Apollo launches Mubadala-backed private credit fund
Apollo Global Management is launching a new private credit fund, with investment from Abu Dhabi’s Mubadala Investment Company.
The new fund – Middle Market Apollo Institutional Private Lending – is part of an existing partnership between the asset manager and Abu Dhabi’s sovereign wealth fund.
The two firms agreed to work together in 2020 and have already partnered on several ventures, including a $2.5bn (£2bn) private credit platform last year.
Read more: Goldman Sachs and Mubadala ink $1bn Asian private credit deal
Mubadala and an affiliate of Apollo have contributed more than $290m into the fund, which had total seed commitments of $450m as of 15 March, according to a regulatory filing seen by Bloomberg, who reported on the new fund.
The fund has over $790m in assets, with the rest of the assets purchased through the use of leverage.
Middle Market Apollo Institutional Private Lending will invest as much as 70 per cent to 80 per cent in loans to US middle market companies.
The fund is structured as a business development company. Institutional investors into the fund will pay no fees during the first year and half of the fees the following year, which is unusual for these types of vehicles.
Read more: Saudi’s Jada Fund of Funds makes second private credit investment
After two years, the full fees will comprise a one per cent management fee and a 12.5 per cent incentive fee after achieving a six per cent hurdle rate, according to the filing.
If the fund does not double its investment commitments to $900m in five years, Apollo will distribute the cash received from sale or loan repayments back to investors, according to the filing seen by Bloomberg.
Mubadala has added its head of credit investments Fabrizio Bocciardi to the fund’s board, the filing showed.
Mubadala has been making a number of investments into the fast-growing private credit market. Last December, it announced that it had partnered with Ares Management and Aldar Properties on a $1bn private credit fund that will invest in property across the UK and mainland Europe.
