Apollo Global Management Touts $40T Private Credit Opportunity, AI Financing and Fund XI at BofA Conference

Core Viewpoint - Apollo Global Management emphasizes the expansive nature of private credit, viewing it as a $40 trillion asset class that includes various forms of debt beyond traditional direct lending, such as commercial and residential real estate debt and asset-backed securities [5][18]. Group 1: Private Credit Landscape - Apollo identifies the growth of sponsor-backed direct lending as a significant development in non-investment-grade financing, noting its rise from zero to $2 trillion [1]. - The firm argues that the evolution of banking post-global financial crisis has shifted more financing activity toward non-bank investors, suggesting that the anticipated slowdown in private credit growth overlooks broader economic changes [5][6]. - Zelter expresses skepticism about the size and speed of an equity monetization cycle, indicating that the U.S. IPO market is relatively small compared to the private equity asset base, which is estimated at $5 trillion to $6 trillion [1][4]. Group 2: Strategic Priorities and Fundraising - Apollo is focusing on origination and multi-channel distribution, with plans to raise Fund XI between $22 billion and $25 billion, targeting a first close before mid-year [4][14]. - The firm has invested billions in origination platforms, emphasizing that access to attractive investments is the limiting factor rather than capital raising [6]. - Apollo's private wealth channel has expanded its product offerings, with eight products raising over $500 million each last year [13]. Group 3: AI Infrastructure and Financing - Apollo estimates that AI infrastructure capital needs will reach $5 trillion to $7 trillion over the next five years, indicating a selective financing approach where the firm has a structural advantage [11][12]. - The firm prefers bespoke, contract-backed deals with minimal residual risk, as illustrated by a recent transaction involving a sale-leaseback of chips [12]. Group 4: Retirement Services and Market Expansion - Apollo remains confident in Athene's growth in fixed annuities, supported by a strong balance sheet and competitive operating costs [15]. - The company highlights a "retirement crisis" in the U.S. and identifies potential growth opportunities in various international markets, including Japan, Korea, and Australia [16]. Group 5: Market Dynamics and Liquidity - Zelter notes that while private credit may evolve to trade more like liquid markets, the premium for offering private solutions at scale is likely to persist [9]. - Apollo has facilitated liquidity in high-grade capital solutions, trading nearly $10 billion of these assets last year [10].