- Apollo Global Management has been quietly building out its credit team as the pandemic rages on and investors await a flurry of deal activity.
- Recent hires have come from Bank of America and PointState Capital, but we learned about several others in the works, including the head of middle-market lending at Goldman Sachs.
- At the center of its growth is a new $12 billion direct lending platform, which it will use to loan companies around $1 billion — financing that its executives expect will be in high demand over the coming months.
- We took a look at Apollo’s credit lineup to date, including some of the most senior execs who will be pulling the strings behind its lending deals, as well as those who Apollo has turned to to help bring its credit division to the next level.
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Apollo Global Management is stacking its bench with credit investment professionals to help scout out debt deals as the coronavirus pandemic continues to drag on businesses.
Founded as a private-equity shop in 1990, credit is now Apollo’s largest division, housing more than $210 billion in assets under management, with much of that tied up in mandates of an insurance company it owns, Athene Holdings.
By comparison, Apollo has about $68 billion in private-equity assets, according to its website.
Now the firm is looking to expand even further, adding a new $12 billion direct lending platform to seek out companies that need a loan of around $1 billion. In the past, such deals were smaller — in the tens or hundreds of millions.
“We’re talking about going to much larger businesses and lending them money,” said John Zito, Apollo’s deputy chief investment officer for credit, in an interview.
To help with that effort, it’s bringing on the head of middle-market lending at Goldman Sachs, Dan Zarkowsky, after hiring Tiffany Gallo from Bank of America, and Natalia Tsitoura from Alcentra, earlier this year.
Zarkowsky will join as a partner, Apollo is expected to announce, after Gallo and Tsitoura joined as managing directors.
Apollo’s direct-lending ambitions
Direct lending is an increasingly popular area of investing for some private-equity firms.
When a company needs a loan, it will often come from multiple banks through a syndication process. But with direct lending, there’s a single lender — which means a simpler process — but terms can be pricier, to factor in the risk taken on by the lender.
Apollo has been active in this area, extending last year a $1.8 billion loan to media investment firm New Media in a financing of its giant newspaper merger with Gannett.
Later in 2019, Apollo also provided a direct loan to New Fortress Energy, an energy investor, in the amount of $800 million.
New Fortress and New Media are both entities created by Fortress Investment Group, the private-equity firm founded by billionaire Wes Edens.
But not all of their loans go to companies with ties to the Milwaukee Bucks co-owner: another direct lending deal that made headlines last year was a $600 million loan to shipping company, YRC Worldwide. And it’s continuing to monitor companies in the US and Europe.
Apollo credit professionals have stayed active during the pandemic
Besides direct lending, Apollo is staying active in other areas of lending, too.
Now private-equity executives and lawyers tell Business Insider that they expect to see more PE deal activity as the pandemic moves into another phase, and business leaders develop a clearer picture of their future financial forecast.
“The sponsor activity has been pretty quiet,” said Zito, the Apollo executive. “You haven’t seen a ton of sponsor acquisitions yet, but we suspect that will start to change within 2021. And when sponsor activity picks up in private equity, they need financing, so when their activity picks up, our activity picks up.”
That’s with the caveat that Apollo does not lend to its own portfolio companies, and will also provide loans to corporate, not just sponsor backed companies.
As Apollo gears up for the flurry of deal activity, we decided to take a look at its line-up, and highlight some of the most senior executives who will be pulling the strings behind these deals, as well as those who Apollo has turned to to help bring its credit division to the next level.
Throughout the process, we learned that Apollo has been adding credit professionals across the board — not only direct lending. This includes the addition of Olivia Guthorn, an executive from Brookfield Asset Management who will lead Apollo’s global corporate credit team’s healthcare industry vertical. Her start date was July 27.
The new hires, along with other recent additions — such as Rina Joshi from PointState Capital — show that Apollo is investing big in credit.