Apollo Plans to Build the First Marketplace for Private Credit

(Bloomberg) -- Apollo Global Management Inc. is seeking to build a marketplace that would allow investors to buy and sell high-grade private assets more easily, while encroaching further into terrain once dominated by the biggest Wall Street firms.

The alternative asset manager is in discussions to partner with banks, exchanges and fintech firms to deliver real-time information and intraday prices for private credit deals, according to Eric Needleman, head of Apollo Capital Solutions.

Such a marketplace would allow Apollo to trade and syndicate the debt it originates on a bigger scale and be the first of its kind in modern-day private markets, where assets are typically held with the buyers and prices are rarely disclosed publicly.

“We are engaging daily with top-tier counterparties, deepening market connectivity, and expanding liquidity solutions and offerings,” Needleman said. “The conversations have been highly constructive at the highest levels.”

Apollo has already made trades with TPG Angelo Gordon, according to a person familiar with the matter.

The biggest trends in the next five years are the convergence of public and private markets and the changing role of financial institutions, Apollo has said. In building out a trading desk and functions, the firm is priming itself to be at the heart of that change.

Last year, Apollo and State Street Corp. said they were planning to launch an exchange-traded fund that invests in public and private credit, a move that would bring private credit closer to retail investors.

“We’re focused on building a true marketplace — open architecture, collaborative, and built for scale,” Needleman said.

So far, the firm has traded about $2 billion of products it originated and has a growing list of about 60 active clients.

Apollo often places investment-grade products it originates on the balance sheets of its Athene insurance arm and third-party insurers, and having a trading function would allow it to shore up liquidity, while earning fees from trades. It will operate the marketplace through Apollo Capital Solutions under its broker-dealer, which is capitalized to absorb risk and provide liquidity and includes a public-facing sales and trading function.

The firm originated $222 billion of loans last year.

Significant Interest

As part of the marketplace build-out, Apollo recently hired John Maggiacomo, who had been head of US credit sales at RBC Capital Markets.

Banks have long been pulling back from holding risk on their balance sheets, which has given rise to market-makers that are are pushing deeper into trading fixed income and corporate debt.

Apollo spies an opportunity to capitalize on the demand from investors to shuffle assets in the booming $1.6 trillion private credit market and said there’s significant interest from both existing private credit holders and traditional public credit buyers.

“There’s a clear use case and demand for secondary markets to develop in these instruments, but to do so we need sophisticated partners with expertise in both private and syndicated domains,” said Brendan McCaffrey, head of capital markets and trading at TPG Angelo Gordon’s corporate-credit business.

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