PROSPECTUS 104,950,000 Common Units AP Alternative Assets, L.P. Managed by Apollo Alternative Assets, L.P. Thisisanintroductionofallofthe104,950,000commonunitsofAPAlternativeAssets,L.P.,alimited partnershipregisteredunderthelawsofGuernsey,tolistingandtradingonEurolistbyEuronext(“Eurolistby Euronext”),theregulatedmarketofEuronextAmsterdamN.V.(“EuronextAmsterdam”),underthesymbol“AAA”. WeexpectthatadmissionofourcommonunitstoEurolistbyEuronext,willbecomeeffectiveandthatdealingsinour commonunitswillcommenceonAugust8,2006.Thelistingfollowsourglobalprivateplacementandrelated transactionsandsubsequentissuancesinrespectofwhichweissuedanaggregateof104,950,000restricteddepositary units(“RDUs”),eachrepresentingonecommonunit.Non-U.S.holdersofourRDUsare,subjecttoconditions describedherein,entitledtoreceivecommonunits.U.S.holderswillcontinuetoholdRDUs.TheRDUswillnotbe listedonanysecuritiesexchange,willcontinuetobesubjecttotransferrestrictions,andwedonotexpectthatapublic marketfortheRDUswilleverdevelop.OurRDUsandtheunderlyingcommonunitsarenon-voting. Investinginour common unitsor the RDUsinvolves risks.See “RiskFactors” beginning onpage7. OurcommonunitsandtheRDUshavenotbeenandwillnotberegisteredundertheU.S.SecuritiesActof 1933,asamended(the“U.S.SecuritiesAct”)oranyotherapplicablelawoftheUnitedStates.Ourcommon unitsandtheRDUsmaynotbeofferedorsoldwithintheUnitedStatesortoU.S.persons,excepttopersons whoare(a)qualifiedpurchasers(asdefinedintheU.S.InvestmentCompanyActof1940,asamended(the“U.S. InvestmentCompanyAct”)andrelatedrules)and(b)either(1)qualifiedinstitutionalbuyersor(2)accredited investors.Foradditionaltransferrestrictions,see“CertainERISAConsiderations”and“Transfer Restrictions.” WehavegivenGoldmanSachsInternational,Citigroup,JPMorganandCreditSuissetheoptiontopurchase 11,250,000commonunitsfromourManagingGeneralPartnerattheinitialofferingpriceofourRDUsintheglobal privateplacementlessthecommissionpaidtotheseinstitutions,fromthedateoflistingonEurolistbyEuronextuntil 30daysfromsuchdate. DatedJuly31,2006 NOTICETOINVESTORS AboutthisProspectus Thisprospectushasbeenproducedsolelyinconnectionwithourapplicationforadmissionofourcommon unitstolistingandtradingonEurolistbyEuronext.Inmakinganinvestmentdecisionregardingourcommon unitsorRDUs,investorsmustrelyontheirownexaminationofus,includingthemeritsandrisksinvolvedinan investmentinourpartnership.GoldmanSachsInternational,Citigroup,JPMorganandCreditSuissemakeno representationorwarranty,expressedorimplied,astotheaccuracyorcompletenessoftheinformationinthis prospectus,andnothinginthisprospectusis,orshallberelieduponas,apromiseorrepresentationbythese institutions. ThisdocumentconstitutesaprospectusforthepurposesofArticle3ofDirective2003/71/ECofthe EuropeanParliamentandoftheCouncilandhasbeenpreparedinaccordancewithArticle3oftheDutchActon theSupervisionoftheSecuritiesTrade1995(Wettoezichteffectenverkeer1995),asamended,andtherules promulgatedthereunder.ThisdocumenthasbeenapprovedbyandfiledwiththeNetherlandsAuthorityforthe FinancialMarkets(AutoriteitFinanciëleMarkten). Weacceptresponsibilityfortheinformationcontainedinthisprospectus.Tothebestofourknowledge, havingtakenallreasonablecaretoensurethatsuchisthecase,theinformationcontainedinthisprospectusisin accordancewiththefactsanddoesnotomitanythinglikelytoaffecttheimportofsuchinformation. Youshouldassumethattheinformationappearinginthisprospectusisaccurateonlyasofthedateonthe frontcoverofthisprospectus,regardlessofthetimeofdeliveryofthisprospectusorofanyofferorsaleofour commonunitsortheRDUs.Ourbusiness,financialcondition,resultsofoperationsandprospectscouldhave changedsincethatdate.Weexpresslydisclaimanydutytoupdatethisprospectusexceptasrequiredby applicablelaw. RestrictionsonDistributionandSale Thisprospectusdoesnotconstituteorformpartofanyofferorinvitationtosellorissue,oranysolicitation ofanyoffertopurchaseorsubscribefor,anycommonunitsorRDUs,norshallit(oranypartofit)orthefactof itsdistribution,formthebasisof,orbereliedoninconnectionwith,anycontracttherefor.Thedistributionof thisprospectusincertainjurisdictionsmayberestrictedbylaw.Personsinpossessionofthisprospectusare requiredtoinformthemselvesaboutandtoobserveanysuchrestrictions. NoticetoEuroclearParticipants AnyparticipantoftheclearingandsettlementsystemoperatedbyEuroclearBankS.A./N.V.