2017 Wells Fargo Thought Leadership Forum

Transcription

1 2017 Wells Fargo Thought Leadership Forum Apollo Investment Corporation Howard Widra President December 6, 2017 Information is as of September 30, 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.

2 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 thirdparty 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, 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 and may include certain assets for which Apollo may earn investment-related services fees rather than management or advisory 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 byother investment managers. 1

3 AINV (1) Benefits From a Strong External Manager Apollo Global Management, LLC is one of the world s largest alternative asset managers Firm Profile (2) Business Segments Founded: 1990 AUM: $242bn Employees: 1,024 Inv. Professionals: 381 Global Offices: 16 Credit $158bn AUM Drawdown Liquid / Performing Permanent Capital Vehicles: -Athene -MidCap -BDCs -Closed-End Funds Advisory Private Equity $70bn AUM Opportunistic buyouts Distressed buyouts and debt investments Corporate carve-outs Real Assets $13bn AUM Commercial real estate Global private equity and debt investments Performing fixed income (CMBS, CRE Loans) Investment Approach Global Footprint Value-oriented Contrarian Integrated investment platform Toronto Chicago Toronto Chicago New York Los Angeles St. LouisBethesda Houston London Madrid Frankfurt Luxembourg Delhi Shanghai Opportunistic across market cycles and capital structures Bethesda Mumbai Hong Kong Singapore Focus on nine core industries (1) AINV refers to Apollo Investment Corporation. (2) As of September 30, Please refer to the definition of Assets Under Management at the beginning of this presentation. Note: AUM components may not sum due to rounding. 2

4 Apollo Credit Platform: Broad Capabilities & Capital Sources We believe Apollo is one of the largest and most successful managers of alternative credit Apollo Credit $158 billion in AUM & 230 Investment Professionals (1) Corporate Credit Structured Credit Apollo Advised Assets Performing Credit Liquid Opportunistic Credit Illiquid Opportunistic Credit Direct Origination European Principal Finance Structured Credit Athene Asset Management & Other Advised Assets ~$12 billion in AUM Encompasses MidCap, Apollo Investment Corporation (AINV) and CION Additional capacity in certain Opportunistic funds for off-the-run, directly sourced corporate loans Liquid / Performing Alternative Funds $42 billion in AUM (includes Performing and Hedge Funds, Managed CLOs, and SMAs) Permanent Capital $89 billion in AUM (includes Athene, MidCap and publicly traded funds) Drawdown Funds $27 billion in AUM (includes Opportunistic, European and Structured Credit Funds, and SMAs) (1) As of September 30, Please refer to the definition of Assets Under Management at the beginning of this presentation. 3

5 Apollo Has a Range of Solutions Across the Credit Spectrum Apollo manages more than 100 discrete funds or accounts across a broad set of investment strategies Target Return Illustrative Composition of Apollo s Credit Business $158 billion of AUM 15%+ Drawdown Funds ($27bn) 10-15% 5-10% MidCap ($7.4bn) Total Return ($4bn) Hedge Funds ($7bn) EM Debt AINV ($2.4bn) CION CLOs ($1.7bn) ($12bn) Credit Managed Accounts ($23bn) <5% Athene & Athora ($82bn) Yield-Oriented Strategies Opportunistic Strategies $131 billion of AUM including $95 billion in Credit Permanent Capital Vehicles $27 billion of AUM Note: As of September 30, Diagram is illustrative in nature with bubbles banded by approximate return targets and size of bubbles representing magnitude of AUM. Identified pockets of AUM may not sum due to double counting. There is no guarantee that these target returns will be realized. 4

6 Apollo s Direct and Specialty Origination Platform Direct Origination Encompasses an Array of Origination Verticals Aircraft Leasing Oil & Gas Capital Markets Sponsor Non-sponsor Corporate Asset Based Life Sciences Lender Finance Large and Diverse Team of 125+ Professionals Focused on Direct Origination Creates Stable Source of Proprietary Deal Flow 60+ Originators 65+ Underwriters Direct Origination Team is bolstered by access to the broader Apollo Global Management s integrated platform 5

