Private Credit’s Future? It’s All About the Banks | Apollo’s Jim Zelter (Full Interview)

Private credit’s effort to finance investment-grade companies is going to come down to its partnerships with banks, according to Apollo Global Management Inc. President Jim Zelter.

“The future of IG private credit is really in partnership with the banks — no doubt about it,” Zelter said in an interview with Bloomberg TV's Francine Lacqua. Apollo has 12 origination partnerships with banks, according to Zelter, in addition to its own deal-sourcing teams. Those include tie-ups with BNP Paribas SA, Citigroup Inc., Standard Chartered Plc, and others that are “private, or have not been announced, but still very active,” he said.

Investment-grade companies have traditionally turned to banks for financing. However, private credit firms have been eyeing ways to diversify beyond providing debt for riskier companies. Apollo has said investment-grade opportunities could swell the total private credit market to $40 trillion.

Partnerships have been pitched as a way for banks to reap fees from deals, but offload some of the funding burden to private credit firms. It’s also a way for the two sets of lenders to provide different portions of a capital structure.

A bank might have appetite for more senior positions or prefer lending for a shorter amount of time than its private credit counterpart, Zelter said.

In Zelter’s view, there are plenty of opportunities in Europe, as some governments might have limited budgets and can’t fulfill the capital expenditure needs of investment-grade companies in sectors including energy transition or data centers.

Apollo is particularly interested in private investment-grade credit opportunities in Germany, according to Zelter.

A lot of capital expenditure spending in the country has been delayed, Zelter said. As a result, debt and other long-term capital is “particularly appropriate” for opportunities in Germany, he said.

As an example, Zelter referred to the firm’s new joint venture with RWE, a German power producer. Apollo committed €3.2 billion of equity as part of the deal.

Apollo’s credit business managed $690 billion of assets across public and private markets as of June 30.

--------

Watch Bloomberg Radio LIVE on YouTube

Weekdays 7am-6pm ET

Follow us on X

Subscribe to our Podcasts:

Bloomberg Daybreak

Bloomberg Surveillance

Bloomberg Intelligence

Balance of Power

Bloomberg Businessweek

Listen on Apple CarPlay and Android Auto with the Bloomberg Business app:

Apple CarPlay

Android Auto

Visit our YouTube channels:

Bloomberg Podcasts

Bloomberg Television

Bloomberg Originals