(“Euroclear Bank”)(the“Euroclearsystem”)thatholdscommonunitsintheEuroclearsystemwillbedeemedtohave representedtoandagreedwithusandEuroclearBankasaconditiontothecommonunitsbeingintheEuroclear systemtofurnishtoEuroclearBank(a)itstaxidentificationnumber,(b)noticeofwhetheritis(i)apersonwho isnotaUnitedStatesperson,(ii)aforeigngovernment,aninternationalorganizationoranywhollyowned agencyorinstrumentalityofeitheroftheforegoingor(iii)ataxexemptentityand(c)suchotherinformationas EuroclearBankmayrequestfromtimetotimeinordertocomplywithitsUnitedStatestaxreportingobligations andotherobligations.IfaparticipantintheEuroclearsystemfailstoprovidesuchinformation,EuroclearBank may,amongothercoursesofaction,blocktradesinthecommonunitsandrelatedincomedistributionsofsuch participant. NoticetoClearstreamParticipants AnyparticipantoftheclearingandsettlementsystemoperatedbyClearstreamBankingS.A. (“Clearstream”)(the“Clearstreamsystem”)thatholdscommonunitsintheClearstreamsystemwillbe deemedtohaverepresentedtoandagreedwithusandClearstreamasaconditiontothecommonunitsbeingin theClearstreamsystemtofurnishtoClearstream(a)itstaxidentificationnumber,(b)noticeofwhetheritis(i)a personwhoisnotaUnitedStatesperson,(ii)aforeigngovernment,aninternationalorganizationoranywholly ownedagencyorinstrumentalityofeitheroftheforegoingor(iii)ataxexemptentityand(c)suchother i informationasClearstreammayrequestfromtimetotimeinordertocomplywithitsUnitedStatestaxreporting obligationsandotherobligations.IfaparticipantintheClearstreamsystemfailstoprovidesuchinformation, Clearstreammay,amongothercoursesofaction,blocktradesinthecommonunitsandrelatedincome distributionsofsuchparticipant. NoticetoNIECParticipants AnyparticipantoftheclearingandsettlementsystemoperatedbyEuroclearNIEC(the“NIECsystem”) thatholdscommonunitsintheNIECsystemwillbedeemedtohaverepresentedtoandagreedwithusandNIEC asaconditiontothecommonunitsbeingintheNIECsystemtofurnishtoNIEC(a)itstaxidentificationnumber, (b)noticeofwhetheritis(i)apersonwhoisnotaUnitedStatesperson,(ii)aforeigngovernment,an internationalorganizationoranywhollyownedagencyorinstrumentalityofeitheroftheforegoingor(iii)atax exemptentityand(c)suchotherinformationasNIECmayrequestfromtimetotimeinordertocomplywithits UnitedStatestaxreportingobligationsandotherobligations.IfaparticipantintheNIECsystemfailstoprovide suchinformation,NIECmay,amongothercoursesofaction,blocktradesinthecommonunitsandrelated incomedistributionsofsuchparticipant. MarketStabilization Inconnectionwithadmission,wehaveappointedGoldmanSachsInternationalasstabilizationmanager. GoldmanSachsInternational,Citigroup,JPMorgan,CreditSuisse,oranyoftheiragents,mayover-allotoreffect transactionsthatstabilizeormaintainthemarketpriceofourcommonunitsatlevelsabovethosewhichmight otherwiseprevailintheopenmarket.Suchtransactionsmaycommenceonorafterthedateofcommencementof tradingonEurolistbyEuronextandwillendnolaterthan30daysthereafter.Suchtransactionsmaybeeffectedon EurolistbyEuronextintheover-the-countermarketorotherwise.Thereisnoassurancethatsuchstabilizationwill beundertakenand,ifitisundertaken,itmaybediscontinuedatanytime.See“DescriptionofourGlobalPrivate Placement-Stabilization”beginningonpage168. Forward-LookingStatements Thisprospectuscontainscertainforward-lookingstatements,includingstatementsregardingtargetreturns, basedonourbeliefs,assumptionsandexpectationsofourfutureperformance,takingintoaccountallinformation currentlyavailabletous.Thesebeliefs,assumptionsandexpectationscanchangeasaresultofmanypossible eventsorfactors,inwhichcaseourbusiness,financialcondition,liquidity,resultsofoperationsandactual