7 Competitive Advantages We Believe Apollo s Direct Origination Platform Enjoys Significant Competitive Advantages Extensive origination team on par with any peer in the market Ability to provide solutions across the capital structure Full-service product suite term loans, revolver and agent capabilities Significant expertise in niche verticals with flexible product set Significant scale with permanent capital AUM (1) Well positioned to take on large commitments to win business Speed and certainty of execution Access to the broader Apollo Global integrated platform (1) Please refer to the definition of Assets Under Management at the beginning of this presentation. 6

8 Apollo s Dedicated Direct Origination Vehicles We believe Apollo s Direct Origination Platform is a premiere U.S. origination platform that provides best-in-class full service debt solutions to middle market companies Business development company (BDC) under the Investment Company Act of 1940 and regulated investment company (RIC) for tax purposes Focused on providing senior and junior debt solutions to U.S. middle market companies Publicly-listed on NASDAQ $2.4 billion in funded assets / 87 distinct positions (1) Established 2004 Full-service finance company focused on directly originated middle market senior debt Business lines include asset-backed loans, leveraged, real estate, and venture lending Privately-held by investors affiliated with Apollo $7.4 billion in funded assets / 499 distinct positions (1) Established 2008 Additional capacity in select Opportunistic Credit accounts (1) As of September 30,

9 Apollo s Direct Lending Product Suite Apollo s Direct Origination Platform has one of the broadest product offerings in the market which we believe allows us to see a wide array of opportunities Origination Channel Asset Yield (4) AINV MidCap 1 Corporate Lending Senior 4% 6% Stretch Senior 6% 8% Junior 8% 11% Real Estate Lending 4.5% 7.5% Life Sciences Lending 9% 12% Asset Based Lending 5% 11% Lender Finance 5.5% 11.5% Aircraft Leasing (1) 11% 14% Occasional opportunities within certain asset classes will be suitable for both AINV and MidCap (3) Total Investments (in billions) $2.4 (2) $7.4 (2) Primary Mandate Senior and subordinated debt yielding ~ 8% to 12% Senior debt yielding ~ 5% to 7% (1) Investment in aviation made via Merx Aviation Finance, LLC, a wholly owned portfolio company of AINV. (2) As of September 30, (3) Co-investments that are subject to the exemptive order are to be pari-passu. (4) There is no guarantee that these asset yields will be achieved. 8

10 Apollo Investment Corporation ( AINV ) AINV operates as part of Apollo s Direct Origination Business AINV Ticker (NASDAQ) $1.30 billion Market Capitalization (1) $2.36 billion 87 (2) (3) Investment Portfolio Portfolio Companies (2) 24 Different Industries (2) 10.1% (1) (4) Dividend Yield (1) As of December 4, (2) As of September 30, (3) At fair value (4) Most recent quarterly dividend annualized divided by share price. There can be no assurances that AINV s dividend will remain at the current level. 9

11 AINV Investment Strategy Our portfolio repositioning strategy is based on the following key principles: Continue to increase exposure to core strategies consisting of: Senior secured traditional corporate loans sourced by Apollo s direct origination platform with emphasis on true first lien and floating rate loans First lien loans in life sciences, asset-based lending and lender finance, areas with significant barriers to entry and areas in which MidCap has expertise Continue to transition away from non-core strategies (1) Reduce outsized single name or industry concentration With the continued successful execution of this repositioning plan, we believe that AINV should generate consistent and sustainable ROEs The AINV investment strategy reflects the views of Apollo Investment Corporation s management team. Subject to change at any time. There is no guarantee that the strategy will be achieved. (1) Non-core strategies are oil & gas, renewables, shipping and structured credit. 10

12 Significant Progress Reducing Exposure to Non-Core Assets (1) We have significantly reduced AINV s exposure to non-core assets which are generally higher on the risk spectrum and have more volatile returns Portfolio Composition by Strategy (2) $2.62 bn $2.36 bn 5% 19% 18% 41% 50% 41% 27% Non-Core Assets % of Total Portfolio (2) 6/30/16 9/30/17 Oil & Gas 11.6% 6.9% Renewables 8.9% 8.2% Shipping 5.1% 4.8% Structured Credit 9.1% 3.3% Legacy 6.0% 3.6% Non-Core and Legacy Investments 40.7% 26.8% 6/30/2016 9/30/2017 Life Sciences, Asset Based and Lender Finance Aircraft Leasing Corporate Lending Non-Core & Legacy (1) (1) Non-core assets are oil & gas, renewables, shipping and structured credit. (2) At fair value. 11

