Core Insights - Investor confidence in private credit has been shaken following Blue Owl's decision to halt redemptions from its fund, raising concerns about the stability of other private-debt funds and BDCs [3][5][12] - The situation is being viewed as either a company-specific issue or indicative of broader industry problems, particularly with lending to software companies facing disruption from artificial intelligence [2][15] - The shares of asset managers involved in private credit have experienced significant declines, with Blue Owl's shares dropping around 12% in one week, and other firms like Blackstone and Apollo also facing losses [5][12] Group 1: Market Reactions - Shares of asset managers have been under pressure due to concerns over underwriting standards and the recent selloff in software companies, which are heavily represented in their loan portfolios [4][6] - The VanEck BDC Income ETF has seen a 1.9% weekly loss and has dropped over 25% in the past year, reflecting investor worries about the BDC sector [9] - Apollo Global's shares fell more than 4%, while Blackstone and Ares Management saw losses of 6.6% and 8% respectively during the same week [12] Group 2: Industry Concerns - The liquidity mismatch in publicly traded vehicles that package private loans is becoming apparent, leading to increased scrutiny from investors [8] - U.S. Treasury Secretary Scott Bessent expressed concerns about the growth of private credit outside the banking system and its potential impact on the regulated financial system [13][14] - The current economic expansion, despite a slowdown, may provide some support for private-credit managers, although fears of a recession could lead to higher default rates [14][15] Group 3: Company-Specific Developments - Blue Owl announced it would return 30% of OBDC II investors' capital at book value, aiming to alleviate concerns over liquidity [13] - The firm emphasized that it is not halting investor liquidity, but rather accelerating capital returns to shareholders [13] - The private-equity giants like Blackstone, Apollo, and KKR have significantly contributed to the growth of private credit, which is now facing scrutiny [11][10]

Key insight: Bank of America is putting more focus on private-credit lending as the sector's needs continue to grow.What's at stake: Banks are getting more entangled with asset managers in the $1.8 trillion private credit market at a time when the tide may be shifting for the business.Supporting data: As of the third quarter 2025, banks with more than $100 billion of assets held about 86% of the industry's loans to nonbank financial institutions, according to a Federal Deposit Insurance Corp. analysis.Wall ...

Apollo Global Management Inc. Chief Executive Officer Marc Rowan and Eiji Ueda, the firm's Asia-Pacific chief, discuss how the business's private-credit expertise meshes with Japan's needs to finance capital investment. They speak with Bloomberg Television's David Westin on Wall Street Week. ...

Core Viewpoint - Executives from major private capital firms, including Apollo, Blackstone, and Ares, are struggling to reassure investors about the safety of their portfolios amid a selloff in the software sector driven by fears of AI disruption [1] Group 1: Impact of AI on Alternative Asset Managers - Concerns about AI's impact on software companies have negatively affected the stock prices of alternative asset managers, despite significant new client investments and a resurgence in mergers and acquisitions [1] - Executives have defended their portfolios, stating that they are well-constructed to withstand AI-related risks, with Ares reporting only 6% of its assets in software, which is highly diversified [1] - Apollo's CEO indicated that software accounts for less than 2% of its assets under management, with minimal exposure in private equity and insurance portfolios [1] Group 2: Stock Performance and Market Reactions - Despite some recovery in stock prices following earnings reports, shares of these firms remain down approximately 30% over the last six months [1] - KKR has about 7% of its portfolio in software, with its shares down 29% over the same period, while Blue Owl reported 8% exposure and a 36% decline in share price [1] - Blackstone's shares have decreased by 24% over the last six months, with software comprising 7% of its total assets and 10% of its credit holdings [1] Group 3: Executive Insights and Future Outlook - Executives from these firms express confidence in their portfolios, with Blue Owl's co-CEO stating they do not foresee meaningful losses or performance deterioration [1] - KKR's co-CEO mentioned that the firm has identified AI as both an opportunity and a risk, with $118 billion in dry powder available for investment [1] - Analysts suggest that the narrative surrounding alternative asset managers has shifted, with concerns about their role in AI financing and potential losses due to AI's transformative impact [1]