returnsmayvary,andtargetreturnsmayberevised,materiallyfromthoseexpressedinourforward-looking statements.See“SpecialNoteRegardingForward-LookingStatements”beginningonpage36. ValuationandOtherData ThisprospectuscontainsvaluationdatarelatingtocertaininvestmentfundsmanagedbyApolloandrelated datathathasbeenderivedfromsuchfunds.Thisprospectusalsocontainscertaindatawhichhasbeenderived fromourmanagementrecordsrelatingtothefundsraisedfromtheglobalprivateplacementandrelated transactionsandsubsequentissuancesofRDUs,andtheinitialinvestmentofthosefunds.Noneofthisdatahas beenaudited. Whenconsideringthevaluationandrelateddatapresentedinthisprospectus,youshouldbearinmindthat thehistoricalresultsofthefundsthatApollohasmanagedorsponsoredinthepastarenotindicativeofthefuture resultsthatyoushouldexpectfromus,includingasaresultoftheimpactonouroverallresultsofourtemporary cashinvestments,non-privateequityandcapitalmarketsinvestments,andadditionalinvestments,whichmaybe material.See“SpecialNoteRegardingHistoricalPrivateEquityValuationandRelatedData”beginningonpage 37. ThestatementrelatingtotheperformanceofFundIVduringtheperiodfrom1998to2001whichissetoutin “Business—AboutApollo”andmadebyreferencetofiguresfromThomsonVentureEconomicshasbeensourced fromstatisticsobtainedfromThomsonVentureEconomicsinJuly2006relatingtotheperformanceofbuyout fundsof1998vintagegreaterthan$500millionasofDecember31,2005.Suchinformationhasbeenaccurately reproducedand,sofarasweareawareandareabletoascertainfrominformationpublishedbyThomsonVenture Economics,nofactshavebeenomittedwhichwouldrenderthereproducedinformationinaccurateormisleading. ii PRESENTATIONOFCERTAININFORMATION Wehavepreparedthisprospectususinganumberofconventions,whichyoushouldconsiderwhenreading theinformationcontainedherein.Unlessthecontextsuggestsotherwise,referencesto: • “we,”“us,”“our”and“ourpartnership”aretoAPAlternativeAssets,L.P.,aGuernseylimited partnership; • “$”or“dollars”aretothelawfulcurrencyoftheUnitedStates; • “€”or“euro”aretothecommoncurrencyofthememberstatesoftheEuropeanMonetaryUnion; • “AAAAssociates”aretoAAAAssociates,L.P.,aGuernseylimitedpartnership,whichservesasthe generalpartneroftheInvestmentPartnership; • “admission”aretoadmissionofourcommonunitstolistingandtradingonEurolistbyEuronext; • “affiliate”or“affiliated”aretoapersonthatdirectlyorindirectly,throughoneormoreintermediaries, controls,iscontrolledby,orisundercommoncontrolwith,anotherspecifiedperson.Forthepurposeof thisdefinition,theterm“control”(includingtheterms“controlling”,“controlledby”and“under commoncontrolwith”)meansthepossession,directlyorindirectly,ofthepowertodirectorcausethe directionofthemanagement,includingday-to-daymanagement,andpoliciesofapersonorentity, whetherthroughtheownershipofsecurities,bycontractorotherwise; • “AICCo-invest”aretoAICCo-investII,L.P.,whichhasbeenformedbyApolloAlternativeAssetsto makeco-investmentsalongsideApolloInvestmentCorporationand/orApolloInvestmentEuropein situationswhereApolloInvestmentCorporationand/orApolloInvestmentEurope(asthecasemaybe) isnotabletodeploysufficientcapitaltofinanceaparticularinvestmentandinwhichtheInvestment Partnership,throughAICCo-investI,L.P.,willbethesoleinvestor; • “Apollo”are,asthecontextmayrequire,toApolloAdvisors,L.P.,ApolloManagement,L.P.,Apollo ManagementIV,L.P.,ApolloManagementV,L.P.,ApolloManagementVI,L.P.,ApolloInvestment Management,L.P.,andApolloEuropeManagement,L.P.,eachofwhichisalimitedpartnershipformed toactasmanagerofaparticularApolloFund(anditsco-investmententities),andanyotherentity formedtoactasmanagerofanApolloFund,andineachcasetoanyoftheiraffiliates,excludingApollo AlternativeAssets,providedalwaysthatanyreferencesinthisdocumenttoobligationsor responsibilitiesacceptedbyanyoftheforegoingentitiesshallnotimplyacceptanceofsuchobligation orresponsibilitybyanyApolloFundoranyportfoliocompanyinwhichanApolloFundorthe InvestmentPartnershiphas,whetherdirectlyorindirectly,invested; • “ApolloAlternativeAssets”aretoApolloAlternativeAssets,L.P.,aCaymanIslandsexemptedlimited