13 Emphasis on First Lien Debt We have significantly increased AINV s exposure to first lien debt investments which we believe have less risk, given higher recovery prospects in the event of default Investment Portfolio Exposure to First Lien Debt (1) $2.62 billion $2.36 billion Over the past 5 quarters, 45% of deployment was in first lien debt First Lien 40% First Lien 48% 6/30/2016 9/30/2017 (1) At fair value. 12

14 Emphasis on Floating Rate Debt We have significantly increased our exposure to floating rate debt which we believe better positions AINV for rising interest rates Investment Portfolio Exposure to Floating Rate Debt (1) Floating Rate 77% Floating Rate 91% Over the past 5 quarters, 100% of deployment within our corporate debt portfolio was in floating rate debt 6/30/2016 9/30/2017 (1) At fair value. The Company s interest rate type information is based on its corporate debt portfolio, exclusive of investments on non-accrual status. 13

15 Emphasis on Sponsor Lending We have significant resources dedicated to sponsor lending with a unified team of Apollo and MidCap professionals covering 400+ financial sponsors Investment Portfolio Sponsor Lending (1) Non- Sponsored 19% Sponsored 81% Over the past 5 quarters, 82% of deployment within our corporate debt portfolio was to sponsor-backed companies (1) At fair value. As of September 30, The sponsored / non-sponsored percentages are calculated using the Company s corporate debt portfolio and excludes aviation, oil and gas, structured credit, renewables, shipping and commodities. 14

16 Investments Made Pursuant to Co-Investment (1) Our ability to co-invest along with other Apollo managed capital makes us one of the largest market participants uniquely positioned to make large commitments Co-Investment Deployment as % Total Deployment (2) Corporate Lending 26% Life Sciences 6% Asset Based 6% Lender Finance 0.2% Over the past 5 quarters, AINV has invested $417 million or 38% of total deployment across 19 companies, pursuant to the co-investment exemptive order (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. (2) From July 1, 2016 through September 30,

17 Reduced Borrower Concentration We have significantly reduced our single name concentration exposure by reducing outsized positions as well as adding new positions consistent with our target hold size Average Borrower Exposure (1) $35.0 $33.0 $31.0 $32.3 million 2.7% $29.0 $27.0 $25.0 $ % $27.1 million 1.8% 2.2% 1.7% $21.0 $ % 1.1% 1.2% $17.0 $15.0 6/30/16 9/30/17 Avg. Borrower Exposure Avg. Borrower Exposure % Portfolio Avg. Borrower Exposure % Net Assets 0.7% (1) Average borrower exposure defined as investment portfolio at fair value divided by number of portfolio companies. 16

18 Potential Levers to Drive Shareholder Value Redeployment of under-earning / non-earning assets Utilization of dry powder to operate within target leverage range Benefit from rising interest rates Reduction in funding costs by redeeming / refinancing term debt Proactive share repurchase program The potential levers to drive shareholder value reflect the views and opinion of the management team of Apollo Investment Corporation. Subject to change at any time. There is no guarantee that the potential levers will be achieved. 17

19 Conclusion Apollo has one of the largest direct origination teams in the marketplace with significant expertise in many verticals. Looking ahead, AINV will continue to focus on investing in core assets and decreasing exposure to non-core assets (1) Investment Portfolio by Strategy (1) 19% 41% 5% 18% 50% ~ 20% 25% ~15% ~50% 60% 41% 27% 7% 6/30/2016 9/30/2017 Target Portfolio (3) Non-Core & Legacy Aircraft Leasing (2) Corporate Lending Life Sciences, Asset Based and Lender Finance Strategy designed to deliver consistent shareholder returns and a stable NAV (1) At fair value. (2) Non-core strategies are oil & gas, renewables, shipping and structured credit. (3) The target portfolio reflects the views and opinion of the management team of Apollo Investment Corporation. Subject to change at any time. There is no guarantee that the target portfolio will be achieved. 18

