An Emerging New Financial Frontier

If you caught Apollo Global Management, Inc. Investor Day on October 1, 2024, you witnessed a bold vision for the future of global finance. Our journey, marked by innovation and strategic partnerships, is now reshaping the financial landscape and expanding the reach of capital markets. Part of that vision involves a re-imagining of global financial markets, involving a melding of public and private credit, collaborative relationships with banks, and a further democratization of markets.

That vision is already being played out in a series of transactions announced over the last few weeks.

On September 26th, Apollo announced a groundbreaking partnership with Citi (and involving Athene) on a $25 billion private credit deal. This follows two other major initiatives Apollo has rolled out in the last month: a $5 billion collaboration with BNP Paribas and Apollo's ambitious plans to build a private credit trading desk.

Together, these developments underscore three key themes that should be of interest to policymakers, regulators and stakeholders:

• The emergence of an increasingly collaborative ecosystem between banks, asset management firms, and insurers;
• The democratization of private credit for a broader range of investors; and,
• Innovations that address existing prudential concerns, particularly around transparency and liquidity.

A Collaborative, Not Competitive, Ecosystem

Traditionally, banks and private credit firms have been seen as competitors, but that model is changing, and it needs to change to ensure the global market has access to a full range of capital solutions to fund both private and public opportunities.

Rather than competing for the same deals, Citigroup and Apollo will be pooling their resources to provide capital to underserved sectors, like small- and medium-sized businesses, or to large-scale infrastructure projects that require long-term, flexible financing solutions.

This kind of collaboration allows for greater efficiency and reach, ensuring that critical sectors of the economy have access to the capital they need.

Similarly, Apollo's collaboration with BNP reinforces this theme in Europe. By working alongside one of the largest European banks, Apollo is helping BNP Paribas tap into private credit markets to meet the needs of clients who seek alternative financing. The recent European Commission -sponsored report by former Italian Prime Minister Mario Draghi on "The future of European competitiveness – A competitiveness strategy for Europe" further underscores the important role that private capital must play in fueling critical investment in Europe.

Apollo's partnership with BnP provides an immediate example of the power of banks and private credit firms working in harmony to serve a wider spectrum of borrowers.

Democratization of Private Credit

Market democratization refers to the process of making financial markets more accessible to a wider range of investors, breaking down barriers that have traditionally favored large institutions. In private credit, this transformation is accelerating, as new platforms and tools open up opportunities that were once reserved for the elite.

By enabling broader participation, democratization fosters a more inclusive financial system, benefiting both consumers and markets by enhancing competition, innovation, and liquidity.

Democratization also further breaks downs the divisions between "public" and "private" investments, expanding access to a wider range of investors.

As Apollo CEO Marc Rowan noted in a recent CNBC interview, “a year from now I predict you won’t be able to tell the difference between public and private.”

Apollo’s planned private credit trading desk is a key driver in this democratization. By creating a platform that enhances liquidity and transparency in private credit markets, Apollo is empowering a more diverse set of investors—from institutional to smaller players—to buy and sell private credit assets with greater flexibility. This initiative addresses traditional barriers to entry, making it easier for smaller investors to participate in private credit, which has long been the domain of large institutions.

Ultimately, by broadening access and market participation, Apollo is contributing to a more dynamic and competitive financial landscape that benefits all stakeholders.

Innovations That Foster Transparency and Liquidity

Private credit markets have often been viewed with caution due to concerns over transparency and liquidity, especially from regulators who emphasize the potential risks to financial stability. Apollo’s private credit trading desk, along with other innovations, directly addresses these challenges by enhancing transparency through standardized pricing and reporting, making private credit more accessible and understandable to a wider range of investors.

These initiatives not only increases market clarity but also inject liquidity into the system by providing a secondary market where investors can enter and exit positions with greater flexibility.

In doing so, Apollo is building confidence in private credit, positioning it as a stable, attractive asset class for both institutional and smaller investors alike.

Shaping the Future of Finance

Apollo’s recent Investor Day and deals underscore our commitment to transforming the financial ecosystem. By fostering deeper collaboration between traditional institutions like banks and innovative private credit platforms, we are not just expanding the reach of private credit - we are actively democratizing it for a more diverse range of investors.

This holistic approach not only broadens access but also strengthens the integrity of financial markets by addressing key regulatory concerns around liquidity and transparency.

As Apollo continues to lead in these transformative areas, we remain committed to engaging with policymakers, regulators, and stakeholders. Together, we can build a future where financial innovation supports a more inclusive, resilient, and dynamic global economy.

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