Apollo estimates private credit market is worth $40trn
A senior executive at Apollo Global Management has estimated that the private credit market could be worth up to $40trn (£32.16trn).
Last month, Pitchbook calculated that the global private credit sector was worth $1.75trn by the end of 2022. However, Chris Edson, global co-head of the financial institutions group at Apollo Global Management, said that the true size of the market is closer to $40trn.
“We think private credit is much larger [than has been reported],” Edson said, at Apollo’s 2023 platform origination deep dive event.
“We think it is about a $40trn market.
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“This is not a new market,” he added. “These are assets that have been around for decades. These are assets that have sat on bank balance sheets, these are assets that sat on other financial institutions and these are assets that have been in the capital markets. These are traditional assets like mortgages, trade finance, and transportation finance.”
Edson noted that Apollo does not believe that all private credit is attractive, and reiterated the company’s philosophy to seek out investment grade opportunities with an attractive risk/reward balance.
“We’re looking for outsized deployment,” he added.
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“We’re focused on really stable investments into businesses that have really long track records of performance. Our returns are primarily driven by the net income generation of this business, not by changes in franchise value or other things like that.
“We like asset-backed finance because it has a long track record of performance.”
Apollo predicts that its private equity clients are seeking a fixed income replacement to help fund their retirement, and aims to tap the high-net-worth individual (HNWI)market in anticipation of rising demand for private credit products.
In September 2023, Apollo announced that it was targeting a fundraise of around $2.5bn for a new private credit vehicle that will look to provide loans to large corporate borrowers. This follows the launch the Apollo Origination Partnership Fund I, which closed last year with a remit to invest in large corporate borrowers in North America and Western Europe. Both funds are open to HNWI investors.
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