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(Bloomberg) -- As companies increasingly benefit from a wider range of financing options, the barriers between private and public markets are coming down, James Zelter, co-president of Apollo Global Management Inc., said in an interview on Bloomberg TV.
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As an investment destination, the US stands out as a “beacon of opportunity” in comparison with other regions around the world, Zelter said, attributing its success to the country’s embrace of private capital.
“Private credit and private capital has been the engine of economic growth in the US,” he said.
Private credit has ballooned in size over recent years, as higher interest rates have bolstered returns to match those of private equity. From its beginnings financing small and medium-sized firms, the industry increasingly targets investment-grade companies. While corporate lending to smaller businesses sits at around $1.6 trillion, Apollo views private credit, including investment-grade opportunities, as a $40 trillion market.
One of the lead players in the sector, Apollo has around $598 billion in assets under management in its credit arm, including in corporate direct lending. Its Outlook for Private Markets in 2025 forecast continued collaboration between alternative investment managers and banks focused on generating new deals.
Such partnerships have proliferated, and Apollo has engaged in one of its own with Citigroup Inc. In September 2024, the two firms agreed to arrange financings for corporate and private equity clients and are planning to work together on $25 billion worth of deals over the next five years.
“The amount of integration and dialogue going on between the top five, top 10 institutions and a handful of us that lead the industry working on big deals has never been deeper,” Zelter said.
IPO Options
Last Autumn, bankers suggested the market for initial public offerings of companies that are owned by private equity firms was picking up, buoying the outlook for such first-time share sales going into 2025. As much as $3.2 trillion could be tied up in ageing, PE-backed companies waiting to be sold or listed, Bloomberg previously reported.
Zelter, however, was more cautious, saying that Apollo had valuation issues with a lot of private equity companies that have wanted to do IPOs. Given the increasing number of other avenues for raising financing, he doesn’t expect the amount of IPOs to be as large as some have forecast.