partnershipandanaffiliateofApollo,whichactsasinvestmentmanagertousandtotheInvestment Partnership; • “ApolloFund”aretotheStrategicValueFund,ApolloInvestmentEurope,ApolloInvestmentCorporation, AICCo-invest,FundVI,FundVandFundIVandanyotherexistingorfuturepooledinvestmentvehicle (otherthanourpartnershiportheInvestmentPartnership)sponsoredormanagedbyApolloandinwhichat least25%oftheinvestablecapitalisprovidedbyinvestorswhoarenotaffiliatedwithApollo; • “ApolloInvestmentCorporation”or“AIC”aretoApolloInvestmentCorporation,aMaryland corporation; • “ApolloInvestmentEurope”or“AIE”aretoAPInvestmentEuropeLimited,aGuernseylimited company; • “Apolloinvestmentprofessionals”aretotheinvestmentprofessionalsofApollofromtimetotime, currentdetailsofwhomaresetoutinappendixBtothisdocument,whoseservicesareutilizedby ApolloandApolloAlternativeAssetsintheday-to-daymanagementoftheApolloFundsandthoseof ourpartnership; • “carriedinterest”aretointerests(includingincentivedistributions)grantedtoApollobyanApolloFund ortheInvestmentPartnershipwhichentitleApollotoreceiveallocations,distributionsorfeescalculated iii byreferencetotheperformanceofsuchfundoritsunderlyinginvestments,ortheunderlying investmentsoftheInvestmentPartnershiporitssubsidiaries,ratherthanbyreferencetoamounts contributedtosuchfundorinvestmentorinvestedbyApollointheInvestmentPartnership; • “Citigroup”aretoCitigroupGlobalMarketsLimitedofCitigroupCentre,33CanadaSquare,London E145LB; • “CreditSuisse”aretoCreditSuisseSecurities(USA)LLCofElevenMadisonAvenue,NewYork 10010; • “existingApolloprivateequityfunds”aretoFundVI,FundVandFundIV; • “FundIV”aretoApolloInvestmentFundIV,L.P.,aDelawarelimitedpartnership,anditsparallel co-investmentfunds; • “FundV”aretoApolloInvestmentFundV,L.P.,aDelawarelimitedpartnership,anditsparallel co-investmentfunds; • “FundVI”aretoApolloInvestmentFundVI,L.P.,aDelawarelimitedpartnership,anditsparallel co-investmentfunds; • the“globalprivateplacement”aretotheprivateplacementofanaggregateof75,000,000commonunits intheformofRDUsonJune15,2006; • the“globalprivateplacementandrelatedtransactions”areto(i)theglobalprivateplacement,(ii)the issuanceof11,250,000commonunitsintheformofRDUstoourManagingGeneralPartnerinrespect ofwhichithasgrantedastabilizationoptioninconnectionwithourglobalprivateplacement,(iii)a$74 millioncashcontributionmadetoourpartnershipbyAAAHoldings,L.P.,aGuernseylimited partnershipthatisownedbyApolloinvestmentprofessionalsandsenioradvisors,(iv)a$1millioncash contributionmadetotheInvestmentPartnershipbyitsgeneralpartner,whichisownedbycertain Apolloinvestmentprofessionals,and(v)ouruseofthecapitalcontributionsthatwehavereceivedin connectionwiththeforegoingtransactionsasdescribedunder“UseofProceedsfromourGlobalPrivate PlacementandRelatedTransactions”beginningonpage47; • “GoldmanSachsInternational”aretoGoldmanSachsInternationalofPeterboroughCourt,133Fleet Street,LondonEC4A2BB; • “investedcapital”withrespecttothehistoricalreturnsoftheValueInvestmentFund,excludeassets heldincashpendinginvestment; • the“initialofferingprice”aretotheinitialofferingpriceof$20.00perRDUinconnectionwiththe globalprivateplacementandrelatedtransactions; • the“InvestmentPartnership”aretoAAAInvestments,L.P.,aGuernseylimitedpartnership,and,as applicable,itssubsidiaries,throughwhichourinvestmentswillbemade; • “JPMorgan”aretoJ.P.MorganSecuritiesInc.of277ParkAvenue,NewYork,NY10172; • our“ManagingGeneralPartner”aretoAAAGuernseyLimited,aGuernseylimitedcompanywith registrationnumber44836,whichservesasourgeneralpartner; • “ourcapitalinvestedinApolloFunds”aretotheaggregateoftheacquisitioncostofthesecuritieswe holdin,andamountscommittedbyustopurchasesecuritiesin,allApolloFunds(whetherdirectlyor indirectlyandwhetherfundedoutoftheproceedsoftheissueofcommonunits,thedisposalof investmentsorthroughborrowingsincurredbyourpartnershiportheInvestmentPartnership); • the“ManagingInvestmentPartner”aretoAAAMIPLimited,aGuernseylimitedcompany,which