Apollo Global Management Inc.’s Co-President James Zelter sees “unprecedented returns” for senior lenders on large buyout deals in the years ahead.
(Bloomberg) — Apollo Global Management Inc.’s Co-President James Zelter sees “unprecedented returns” for senior lenders on large buyout deals in the years ahead.
“We never expected credit to have the kinds of returns we have right now,” Zelter said during a panel discussion at the IPEM private markets conference in Paris on Wednesday.
Zelter’s prediction comes amid what many are calling a golden era for providers of private credit. Traditional bank lenders have pulled back from the market during an aggressive rate-hiking cycle designed to combat inflation.
Buyout firms have increasingly been turning to providers of private debt to get deals over the line. While this has gone some way to plugging financing gaps on transactions, some private equity buyers are also having to put up more equity.
“The opportunity to be a senior lender in a large buyout and be making 10% to 12% with a massive equity check, I suspect that’s going to be a marketplace in 23, 24, 25 that there are really unprecedented returns on a risk-adjusted basis,” Zelter said at IPEM.
Apollo manages more than $400 billion in credit strategies, making it one of the biggest non-bank providers on the Street. Earlier this year, the firm’s Co-Founder and Chief Executive Officer Marc Rowan said he expected growth in private credit to outstrip its other businesses.
In January, Apollo formed a joint venture with Abu Dhabi sovereign wealth fund Mubadala Investment Co. to lend about $2.5 billion over the next five years.
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