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Roula Khalaf, Editor of the FT, selects her favorite tales on this weekly publication.
The author is a former funding banker and creator of “Energy Failure: The Rise and Fall of an American Icon”
Risky monetary markets, like those we face now because of America’s ever evolving tariff insurance policies, usually create distinctive alternatives. Suppose again to what occurred in October 2022, shortly after Credit score Suisse launched a significant enterprise restructuring and the credit-rating companies introduced they had been downgrading the Swiss financial institution’s debt, including to the turmoil that was engulfing the then 166-year-old monetary establishment.
One of many rapid steps the financial institution took in response to the waning confidence in it was to speed up the sale of the majority of one in every of its crown jewels, the so-called securitised merchandise group, a big asset-based lending enterprise that created — or “originated”, in monetary jargon — merchandise comparable to mortgages and auto loans and offered them to buyers.
The enterprise was beloved inside Credit score Suisse, and one in every of its most worthwhile. However generally the market forces you to do stuff you don’t need to do, and the sale of this enterprise was a kind of occasions.
As ever, the at all times opportunistic Apollo World Administration, the choice asset supervisor, was solely too joyful to pounce on Credit score Suisse’s rising monetary misery. That’s Apollo’s DNA. Briefly order,j earlier than different, extra extremely regulated monetary establishments might act, Apollo reduce a cope with Credit score Suisse to purchase the New York-based enterprise.
Apollo purchased all of it for a slight low cost to the par worth of the mortgage portfolio, in response to one insider. It renamed the enterprise Atlas SP and set it up as a separate unit, with Apollo as the bulk proprietor and Mass Mutual, the massive insurance coverage firm, and the sovereign wealth fund Abu Dhabi Funding Authority as minority buyers.
For the reason that deal closed in February 2023, Atlas SP has develop into the cornerstone of Apollo’s bold plan to remake Wall Avenue, by the marketplace for personal credit score. “Once you look again at actually, actually strategic transactions for this agency, that’s obtained to be up there,” Apollo president Jim Zelter informed me in December, “as a result of it actually was a primary large foray of an origination enterprise of that scale, owned by a non-bank.” He mentioned he jokes with Marc Rowan, Apollo’s chief government, that 5 years in the past they didn’t even know the way to spell Atlas.
Now, it’s central to the agency’s core technique of accelerating the quantity of personal credit score that Apollo originates to generate the income-producing property it must cowl the liabilities generated by Athene, Apollo’s wholly owned annuity enterprise. It captures the unfold between the 2 as revenue.
Of Apollo’s $785bn of property beneath administration, some $641bn is personal credit score, with the stability being personal fairness. Apollo has lengthy preached that there’s much less danger in its enterprise of the type of deposit runs and lack of investor confidence seen by some banks as a result of the length of its property and liabilities are each long-term and intently matched. The message is beginning to get out. The corporate has a market worth of $86bn, up greater than 250 per cent prior to now 5 years, though its inventory was hit exhausting within the latest broader market turmoil. After a latest rally, it nonetheless down round 13 per cent to date in 2025.
Apollo originated some $220bn of property in 2024 and has the ambition to boost that to $275bn in beneath 5 years. Atlas SP is the important thing to reaching that aspiration. It originated greater than $40bn of property final 12 months with a aim to do $50bn this 12 months. Atlas SP is likely one of the 16 loan-origination “platforms” that Apollo both owns or has a majority fairness funding in however has a specific strategic significance. Atlas SP has 300 purchasers, and every of these debtors is an originator of small loans itself, giving the enterprise tentacles throughout an enormous swath of American companies.
In some ways, Apollo’s origination companies, with Atlas on the centre, has helped fill a part of the void the outdated GE Capital left after it was dismantled and offered off a decade in the past. It now offers all types of loans for stock and tools, automobiles and fleets, mortgages, funding funds and for constructing out digital infrastructure. The Atlas deal, John Zito, Apollo’s co-president, informed a Grant’s Curiosity Price Observer investor convention a 12 months in the past, “will likely be checked out as in all probability probably the most modern M&A transaction during the last 5 years”.
For the time being, the long run is right here, and it appears to be working simply advantageous. The query is: Will there be a reckoning for personal credit score and, in that case, when will or not it’s, and what’s going to trigger it? In a Might 2 Bloomberg interview, Robert O’Leary, the co-CEO of Oaktree Capital mentioned some restricted companions in personal credit score funds, anticipating a recession, have already began promoting their stakes at reductions as massive as 50 cents on the greenback, and it might get a lot worse, he mentioned, if, and when, the true compelled promoting begins.