servesasthegeneralpartnerofAAAAssociates; • “privateequityinvestments”areto(i)directorindirectinvestmentsinexistingandfutureprivateequity fundsmanagedorsponsoredbyApollo,(ii)directorindirectco-investmentswithexistingandfuture iv privateequityfundsmanagedorsponsoredbyApollo,(iii)directorindirectinvestmentsinsecurities whicharenotimmediatelycapableofresaleinapublicmarketthatApolloidentifiesbutdoesnot pursuethroughitsprivateequityfunds,and(iv)investmentsofthetypedescribedin(i)through (iii)abovemadebyApolloFundsinwhichwehavedirectlyorindirectlyinvested; • “servicesagreement”aretoaglobalservicesagreemententeredintoamongApolloAlternativeAssets, asserviceprovider,andourpartnership,theInvestmentPartnership,AAAAssociates,theManaging GeneralPartnerandtheManagingInvestmentPartner,asservicerecipients; • “StrategicValueFund”or“SVF”aretoApolloStrategicValueFund,whichhasbeenformedbyApollo tobemanagedonabasisconsistentwiththeValueInvestmentFund; • “subsidiary”aretoanywholly-ownedsubsidiariesoftheInvestmentPartnershipformedforaparticular purposeorforaspecificinvestmentorinvestments,andwhicharenotthemselvesApolloFunds; • “temporaryinvestments”aretoinvestmentswhichweholdintheformof(i)cash,(ii)cashequivalents, or(iii)anyotherinvestmentgradeandliquidsecuritiesheldbyusforcashmanagementpurposesoras workingcapitalandwhichwedonotholdasaninvestmentinitsownright;and • “ValueInvestmentFund”or“VIF”aretoApolloValueInvestmentFund,L.P.andApolloValue InvestmentOffshoreFund,Ltd.,anexistingApollocapitalmarketsfundthatinvestsinthesecuritiesof distressedandhighlyleveredcompanies. Inthisprospectus,unlessthecontextsuggestsotherwise,weusetheterm“ourinvestments”toreferbothto ourlimitedpartnerinterestintheInvestmentPartnership,whichwillbetheonlyinvestmentsthatwerecordin ourstatementofassetsandliabilities,andinvestmentsthataremadebytheInvestmentPartnershipandits subsidiaries.AlthoughinvestmentsthataremadeonourbehalfandwithourcapitalbytheInvestment Partnershipanditssubsidiarieswillnotappearasinvestmentsinourfinancialstatements,wewillbetheprimary beneficiaryofsuchinvestmentsandwillbearthefullriskofloss.Wealsousetheterm“ourinvestments”torefer toportfolioinvestmentsoftheinvestmentfundsinwhichwewillinvest.Whileotherfundpartnerswillbe involvedinthoseportfoliocompanyinvestments,wegenerallywillbeentitledtoshareratablyinthereturns generatedbysuchinvestmentsandwillsufferthefullriskoflosswithrespecttosuchinvestments.Pleasekeep thisconventioninmindasyoureadthisprospectus. v TABLEOFCONTENTS Page NOTICETOINVESTORS ................................................................... i PRESENTATIONOFCERTAININFORMATION ................................................... iii SUMMARY ............................................................................. 1 RISKFACTORS ......................................................................... 7 SPECIALNOTEREGARDINGFORWARD-LOOKINGSTATEMENTS ................................... 36 SPECIALNOTEREGARDINGHISTORICALPRIVATEEQUITYVALUATIONANDRELATEDDATA ........... 37 OWNERSHIP,ORGANIZATIONALANDINVESTMENTSTRUCTURE ................................... 41 USEOFPROCEEDSFROMOURGLOBALPRIVATEPLACEMENTANDRELATEDTRANSACTIONS ........... 47 DISTRIBUTIONPOLICY ................................................................... 48 CAPITALIZATION ........................................................................ 49 MANAGEMENT’SDISCUSSIONANDANALYSISOFFINANCIALCONDITIONANDRESULTSOF OPERATIONS ......................................................................... 50 BUSINESS.............................................................................. 62 OURMANAGEMENTANDCORPORATEGOVERNANCE ........................................... 82 MANAGEMENTOFTHEINVESTMENTPARTNERSHIP............................................. 92 APOLLOALTERNATIVEASSETSANDOURSERVICESAGREEMENT ................................. 96 SECURITYOWNERSHIP ................................................................... 