20 Appendices 19

21 Financial Highlights ($ in thousands, except per share data) 2Q'18 1Q'18 4Q'17 3Q'17 2Q'17 Operating Results (1) Sep-17 Jun-17 Mar-17 Dec-16 Sep-16 Net investment income $ 34,157 $ 33,320 $ 37,290 $ 36,352 $ 39,537 Net realized and change in unrealized gains (losses) (2,370) (4,539) (29,238) (25,062) 1,577 Net increase (decrease) in net assets resulting from operations $ 31,787 $ 28,781 $ 8,052 $ 11,290 $ 41,114 Net investment income per share $ 0.16 $ 0.15 $ 0.17 $ 0.17 $ 0.18 Net realized and change in unrealized gain (loss) per share (0.01) (0.02) (0.13) (0.12) 0.00 Earnings (Loss) per share - basic $ 0.14 $ 0.13 $ 0.04 $ 0.05 $ 0.18 Distribution recorded per common share $ 0.15 $ 0.15 $ 0.15 $ 0.15 $ 0.15 Select Balance Sheet and Other Data Investment portfolio (at fair value) $ 2,360,290 $ 2,416,579 $ 2,316,708 $ 2,526,333 $ 2,548,568 Debt outstanding $ 864,906 $ 920,674 $ 848,449 $ 1,033,958 $ 1,014,794 Net assets $ 1,472,600 $ 1,477,624 $ 1,481,797 $ 1,506,699 $ 1,541,938 Net asset value per share $ 6.72 $ 6.73 $ 6.74 $ 6.86 $ 6.95 Debt-to-equity ratio 0.59 x 0.62 x 0.57 x 0.69 x 0.66 x Net leverage ratio (2) 0.59 x 0.62 x 0.55 x 0.66 x 0.63 x Weighted average shares outstanding 219,519, ,694, ,694, ,168, ,835,344 Shares outstanding 219,034, ,694, ,694, ,694, ,994,770 Number of portfolio companies, at period end Weighted Average Yields, at period end (3) Secured debt 10.3% 10.2% 10.2% 10.9% 11.0% Unsecured debt 11.2% 11.1% 11.1% 10.7% 10.8% Total debt portfolio 10.3% 10.3% 10.3% 10.9% 11.0% (1) Numbers may not sum due to rounding. (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. (3) On a cost basis. Exclusive of investments on non-accrual status. 20

22 Summary Investment Activity ($ in thousands) 2Q'18 1Q'18 4Q'17 3Q'17 2Q'17 Portfolio Activity (1) Sep-17 Jun-17 Mar-17 Dec-16 Sep-16 Investments made $ 265,439 $ 342,036 $ 149,408 $ 201,309 $ 127,629 Investments sold (11,703) (9,949) (38,393) (17,114) (17,924) Net investment activity before repayments $ 253,737 $ 332,087 $ 111,015 $ 184,195 $ 109,705 Investments repaid (328,096) (241,998) (306,449) (178,208) (197,130) Net investment activity $ (74,359) $ 90,089 $ (195,434) $ 5,987 $ (87,425) Number of portfolio companies, at beginning of period Number of new portfolio companies Number of exited portfolio companies (9) (13) (12) (10) (5) Number of portfolio companies, at period end Number of investments in existing portfolio companies Yield on Activity (2) Yield on investments made 10.0% 10.3% 9.8% 10.1% 10.3% Yield on debt sales and repayments 10.3% 11.3% 9.9% 10.5% 10.7% (1) Numbers may not sum due to rounding. (2) Yield on activity is for debt investments and excludes select short-term trades and investments on non-accrual status. 21

23 Quarterly Investment Activity Investment Activity ($ in millions) Portfolio Yield (1) (2) $128 $201 $149 $342 $ % 10.9% 10.3% 10.3% 10.3% ($18) ($17) ($38) ($10) ($12) ($197) ($178) ($242) ($306) ($328) Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 New Investments Sales Repayments Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Net Investment Activity ($ in millions) Yield on Investment Activity (2) (3) $ % $6 10.7% 11.4% ($87) ($195) ($74) 10.4% 10.3% 10.1% 8.8% 10.2% 9.9% 9.8% 10.3% 10.3% 10.0% 9.4% 9.3% Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 New Investments Sales Repayments (1) Weighted average yield on total debt portfolio on a cost basis at period end, exclusive of investments on non-accrual status. (2) Change in terms on investments may impact the weighted average yield of the total debt portfolio but are not reflected in new, sold or repaid investments. (3) Yield on activity is for debt investments and excludes select short-term trades and investments on non-accrual status. 22