Summary of Apollo Global Management Conference Call Company Overview - Apollo Global Management (NYSE: APO) was founded in 1990, initially focusing on private equity, and has evolved into a diversified global alternative asset manager with over $900 billion in assets under management, making it one of the five largest alternative managers globally [4][4][4]. Industry Insights - The current macroeconomic environment is characterized by a resilient economy, potential interest rate cuts by the Federal Reserve, and an anticipated acceleration in IPO and M&A activities [4][4]. - Despite a robust market, there are concerns about tight spreads, heightened geopolitical risks, and muted private equity realizations [5][5]. - The private credit market is viewed as a significant growth area, with a broader definition encompassing various forms of financing beyond traditional direct lending [11][11][13]. Key Themes and Strategic Priorities - Apollo's leadership emphasizes the importance of origination in maintaining growth momentum, focusing on sectors such as the global industrial renaissance and public-private convergence [20][20][21]. - The firm has invested billions in origination platforms to enhance its capital solutions across investment-grade and non-investment-grade markets [19][19][19]. - The private credit asset class is estimated to be around $40 trillion, indicating a vast opportunity beyond direct lending [13][13]. Private Credit Market - The private credit market has evolved significantly, with a focus on non-investment grade financing, which has grown from zero to approximately $2 trillion [12][12]. - Apollo's strategy includes educating investors about the broader opportunities within private credit, which encompasses commercial real estate debt, residential real estate debt, and asset-backed securities [13][13][16]. AI Infrastructure Financing - The market for AI infrastructure financing is projected to require $5-7 trillion over the next five years, with Apollo focusing on providing capital in a structurally advantageous manner [31][31][33]. - The firm aims to avoid speculative investments and instead seeks opportunities where it can add bespoke value [32][32]. Retirement Services and Athene - Athene, Apollo's retirement services business, is positioned as a market leader in fixed annuities, benefiting from a strong balance sheet and low operational costs [43][43]. - The competitive landscape is becoming more crowded, but Apollo believes it can maintain its market share through its diverse capital-raising channels [44][44][46]. - The firm is exploring growth opportunities in international markets, particularly in Japan, Korea, Taiwan, and Australia, as well as expanding its presence in the UK [51][51][52]. Future Outlook - Apollo is optimistic about its growth trajectory, particularly in private credit and retirement services, and is focused on maintaining quality and excellence in its operations [26][26][29]. - The firm anticipates a successful fundraising for Fund XI, aiming to replicate the success of previous funds with a target of $22 billion to $25 billion [40][42]. Conclusion - Apollo Global Management is navigating a complex macroeconomic landscape while focusing on strategic growth areas such as private credit and retirement services. The firm is committed to maintaining its competitive edge through innovation in capital solutions and expanding its global footprint [4][4][19][43].