103 RELATIONSHIPSWITHAPOLLOANDRELATEDPARTYTRANSACTIONS.............................. 104 DESCRIPTIONOFOURCOMMONUNITSANDOURLIMITEDPARTNERSHIPAGREEMENT ................ 109 DESCRIPTIONOFTHEINVESTMENTPARTNERSHIP’SLIMITEDPARTNERSHIPAGREEMENT .............. 121 DESCRIPTIONOFTHERESTRICTEDDEPOSITARYUNITSANDOURRESTRICTEDDEPOSITAGREEMENT .... 127 CERTAINTAXCONSIDERATIONS ........................................................... 135 TRANSFERRESTRICTIONS ................................................................. 160 CERTAINERISACONSIDERATIONS ......................................................... 164 DESCRIPTIONOFOURGLOBALPRIVATEPLACEMENT ........................................... 166 EURONEXTMARKETINFORMATION ......................................................... 169 LEGALMATTERS ....................................................................... 170 INDEPENDENTACCOUNTANTS ............................................................. 170 GUERNSEYADMINISTRATOR .............................................................. 170 DOCUMENTSAVAILABLEFORINSPECTION ................................................... 170 APPENDIXA:INVESTMENTS ............................................................... A-1 APPENDIXB:APOLLOINVESTMENTPROFESSIONALS ........................................... B-1 vi SUMMARY Thissummaryhighlightscertainaspectsofourbusinessandshouldbereadasanintroductiontothis prospectus.Anydecisiontoinvestinourpartnershipshouldbebasedonaconsiderationofthisprospectusasa whole.Nocivilliabilityistoattachtoourpartnershipsolelyonthebasisofthissummaryunlessitismisleading, inaccurateorinconsistentwhenreadtogetherwiththeotherpartsofthisprospectus.Ifaclaimrelatingtothe informationinthisprospectusisbroughtbeforeacourtofaMemberStateoftheEuropeanEconomicArea,the plaintiffmayunderthenationallegislationoftheMemberStatewheretheclaimisbroughtberequiredtobear thecostsoftranslatingthisprospectusbeforelegalproceedingsareinitiated. OurPartnership WeareaGuernseylimitedpartnershipmanagedbyApolloAlternativeAssets.ApolloAlternativeAssetsis anaffiliateofApollo,aleadingprivateequity,debtandcapitalmarketsinvestorwith16yearsofexperience investingacrossthecapitalstructureofleveragedcompanies.Wehavetheabilitytoinvestin,orco-investwith, allofApollo’scurrentandfutureprivateequityandcapitalmarketsinvestmentfunds. Inconnectionwithourglobalprivateplacementandrelatedtransactions,weissuedanaggregateof 78,700,000RDUsataninitialofferingpriceof$20.00perRDU,whichincluded3,700,000RDUsissuedto affiliatesofApollo,andanadditional11,250,000RDUstoourManagingGeneralPartnerinrespectofwhichit hasgrantedastabilizationoptiontothemanagersofourglobalprivateplacementwhichhasnotyetbeen exercised.Wehavesubsequentlyissuedanadditional15,000,000RDUsatapriceof$20.00perRDU.Asa result,weraisedapproximately$1,764million(netofexpenses)tofundcapitalcommitments,futureinvestments andourworkingcapitalrequirements. OurInvestmentStrategy ApolloAlternativeAssetsimplementsourinvestmentpoliciesandproceduresandcarriesouttheday-to-day managementandoperationsofourbusinesspursuanttoaservicesagreement.Weanticipatethatovertime, approximately50%ofourcapitalwillbeinvestedinprivateequity.Ourinvestmentsinprivateequityare expectedtoconsistmainlyof(i)commitmentstoprivateequityfundssponsoredbyApollo,(ii)co-investments alongsidesuchfunds,and(iii)purchasesofsecondaryinterestsinsuchfunds.Ourpartnershiphasa co-investmentagreementwithFundVI,whichrepresentsanaggregateco-investmentopportunityof approximately$1.5billion. Inadditiontoourinvestmentsinprivateequity,weanticipatethatcapitalwillbedeployedthrough investmentsin,orco-investmentarrangementswith,Apollo’scapitalmarkets-focusedfunds,includingthe StrategicValueFund(oneofApollo’sdebtandequityinvestmentfundsfocusedonvalue-orientedanddistressed securities),ApolloInvestmentEurope(Apollo’sEuropeanmezzanineandleverageddebtinvestmentvehicle)and ApolloInvestmentCorporation(Apollo’sU.S.mezzanineandleverageddebtinvestmentvehicle).Wealso