Quiver Quantitative - Apollo Global Management (APO), a leading alternative investment manager, is setting its sights on expanding its portfolio in the secondary credit investment market. The New York-based firm is gearing up to launch its second fund dedicated to this niche, eyeing a substantial $2 billion capital raise. This move comes as secondary credit investments, which involve purchasing stakes in existing debt funds at a discount, gain momentum in the financial world, blending the allure of private credit with the dynamic market of secondaries.
The initiation of this fund marks a significant step for Apollo, which had previously ventured into the credit secondaries space in April 2021, managing $1 billion in assets. The firm's strategic move to target $2 billion for its second fund underscores the growing investor interest and potential in the secondary credit market. This fund aims to capitalize on opportunities arising from investors seeking early exits from debt funds, allowing Apollo to acquire these interests at favorable prices.
Market Overview: -Private equity giant Apollo Global Management sets its sights on $2 billion for its next credit secondaries fund, capitalizing on booming demand. -The fund taps into two hot trends - private credit and secondaries - by acquiring discounted stakes in existing debt funds from early exiting investors. -Expected launch before quarter-end signifies Apollo's growing appetite for secondary investments, fueled by a dedicated platform and key hires.
Key Points: -Building on a successful $1 billion debut in 2021, Apollo's second credit secondaries fund targets twice the size, capturing investor enthusiasm for the asset class. -Secondary credit offers the allure of both private credit's attractive returns and secondaries' discounted entry points, combining the best of both worlds. -Apollo's dedicated "S3" business, spanning diverse asset classes, strengthens its secondary play, with recent hires further bolstering its capabilities.
Looking Ahead: -The success of Apollo's fundraising will provide insights into the continued hunger for secondaries within the private credit space. -Competition for quality assets in the market is expected to be fierce, with established players like Apollo vying with emerging specialists. -As investor interest in both private credit and secondaries shows no signs of waning, Apollo's venture could pave the way for further capital allocation towards this lucrative niche.
In 2022, Apollo bolstered its focus on secondary investing, bringing on board seasoned professionals Veena Isaac, Steve Lessar, and Konnin Tam from BlackRock (NYSE:BLK). This strategic hiring spree was part of Apollo's broader initiative to deepen its expertise and expand its footprint across various segments of alternative investments. The firm's Secondary Solutions Group (S3) plays a pivotal role in this endeavor, offering an array of services including fund financing, capital solutions for sponsors and limited partners, and other financial structuring across private equity, private credit, infrastructure, and real estate sectors.
Apollo's foray into its second credit secondaries fund reflects its commitment to diversifying and enriching its investment strategies in the evolving landscape of alternative investments. The anticipated formal marketing of the fund by the end of the current quarter is a testament to the firm's aggressive pursuit of growth and innovation in this arena.
This article was originally published on Quiver Quantitative