Summary of Blue Owl Capital Conference Call Company Overview - **Company**: Blue Owl Capital (NYSE: OWL) - **AUM Growth**: Grew from $0 to $300 billion in less than 10 years, focusing on private credit, digital infrastructure, and asset-backed finance [4][10][11] - **Market Position**: Ranked as a top two alternative manager in the private wealth channel, which is the fastest-growing channel over the last five years [4] Macro Environment - **Market Outlook**: Entering year four of a bull market with expectations for accelerated IPO and M&A activity [6] - **Interest Rates**: The company is agnostic to interest rate movements, but a favorable M&A environment is anticipated [6][8] - **M&A Activity**: Cautiously optimistic about M&A leading to good deployment opportunities, despite previous underperformance in this area [7][8] Strategic Priorities for 2026 - **Execution Focus**: 2026 is centered on execution and improving margins after a period of acquisitions and integration [10][11] - **Margin Improvement**: Expected gradual increase in margins from 58% to 60% over time [11] - **Fundraising Goals**: Aiming to complete fundraising for various funds, including a target of $7.5 billion for the GP Stakes Fund [12][13] Deployment and Investment Strategies - **Deployment Outlook**: Strongly tied to M&A cycles; private equity firms prefer financing buyouts with private debt [16][18] - **Digital Infrastructure**: Significant backlog in digital infrastructure projects, with a focus on high-quality tenants [9][19] - **Triple Net Lease Strategy**: Market leader in triple net lease investments, generating over 20% returns per annum [20][22] Asset-Backed Finance (ABF) - **Acquisition of Atalaya**: Acquired Atalaya to enhance ABF capabilities, with a total addressable market (TAM) estimated between $8 trillion and multiples of that [31][32] - **Performance**: The ABF segment has shown exceptional performance, generating a 19% gross return last year [34] Credit Quality Trends - **Loan Performance**: Average company EBITDA of $320 million with low annualized losses of 8 basis points over 10 years [36][37] - **Market Sentiment**: Despite negative press, portfolios are performing well, with expected continued strong performance over the next 18-24 months [38][39] Wealth Management Insights - **Market Position**: Second in the world for private wealth management, with a focus on providing a better investor experience [57][58] - **Future Trends**: Anticipates a shift towards private equity and strategies offering low volatility and high current income [59][60] Additional Insights - **Redemptions**: Noted an increase in redemptions due to market volatility, with expectations for a return to historical levels later in the year [47][50] - **AI and Technology Investments**: Cautiously optimistic about the long-term impact of AI, focusing on partnerships with established companies rather than speculative investments [29][30] This summary encapsulates the key points discussed during the Blue Owl Capital conference call, highlighting the company's strategic direction, market outlook, and performance metrics.

Ares Management Conference Call Summary Company Overview - Ares Management (NYSE: ARES) is one of the largest alternative asset managers globally, with a significant presence in non-investment grade private credit. The firm's assets under management (AUM) have increased from approximately $200 billion five years ago to $600 billion currently, marking a threefold growth [3][4]. Macro Environment and Industry Outlook - The macroeconomic backdrop for 2026 is viewed positively, with expectations for increased IPOs and M&A activity. The Federal Reserve's rate cuts and a pro-business administration are seen as supportive factors for the deal environment [4][5]. - Ares Management reported a record fourth quarter in 2025, deploying about $46 billion in capital, with a record-high pipeline as of January 2026, indicating strong transaction volumes anticipated in the first half of the year [5][6]. - The firm is optimistic about the impact of AI on investment opportunities, emphasizing that while some companies may face disruption, others will benefit from improved margins and productivity [10][11]. Strategic Priorities - Ares Management's strategic priorities for the year include: 1. Expansion in digital infrastructure, particularly in Japan, where the firm aims to diversify its product offerings [15][18]. 2. Continued development of a vertically integrated real estate approach, focusing on owning and managing real estate assets [19][20]. 3. Capturing margin opportunities across the business through technology investments and organizational redesign [20]. 4. While private equity is not a top priority, the firm remains open to expanding its capabilities in this area to meet client demand and enhance value creation [21][22]. Financial Guidance - Ares Management has reaffirmed its growth targets, aiming for a 16%-20% annual growth in fee-related earnings (FRE) and over 20% growth in revenue income (RI) [27][28]. The firm also announced a 20% increase in its dividend, reflecting confidence in its financial outlook [28]. Private Credit Insights - Ares Management is recognized as a leading non-investment grade private credit lender, with a strong performance track record attributed to its origination-led strategy and deep industry expertise [32][37]. - The firm maintains a selective investment approach, approving only 3%-5% of transactions, which contributes to its high asset selectivity and performance [32][35]. - The private credit market is characterized by a concentration of capital among top managers, with Ares Management positioned favorably due to its scale and incumbency advantages [53][54]. Market Dynamics and Competition - The relationship between banks and private credit managers is described as symbiotic rather than competitive. Ares Management benefits from banks' de-risking strategies, which create opportunities for private credit to fill the gap in the market [48][50]. - Despite some negative narratives surrounding private credit, Ares Management reports positive net flows and a strong appetite for private credit among institutional clients [43][44]. Wealth Management Strategy - Ares Management has strategically built its wealth management channel, focusing on ensuring a right-to-win in the market. The firm has achieved a top 3 distributor position in the wealth channel and aims to deepen relationships with existing distribution partners [60][62]. - The firm is cautious about adding new products, preferring to scale existing offerings and ensure they align with the overall business strategy [64][65]. AI Implementation - Ares Management has integrated AI capabilities into its operations, focusing on enhancing productivity and investment outcomes. The firm is actively deploying AI tools across various functions, including investment analysis and sales optimization [68][70]. - The early results from AI initiatives have shown promise, contributing to a slowdown in organic headcount growth while maintaining productivity levels [71]. Conclusion - Ares Management is well-positioned for growth in 2026, with a strong focus on strategic priorities, financial performance, and leveraging technology to enhance its operations and investment capabilities. The firm remains optimistic about the macroeconomic environment and the opportunities presented by AI and digital infrastructure.