expecttoinvestinadditionalcapitalmarketsfunds,privateequityfundsandinvestmentsidentifiedbyApollo AlternativeAssets. Webelievethatwehavetheabilitytodeployapproximately$1.3billioninprivateequityandcapital marketsinvestmentsbeforetheendof2006,representingapproximately90%oftheinitialcapitalraisedinthe globalprivateplacement.Ofthe$1.3billion,asofJuly28,2006,wehaveinvestedapproximately$400million intheStrategicValueFund,wehaveinvested,orcommittedtoinvest,approximately$140millioninApollo InvestmentEuropeandthroughourco-investmentwithFundVIwehaveinvested,orcommittedtoinvest, approximately$130millioninthreerecentlyannounceddealswhichhaveclosedorareexpectedtoclosebymid- August2006.Thebalanceofourinitialcapitaliscurrentlyinvestedintemporaryinvestments. Apollo’sRoleinOurInvestments WerelyontheskillsoftheApolloinvestmentprofessionalsinselecting,evaluating,structuring, negotiating,executing,monitoringandexitingourinvestmentsandformanagingouruninvestedcapitalin 1 accordancewithourcashmanagementpolicy.TheseactivitiesarecarriedoutbytheApolloinvestment professionalsandApolloAlternativeAssets’investmentcommitteepursuanttoourservicesagreementorunder theinvestmentmanagementagreementsbetweenApolloanditsinvestmentfunds.ApolloAlternativeAssetshas broaddiscretionwhenmakinginvestmentrelateddecisionsunderourservicesagreementandApollohas similarlybroaddiscretioninrelationtoitsotherinvestmentfundsunderthetermsoftherelevantinvestment managementagreements.OurManagingGeneralPartner’sboardofdirectorsapprovesspecificinvestment decisionsinonlylimitedcircumstances.Ourabilitytogrowourinvestmentbaseandtogeneratereturnstherefore dependsontheabilityofApollo’sinvestmentprofessionalstoexecuteourinvestmentstrategy. Apolloisstronglycommittedtooursuccess.Inconnectionwithourformationandtheglobalprivate placement,theApolloinvestmentprofessionalsandsenioradvisorscontributed$75millionincashtoour partnershipandtheInvestmentPartnership,ofwhich$74millionwascontributedtousinexchangefor 3,700,000RDUsissuedattheinitialofferingprice.Additionally,underourservicesagreement,Apollo AlternativeAssetshasagreedtocauseApollotoacquireadditionalcommonunits,RDUsorotherequity securitiesfromusonaquarterlybasiswithanamountequalto25%oftheaggregateafter-taxcashdistributions, ifany,madetoApollopursuanttothecarriedinterestsapplicabletoourinvestments.Commonunits,RDUsor otherequitysecuritiesthathavebeenormaybeissuedtoApolloanditsaffiliatesinconnectionwiththeglobal privateplacementandrelatedtransactionsorpursuanttoourservicesagreementasdescribedabovearesubjectto ageneralprohibitionontransferforaperiodofthreeyearsfromthedateofissuance.Webelievethese arrangementscreateanincentiveforApollotopursueinvestmentsthathelpusachieveourgoalofcreatinglong- termvalueforourunitholders. OurManagingGeneralPartner OurManagingGeneralPartnerisresponsibleformanagingourbusinessandaffairs.OurManagingGeneral Partnerhasaboardofdirectorsandexpectstoappointachieffinancialofficerwhoseserviceswillbeprovided pursuanttoourservicesagreement.OurManagingGeneralPartner’sdirectorsareresponsibleformonitoring compliancewithourinvestmentpoliciesandprocedures,butgenerallydonotrevieworapproveindividual investmentdecisions.Rather,authorityformakingindividualinvestmentdecisionshasgenerallybeendelegated toApolloAlternativeAssetspursuanttoourservicesagreementortoApollounderinvestmentmanagement agreementsbetweenApolloandtheApolloFunds. AboutApollo Foundedin1990,Apolloisarecognizedleaderinprivateequity,debtandcapitalmarketsinvestingandhas investedmorethan$16billionsinceitsinception.ApolloisledbyLeonBlack,asmanagingpartner,andthree additionalfoundingpartners:JohnHannan,JoshHarrisandMarcRowan.Thebusinessemploysmorethan60 investmentprofessionalsandhasofficesinNewYork,LondonandLosAngeles. TheprivateequitybusinessisthecornerstoneofApollo’sinvestmentactivities.Fromitsinceptionin1990 throughMarch31,2006,Apollohasinvestedmorethan$13billioninover150companiesfromitsprivate equityfundsalone.Apollo’sprivateequityfundshavegeneratedagrossannualizedreturnof41%andamultiple of2.1timesinvestedcapitalsinceitsfoundingin1990throughMarch31,2006.FundV,Apollo’s2001vintage yearfund,hasgeneratedagrossannualizedreturnof84%andamultipleof2.3timesinvestedcapitalsinceits inceptioninApril2001throughMarch31,2006.Webelievethatthesereturnsareconservativelycalculated becausetheyincludeapproximately$1.6billionofinvestmentsheldatcost.Approximately90%ofinvestments byprivateequityfundssponsoredbyApollohavegeneratedpositivereturns,andnosuchfundhaseverlost capital. 