From: Richard Kahn

From: Richard Kahn To: "Jeffrey E." <[email protected]> Subject: Fwd: Apollo Global Management LLC: Athene/APO Revised Mgmt Contract a Near-Term Negative but LT Positive Date: Thu, 20 Sep 2018 12:44:50 +0000 Richard Kahn HBRK Associates Inc. 575 Lexington Avenue 4th Floor New York, NY 10022 tel fax cel Begin forwarded message: From: "Morgan Stanley" Subject: Apollo Global Management LLC: Athene/APO Revised Mgmt Contract a Near-Term Negative but LT Positive Date: Seiptember 20, 2018 at 8:28:29 AM EDT To: Rep (Morgan Stanley Wealth Management Apollo Global Management LLC: Athene/APO Revised Mgmt Contract a Near-Term Negative but LT Positive 2,Download Report EFTA01022442 Michael J. Cyprys, CFA, CPA— Morgan Stanley September 20, 2018 12:27 PM GMT We see a 30c hit to APO EPS from a reduction in the base fee that APO generates on assets it manages for Athene: worth 8% hit to our 2019 EPS that likely weighs on the stock today. However, this removes an overhang on the stock and a key risk that weighed on sentiment and the stock YTD. Recall APO generates about 30% of its management fee revenues from its relationship with Athene. worth about S400m in LTM. The new contract reduces the base fee to 22.5 bps from about 35 bps today and extends duration of the contract to four years with auto 2-year renewals. Further, the contact changes the basis on which the additional sub-advisory fee is calculated but economics appear unchanged at first look on that fee. While the change in base fee reduces APO management fees by 10% on our calculation, this removes an overhang on the stock which is a positive and extends duration of capital. We are not changing our estimates at this time. This alert rs sent from Andrew Atlas You received this because you requested that you receive content and reports from: APOLLO GLOBAL MANAGEMENT, LLC Please contact your FA if you want to unsubscribe from the alerts. Disclosures: Please see the full report for risks, disclosures and other important information. Important disclosures regarding the relationship between the companies that are referenced in Morgan Stanley research and Morgan Stanley Wealth Management research are available on the Morgan Stanley Wealth Management disclosure website at https://www.morganstanley.comfonline/researchdisclosures. Morgan Stanley Wealth Management Not Acting as Municipal Advisor Morgan Stanley Wealth Management is not acting as a municipal advisor to any municipal entity or obligated person within the meaning of Section 15B of the Securities Exchange Act (the "Municipal Advisor Rule) and the opinions or views contained herein are not intended to be. and do not constitute. advice within the meaning of the Municipal Advisor Rule. Copyright The copyright in materials provided by Morgan Stanley is owned by Morgan Stanley & Co. LLC. Morgan Stanley Wealth Management is the trade name of Morgan Stanley Smith Barney LLC, a registered broker-dealer in the United States. 2018 Morgan Stanley Smith Barney LLC. Member SIPC. EFTA01022443