The Strategic Case for Private Credit in the Modern PortfolioETF Trends is now VettaFi. Read More --The term private credit is often reduced to its most literal meaning – lending money privately. While accurate, Chris Getter, managing director and portfolio manager at Simplify Asset Management, believes that definition does a disservice to the asset class. The real story is the influence on yields and returns. According to Getter, the private nature of these negotiated securities creates a yield profile tha ...

Financial Data and Key Metrics Changes - Patria reported organic fundraising of $1.7 billion in Q4 2025 and a record $7.7 billion for the full year, exceeding the revised target of $6.6 billion by over $1 billion [5][34] - Fee-related earnings reached $203 million in 2025, up 19% year-over-year, with distributable earnings per share at $1.27 [6][23] - Total fee revenue for Q4 was $101 million, an increase of 8% year-over-year, while full-year total fee revenue reached $344 million, up 14% [39] Business Line Data and Key Metrics Changes - Infrastructure strategies raised approximately $2.3 billion in 2025, significantly higher than the previous year, driven by strong global interest [11] - The credit platform raised a record $1.8 billion in 2025, surpassing the previous record of $1.4 billion in 2024 [12] - Real estate strategies raised over $520 million in Q4 2025, contributing to Patria becoming the largest manager of REITs in Brazil [14] Market Data and Key Metrics Changes - The Brazilian credit market reached $1.7 trillion in 2024, with an estimated $800 billion addressable market for asset-backed, non-bank private credit [13] - Approximately 90% of Patria's fee-earning AUM is in vehicles with no or limited redemptions, indicating a stable asset base [15][21] Company Strategy and Development Direction - Patria aims to achieve a fee-earning AUM target of $70 billion by year-end 2027, with recent acquisitions expected to enhance capabilities in private credit and real estate [8][10] - The company is expanding its investment strategies, including infrastructure development, private equity buyout, and venture capital, to diversify its performance fee earnings stream [22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in meeting 2026 and 2027 fundraising targets of $7 billion and $8 billion, respectively, due to strong demand for their investment strategies [10][34] - The macroeconomic environment is seen as favorable, with financial deepening and deregulation in Latin America driving increased investor interest [28][30] Other Important Information - Patria announced a share buyback program of up to 7 million shares to return capital to shareholders [9] - The company is undergoing leadership changes, with a new CFO set to take over in April 2026 [31][32] Q&A Session Questions and Answers Question: Can you discuss the private equity valuation process? - The company uses an independent appraiser annually to value funds, employing a discounted cash flow model and comparing results with industry multiples [56][58] Question: How do unrealized performance fees affect your financials? - Unrealized performance fees do not impact revenues as management fees are charged based on invested capital, not valuations [62][64] Question: What is the outlook for fundraising in 2026? - The company is optimistic about exceeding the $7 billion fundraising target for 2026, given the strong performance in 2025 [70]

There are fears that shadow banking could fuel the next financial crisis The $2tn (£1.5tn) private credit industry is being quizzed by the City watchdog over fears its unrecognised losses could fuel a financial system meltdown, The Telegraph can reveal. Officials from the Financial Conduct Authority have in recent weeks been piling pressure on so-called shadow banks – an increasingly critical source of funding for the speculative AI boom – to more rigorously mark down the value of loans that are at risk ...