24 Detailed Quarterly Investment Activity ($ in thousands) 2Q'18 1Q'18 4Q'17 3Q'17 2Q'17 Sep-17 Jun-17 Mar-17 Dec-16 Sep-16 Purchases (1) First lien (2) $ 111,229 $ 236,735 $ 52,018 $ 34,174 $ 55,021 Second lien 152, ,819 92, ,657 51,154 Total secured debt 264, , , , ,175 Unsecured debt - - 2,499 12,713 5,154 Structured products and other ,301 Preferred equity Common equity/interests and warrants 1,238 1,481 2, Total Purchases $ 265,439 $ 342,036 $ 149,408 $ 201,309 $ 127,629 Yield at Cost on Debt Purchases (3) First lien 9.3% 10.3% 9.2% 10.0% 10.5% Second lien 10.4% 10.3% 10.2% 10.3% 10.0% Total secured debt 10.0% 10.3% 9.8% 10.2% 10.3% Unsecured debt N/A N/A 8.0% 8.5% 10.2% Preferred equity N/A N/A N/A N/A N/A Yield at Cost on Debt Purchases 10.0% 10.3% 9.8% 10.1% 10.3% Sales and Repayments (1) First lien (2) $ 128,848 $ 136,063 $ 52,662 $ 22,904 $ 26,172 Second lien 140,034 53,838 96,892 35, ,578 Total secured debt 268, , ,554 58, ,750 Unsecured debt 55,000-92,836-4,461 Structured products and other 8,961 33,166 55,102 96,647 48,239 Preferred equity , Common equity/interests and warrants 6,956 28,879 47,350 3,016 7,298 Total Sales and Repayments $ 339,799 $ 251,947 $ 344,842 $ 195,322 $ 215,054 Yield at Cost on Debt Sales and Repayments (3) First lien 10.4% 12.0% 9.3% 10.5% 10.3% Second lien 9.9% 9.7% 10.1% 9.6% 10.8% Total secured debt 10.1% 11.3% 9.8% 9.9% 10.7% Unsecured debt 11.0% N/A 10.0% N/A 12.0% Preferred equity N/A N/A N/A 11.5% 4.0% Yield at Cost on Debt Sales and Repayments 10.3% 11.3% 9.9% 10.5% 10.7% Yield at Cost on Sales 9.3% 9.4% 10.2% 8.8% 13.1% Yield at Cost on Debt Repayments 10.3% 11.4% 9.9% 10.7% 10.4% (1) Numbers may not sum due to rounding. (2) First lien purchases include revolver drawdowns; first lien sales and repayments includes revolver repayments. (3) Yield on activity is for debt investments and excludes select short-term trades and investments on non-accrual status. 23

25 Net Asset Value ($ in thousands, except per share data) 2Q'18 1Q'18 4Q'17 3Q'17 2Q'17 Sep-17 Jun-17 Mar-17 Dec-16 Sep-16 Per Share NAV, beginning of period $ 6.73 $ 6.74 $ 6.86 $ 6.95 $ 6.90 Net investment income Net realized and change in unrealized gain (loss) (0.01) (0.02) (0.13) (0.12) 0.00 Net increase (decrease) in net assets resulting from operations Repurchase of common stock Distribution recorded (0.15) (0.15) (0.15) (0.15) (0.15) NAV, end of period Total NAV, beginning of period $ 1,477,624 $ 1,481,797 $ 1,506,699 $ 1,541,938 $ 1,552,409 Net investment income 34,157 33,320 37,290 36,352 39,537 Net realized and change in unrealized gains (losses) (2,370) (4,539) (29,238) (25,062) 1,577 Net increase (decrease) in net assets resulting from operations 31,787 28,781 8,052 11,290 41,114 Repurchase of common stock (3,956) - - (13,575) (18,270) Distributions recorded (32,855) (32,954) (32,954) (32,954) (33,315) NAV, end of period $ 1,472,600 $ 1,477,624 $ 1,481,797 $ 1,506,699 $ 1,541,938 Net Asset Value Per Share $6.95 $6.86 $6.74 $6.73 $6.72 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Numbers may not sum due to rounding. 24

