28 January 2014 Brokers. Asset Managers & Exchanges Alternative Assot Manager Initiation We also attempted to value the Alts on a sum-of-the parts basis, which we do not think has been especially accurate in forecasting medium or long-term unit price performance for the Alts. Similar to our valuation analysis, there are a number of subjective inputs, combined with longer range valuation assessments that we think can obscure what the stocks will do over a 12- month horizon, the timeframe in which are ratings/price targets are based on. We show our sum-of-parts analysis in Figures 24-28. The analysis values the fee income stream at an asset manager PIE of 16.5x and the carried interest earnings potential (inclusive of dry powder) at a 2.0x MOIC (multiple on invested capital) over a 6-year horizon, and the balance sheets & accrued carry at 1.25x BV. We think this valuation is even more subjective than our PIE approach and can achieve vastly different results by altering the assumptions slightly. For example, our choice of a 2.0x MOIC over a 6-year horizon is conservative vs. past performance (though may be more accurate going forward). Our assumptions indicated the Alts are about fairly valued, with BX & OAK appearing the most overvalued and KKR the most undervalued, and we think this will be an active part of the intense valuation debate on this stock. ['Figure 24! DB Sum of the Parts Valuation Analysis for APO Fee-rsed Earnings &hence sheet value at 3013 Afteitat Fee-related Earnings (2014Q 5443 Rincipal rwestrierds 5425 Per ire SI 13 Accrued carry 51.254 Asettned Fwd RE 1654 Total BV 51.679 Value per unit 51862 Assigned IN map* 1.25x vow 52.099 Owed Merest earnings PM WM 3535 hvested captal • dry powder at 3013 54983 /Muffed 1.0C 20r Total SCPValue 532 49 Carry rate 20% Current pnce 532 20 Comp rate 40% SClovs current price 09% hvesirrent linen (yrs1 60 Value 56,598 YAO avg urns 2014 392.3 Pi/ 53.343 P