expenses and other assets. 2 The Company’s net leverage ratio is defined as debt outstanding plus payable for investments purchased, less receivable for investments sold, less cash and cash equivalents, less foreign currencies, divided by net assets. ($ in thousands, except share and per share data) 4Q'20 3Q'20 2Q'20 1Q'20 4Q'19 Mar-20 Dec-19 Sep-19 Jun-19 Mar-19 Assets Investments at fair value $2,785,433 $2,967,197 $2,804,760 $2,620,312 $2,408,132 Cash and cash equivalents (including foreign currencies) 43,676 42,226 36,437 30,570 41,189 Interest receivable 19,150 18,936 28,692 25,692 24,280 Receivable for investments sold 978 5,685 269 684 336 Other assets 1 21,820 25,979 22,803 23,171 23,860 Total Assets $2,871,058 $3,060,024 $2,892,962 $2,700,430 $2,497,797 Liabilities Debt $1,794,617 $1,785,637 $1,584,128 $1,349,597 $1,128,686 Payables for investments purchased – 800 – – 677 Distributions payable 29,367 29,946 30,171 30,624 31,040 Management and performance-base incentive fees payable 10,289 10,414 12,101 9,539 8,880 Interest payable 2,887 8,138 3,666 10,404 5,818 Accrued administrative services expense 2,797 2,576 2,354 2,295 2,983 Other liabilities and accrued expenses 6,787 6,631 7,149 7,260 7,086 Total Liabilities $1,846,743 $1,844,142 $1,639,570 $1,409,719 $1,185,170 Net Assets $1,024,315 $1,215,882 $1,253,392 $1,290,710 $1,312,627 Additional Data Net asset value per share $15.70 $18.27 $18.69 $19.00 $19.06 Debt-to-equity ratio 1.75 x 1.47 x 1.26 x 1.05 x 0.86 x Net leverage ratio 2 1.71 x 1.43 x 1.24 x 1.03 x 0.83 x Shares outstanding, end of period 65,259,176 66,545,741 67,047,352 67,927,353 68,876,986
Debt Facilities Debt Issued/ Amended Final Maturity Date Interest Rate Principal Amount Outstanding Senior Secured Facility ($1.81 billion) 11/19/2018 11/19/2023 L + 200 bps $1,449,402 2025 Notes 3/3/2015 3/3/2025 5.250% 350,000 3.932% $1,799,402 Deferred Financing Cost and Debt Discount (4,784) $1,794,617 Weighted Average Annualized Interest Cost1 & Total Debt Obligations Total Debt Obligations, Net of Deferred Financing Cost and Debt Discount
36
Note: Numbers may not sum due to rounding. 1 Includes the stated interest expense and commitment fees on the unused portion of the Senior Secured Facility. Excludes amortized debt issuance costs. For the three months ended March 31, 2020. Based on average debt
Debt Facilities ($ in thousands)
Par or Cost (in millions) % of Floating Rate Portfolio Interest Rate Floors No Floor $246 11% < 1.00% 161 7% 1.00% to 1.24% 1,785 77% 1.25% to 1.49% 23 1% 1.50% to 1.74% 72 3% > = 1.75% 44 2% Total $2,331
Investment Portfolio by Interest Rate Type 1
Fixed rate assets 12% Floating rate assets 80% Non yielding and non-accrual assets 4% Variable rate assets 4%
Floating Asset Rate Floor
37
Note: Numbers may not sum due to rounding. 1 Total investment portfolio. On a fair value basis.
Funding Sources by Interest Rate Type Net Investment Income Interest Rate Sensitivity
Annual Net Investment Income (in millions) Annual Net Investment Income Per Share Basis Point Change Up 200 basis points $12.4 $0.190 Up 100 basis points $6.0 $0.092 Down 100 basis points $2.7 $0.042 Fixed rate debt 13% Floating rate debt 51% Common equity 36%
38
See Note 10 (Commitments and Contingencies) in the Company's Form 10-K for the period ended March 31, 2020 for additional information. 1 The funded revolver obligations include standby letters of credit issued and outstanding. The unfunded revolver obligations relate to loans with various maturity dates. Revolver availability is determined based on each loan’s respective credit agreement which includes covenants that need to be met prior to funding and / or collateral availability for asset based revolver obligations. The unavailable unfunded revolver obligations include two loans for which availability decreased subsequent to quarter-end. 2 The delayed draw term loans include conditionality for the use of proceeds and are generally only accessible for acquisitions and also require lender approval. In addition, the delayed draw term loans require the satisfaction of certain pre-negotiated terms and conditions which can include covenants to maintain specified leverage levels and other related borrowing base covenants. 3 Unfunded delayed draw term loans are across 46 borrowers.
$ in thousands Par Funded Unfunded Unavailable Available Revolver Obligations and Bridge Loans 1 $478,715 $208,998 $269,716 $131,841 $137,876 Delayed Draw Term Loans 2 $426,954 $196,176 $230,778 Across 46 borrowers
3
For more information, please contact: Elizabeth Besen Investor Relations Manager Phone: (212) 822-0625 Email: ebesen@apollo.com Gregory W. Hunt Chief Financial Officer and Treasurer Phone: (212) 822-0655 Email: ghunt@apollo.com
39