Apollo Seeks $10 Billion From Insurers With Complex Debt Vehicle

Core Viewpoint - Apollo Global Management Inc. is raising $10 billion from insurers using a special structure, highlighting the growing relationship between private capital and annuity providers [1][2]. Group 1: Fundraising Structure - Apollo is utilizing a special purpose vehicle to sell highly rated debt linked to its credit funds, which include direct lending, asset-based finance, hybrid capital, and investment-grade credit [2]. - The deal is in its early stages, with terms still under discussion with investors, and is expected to be one of the largest of its kind [2]. Group 2: Industry Trends - Alternative investment firms are increasingly accessing the trillions of dollars in insurance capital to sustain their rapid growth [3]. - Insurers are seeking higher yields to meet their liabilities and have invested in complex credit strategies, such as collateralized fund obligations, which allow for cheaper borrowing against illiquid assets [4]. Group 3: Investment Grade Ratings - The structured vehicles aim to achieve investment-grade ratings for their senior debt, enabling insurers to invest in private credit without incurring high capital charges associated with junk-rated credit [5]. - By the end of 2024, approximately one-third of US life insurers' $6 trillion in cash and invested assets is projected to be allocated to various forms of private credit [5].