26 Portfolio as of September 30, 2017 By Asset Class (1) Fixed Rate vs. Floating Rate (1) (2) Preferrred equity, common equity/interests and w arrants 10% Structured products and other 5% Unsecured debt 5% Fixed Rate Assets 9% Floating Rate Assets 91% Secured debt 80% By Industry (1) (3) Sponsored vs. Non-sponsored (1) (4) Chemicals, Plastics & Rubber 2.8% Telecommunications 2.8% Div ersif ied Investment Vehicles, Banking, Finance, Real Estate 4.3% Transportation Cargo, Distribution 5.6% Other 16.6% Business Serv ices 19.5% Av iation and Consumer Transport 18.2% Nonsponsored 19% Sponsored 81% Healthcare & Pharmaceuticals 6.8% Energy Electricity 9.3% Energy Oil & Gas 6.9% High Tech Industries 7.2% (1) On a fair value basis. (2) The interest type information is calculated using the Company s corporate debt portfolio and excludes aviation, oil and gas, structured credit, renewables, shipping, commodities and investments on nonaccrual status. (3) Other consists of: Manufacturing, Capital Equipment; Aerospace & Defense; Utilities Electric; Food & Grocery; Consumer Goods Durable; Advertising, Printing & Publishing; Automotive; Consumer Goods Non-durable; Hotel, Gaming, Leisure, Restaurants; Insurance; Containers, Packaging & Glass; Retail; Media Diversified & Production and Metals & Mining. (4) The sponsored / non-sponsored percentages are calculated using the Company s corporate debt portfolio and excludes aviation, oil and gas, structured credit, renewables, shipping and commodities. 25

27 Portfolio Composition ($ in thousands) 2Q'18 1Q'18 4Q'17 3Q'17 2Q'17 Portfolio Composition, measured at fair value ($) Sep-17 Jun-17 Mar-17 Dec-16 Sep-16 First lien $ 1,142,148 $ 1,140,215 $ 1,049,232 $ 1,052,890 $ 1,060,606 Second lien 750, , , , ,782 Total secured debt $ 1,892,857 $ 1,875,161 $ 1,734,500 $ 1,736,748 $ 1,620,388 Unsecured debt 107, , , , ,645 Structured products and other 124, , , , ,052 Preferred equity 25,780 25,754 25,637 30,785 67,602 Common equity/interests and warrants 209, , , , ,881 Total investment portfolio $ 2,360,290 $ 2,416,579 $ 2,316,708 $ 2,526,333 $ 2,548,568 Portfolio Composition, measured at fair value (%) First lien 48% 47% 45% 42% 42% Second lien 32% 30% 30% 27% 22% Total secured debt 80% 78% 75% 69% 64% Unsecured debt 5% 7% 7% 10% 9% Structured products and other 5% 6% 7% 9% 12% Preferred equity 1% 1% 1% 1% 3% Common equity/interests and warrants 9% 9% 10% 11% 12% Portfolio Composition by Strategy, measured at fair value (%) Core strategies (1) 73% 74% 71% 66% 61% Non-core strategites (2) 23% 23% 24% 29% 34% Legacy & Other 4% 4% 5% 5% 5% Interest Rate Type, measured at fair value (3) Fixed rate % 9% 14% 16% 16% 21% Floating rate % 91% 86% 84% 84% 79% Sponsored / Non-sponsored, measured at fair value (4) Sponsored % 81% 83% 86% 86% 84% Non-sponsored % 19% 17% 14% 14% 16% (1) Core strategies include corporate lending, aviation, life sciences, asset based and lender finance. (2) Non-core strategies include oil & gas, structured credit, renewables, shipping and commodities. (3) The interest type information is calculated using the Company s corporate debt portfolio and excludes aviation, oil and gas, structured credit, renewables, shipping, commodities and investments on non-accrual status. (4) The sponsored / nonsponsored percentages are calculated using the Company s corporate debt portfolio and excludes aviation, oil and gas, structured credit, renewables, shipping and commodities. 26