2 ApollorecentlyclosedFundVI,withcommittedcapitalof$10.1billion,anditisintheprocessofactively investingthatfundinprivateequitytransactions.Throughourco-investmentwithFundVI,wehaveinvested,or committedtoinvest,approximately$130millioninthreerecentlyannounceddeals,whichhaveclosedorare expectedtoclosebymid-August2006,namely: • BerryPlastics,aleadingmanufacturerandmarketerofrigidplasticpackagingproducts,whichApollo expectstopurchasefor$2.25billion. • Rexnord,aworldwidemanufacturerofhighly-engineeredprecisionmotiontechnologyproducts primarilyfocusedonpowertransmission,whichApollopurchasedfor$1.825billiononJuly21,2006. • InternationalPaper’scoatedandsupercalenderedpapersbusiness,abusinessthatproducesannually approximately2milliontonsofcoatedfreesheetandcoatedgroundwoodpapersforthemagazine, catalogandretailinsertmarkets,whichApolloexpectstopurchasefor$1.37billion. Apollo’scapitalmarketsoperationswerestartedin1990asacomplementtoApollo’sprivateequity investmentactivity.Apollohassponsoredorcurrentlymanagesthreecapital-marketsfocusedvehicleswewill investin,oralongsidewith,whichtakeadvantageofthesamedisciplined,value-orientedinvestmentphilosophy employedwithrespecttoprivateequity.Thosevehicles,theStrategicValueFund,ApolloInvestmentEurope andApolloInvestmentCorporation,focusprimarilyondebtandequityinvestmentopportunitiesthatgenerate capitalappreciationandcurrentincome.WebelieveeachcapitalmarketsvehiclebenefitsfromApollo’smarket insight,managementcontacts,industryconsultants,bankingcontactsandexposuretoabroadarrayofpotential investmentopportunities.Inturn,webelievetheexistingApolloprivateequityfundsbenefitfromthecapital marketsvehicles’deepinvolvementinandspanofrelationshipswithinthedebtandequitymarkets. CompetitiveStrengths Webelieveourcompetitivestrengthsinclude: • Apollo’sstrongtrackrecordintargetedinvestmentclasses; • ourdiversifiedexposuretotheinvestmentstrategiesmanagedbyApollo,aleadingprivateequity,debt andcapitalmarketsinvestor; • ourabilitytorapidlydeploycapital; • theactiveinvolvementofApollo’sexperiencedandcohesiveinvestmentteaminourinvestments;and • ourabilitytobenefitfromApollo’scollaborativeinvestmentplatform. FeesandCarriedInterests Underourservicesagreement,weandtheotherservicerecipientshavejointlyandseverallyagreedtopay ApolloAlternativeAssetsaquarterlymanagementfee,payableinarrears,inanaggregateamountequalto one-fourthoftherelevantpercentageofouradjustedassets.Therelevantpercentageis1.25%inrespectofthe first$3billionofouradjustedassetsand1%inrespectofanyexcessadjustedassetsover$3billion.Generally, weanticipatethatouradjustedassetsforthepurposesofthemanagementfeewillbeapproximatelyequaltoour assetvalue,whichincludesthevalueofassetsacquiredwiththeproceedsofborrowingsincurredbyus,ifany, less(i)thevalueofourcapitalinvestmentsintheApolloFundsand(ii)thevalueofourtemporaryinvestments. Themanagementfeeunderourservicesagreementthereforereflectsthevalueofourunrealizedinvestments, otherthaninrespectofourcapitalinvestedinApolloFunds.InrespectofourcapitalinvestedinApolloFunds, Apollowillreceivemanagementfeesdirectlyfromtherelevantfunds.Thesemanagementfeeswillbethesame asthosechargedtootherinvestorsand,inthecaseofcapitalmarketsfunds,maybehigherthanthosedescribed above.Therewillbenodoublechargingofmanagementfees.Inaddition,ApolloAlternativeAssetswillnot chargeamanagementfeeontemporaryinvestmentsforthelifeofourpartnership. 3
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