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February 24, 2025 | PIONLINE.COM
Apollo Global Management’s new global head of origination sees private credit growth ahead in an “industrial renaissance,” with money flowing into areas including infrastructure, digital infrastructure and power.
“There’s a significant amount of investment that’s going into these areas,” said Chris Edson, in a recent interview with Pensions & Investments.
Chris Edson
Edson stepped into the role, a new one at Apollo, as global head of origination in September. He oversees the firm’s origination business — sourcing, structuring and making loans — an area executives have underscored is a top priority for the firm. His focus is on developing the credit business across corporate, sponsor and platform areas globally.
Apollo, which has $751 billion in assets under management as of Dec. 31, has set of goal of over $275 billion in annual origination by 2029, according to an October investor day presentation.
Last year marked a record for Apollo, with origination volume hitting $61 billion in the fourth quarter and $222 billion for the full year “with platforms and high grade capital solutions contributing more than half of total origination volume” for 2024, according to the firm’s Feb. 4 earnings release.
Edson also sees growth ahead and partnerships between long- and short-duration investors in areas including project finance, mortgages and longer-dated asset classes where “it makes sense for there to be a mix of participants.”
Defining private credit
Definitions of private credit widely vary across the industry, with Preqin sizing the industry at about $1.7 trillion counting direct lending, distressed debt, mezzanine, private debt fund of funds, special situations and venture debt in its figure. For Apollo, it’s an approximately $40 trillion market, majority investment grade, with the U.S. still the largest and “most developed” market, Edson said. Private credit encompasses areas including mortgages, commercial real estate, consumer loans, infrastructure and project finance, transportation finance and trade finance.
“These are all things that have been around for a long time, and historically … the majority of this private credit was on bank balance sheets; only now, now it’s diversified,” he said. “It’s still on bank balance sheets, and it's also in other parts of market.”
Investors such as insurance companies used to buy a securitization of fleet assets such as vehicles and equipment. Now, many are making a fleet loan directly for example, Edson said.
“If you go direct, you can earn a little bit of a better risk reward,” he said, adding that investors “derisk things a little bit” by having lending documentation and direct due diligence access.
Edson has been at Apollo for 17 years and watched the firm transition from majority private equity to now being majority credit.
“Everyone at Apollo is an originator and that’s because everyone has relationships, everyone has connectivity, and everyone has content,” he said. “And what we're trying to do is help facilitate bringing all that together, so that we can really cross-sell and provide the best solutions.”
Apollo has 16 origination platforms — some built and others, such as warehouse lending specialist ATLAS SP Partners, acquired — with about 4,000 employees.
Edson says Apollo’s scale is a differentiator, allowing it to participate in large transactions.
“I think the Intel transaction last year is a great example of that. Given the size of that, there were just very few firms that could do that,” he said, referencing Apollo investing $11 billion to acquire a 49% equity interest from Intel in a joint venture entity related to Intel’s Fab 34, a high-volume manufacturing facility.
But other areas could down the line be ripe for expansion, including segments of infrastructure and fund finance — a space he acknowledges probably has as many definitions as private credit itself.
For Apollo, fund finance skews toward the high-grade and investment-grade segment of the market and starts in the subscription line space, he said. (Subscription credit facilities are used to finance activities that otherwise would be funded from capital calls to limited partners.)
“There are some asset classes where we aren’t as big now and may grow into over the future. And that might be something that we could build a platform around, or that might be something where we might … directly source those things on a go forward basis,” he said.
Banks as friends
Apollo has disclosed bank partnerships with Citigroup, BNP Paribas and Standard Chartered.
The Citigroup partnership, announced in September, focuses on a $25 billion direct lending program initially in North America. Also in September, BNP Paribas announced a $5 billion commitment as part of collaboration with Apollo and ATLAS. And in January, Standard Chartered and Apollo announced a $3 billion financing partnership focused on global infrastructure and energy transition credit.
“Banks are friends,” Edson said. “And what we're finding together with them as partners, is that there's a really interesting balance here, and it really links to… matching assets to liability durations. There's a lot of origination that a lot of banks have. They have incredible reach and deep client relationships.”
Especially for longer duration funding facilities, it is “helpful” to have a partner, Edson said.
Institutional investors, especially pensions, have been significantly growing their allocations to private credit in recent years.
Defined benefit funds of the 200 largest U.S. retirement plans reported $198.4 billion in private credit assets as of Sept. 30, according to Pensions & Investments data. That’s up 57.2% from $126.2 billion the previous year.
On credit spreads tightening, as well as the macroeconomic outlook from CIOs, “We’re very focused across our whole portfolio on making sure all of our liabilities have a longer duration than our assets to protect against that liquidity risk. And that's what we really advise all of our partners and clients to focus on as well,” he said.
Edson expects investor definitions of private credit to continue expanding.
“The continued expansion of others’ definition of private credit is something that we’re starting to see more momentum on,” he said.