28 Credit Quality As of September 30, 2017, 1.9% of total investments at amortized cost, or 1.3% of total investments at fair value, were on non-accrual status. ($ in thousands) 2Q'18 1Q'18 4Q'17 3Q'17 2Q'17 Sep-17 Jun-17 Mar-17 Dec-16 Sep-16 Investments on Non-Accrual Status Non-accrual investments at amortized cost $ 46,199 $ 46,430 $ 183,141 $ 236,453 $ 312,955 Non-accrual investments / total portfolio, at amortized cost 1.9% 1.9% 7.0% 8.2% 11.1% Non-accrual investments at fair value $ 30,204 $ 27,458 $ 68,571 $ 65,587 $ 99,521 Non-accrual investments / total portfolio, at fair value 1.3% 1.1% 3.0% 2.6% 3.9% Portfolio Company Credit Metrics (1) Net Leverage (Close) 5.5 x 5.4 x 5.5 x 5.6 x 5.6 x Net Leverage (Current) 5.5 x 5.5 x 5.5 x 5.7 x 5.5 x Interest Coverage (Close) 2.7 x 2.7 x 2.5 x 2.4 x 2.5 x Interest Coverage (Current) 2.7 x 2.7 x 2.5 x 2.5 x 2.6 x ($ in thousands) Industry Industry Cost Fair Value Investments on Non-Accrual Status as of September 30, 2017 Magnetation, LLC Metals & Mining Metals & Mining $ 1,819 $ 654 Spotted Hawk Energy Oil & Gas Energy Oil & Gas 44,380 29,550 Total $ 46,199 $ 30,204 (1) Source: Company data. Includes all portfolio company investments except structured products, common equities, warrants and investments on non-accrual status. Also excludes select investments where debt-to-ebitda is not a relevant or appropriate metric, or data is not available. Weighted average by cost. 27

29 Diversified Funding Sources as of September 30, 2017 Debt Facilities Debt Issued / Amended Final Maturity Date Interest Rate Principal Amount Outstanding (in thousands) Senior Secured Facility ($1.19 billion) 12/22/ /22/2021 L bps $ 216,675 Senior Secured Notes (Series B) 9/29/2011 9/29/ % 16, Notes (redeemable on or after 10/15/17) (1) 10/9/ /15/ % 150, Notes (redeemable on or after 7/15/18) 6/17/2013 7/15/ % 150, Notes 3/3/2015 3/3/ % $ 350,000 Weighted Average Annualized Interest Cost (2) & Total Debt Obligations 5.511% $ 882,675 Deferred Financing Cost and Debt Discount (17,769) Total Debt Obligations,Net of Deferred Financing Cost and Debt Discount $ 864,906 (1) The Company redeemed the 2042 Notes on October 16, (2) 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 September 30, Based on average debt obligations outstanding. 28

30 Interest Rate Exposure as of September 30, 2017 Apollo Investment Corporation has taken several steps to prepare for higher interest rates including: increasing the floating rate portion of the portfolio and issuing fixed rate debt. Investment Portfolio (1) (2) Funding Sources (3) Fixed Rate Assets 9% Floating Rate Assets 91% Common Equity 63% Fixed Rate Debt 28% Floating Rate Debt 9% Floating Rate Asset Floor Net Investment Income Interest Rate Sensitivity (4) ($ in millions) Par or Cost % of Floating Rate Portfolio Interest Rate Floors No Floor $ % < 1.00% 33 3% 1.00% to 1.24% % 1.25% to 1.49% 86 7% 1.50% to 1.74% 13 1% > =1.75% 8 1% Total $ 1, % Annual Net Investment Income (in millions) Annual Net Investment Income Per Share Basis Point Change Up 400 basis points $ 34.5 $ Up 300 basis points $ 25.9 $ Up 200 basis points $ 17.2 $ Up 100 basis points $ 8.6 $ Down 100 basis points $ (1.7) $ (0.008) (1) On a fair value basis. (2) The interest type information is calculated using the Company s corporate debt portfolio and excludes aviation, oil and gas, structured credit, renewables, shipping, commodities and investments on non-accrual status. (3) Based on total debt obligations before deferred financing cost and debt discount. (4) The table shows the estimated annual impact on net investment income of base rate changes in interest rates (considering interest rate floors for floating rate instruments) to our loan portfolio and outstanding debt as of September 30, 2017, assuming no changes in our investment and borrowing structure. 29

31 Contact Information For more information, please contact: Elizabeth Besen Investor Relations Manager Phone: (212) Gregory W. Hunt Chief Financial Officer and Treasurer Phone: (212)

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