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Apollo has moved a fast-growing unit focused on complex lending out of its prized buyout division, in the latest sign of a shift towards private credit and away from a business that built it into a $900bn behemoth.
The shake-up, which has not been previously reported, began earlier this year and was announced at a town hall this week, according to people familiar with the matter and a presentation seen by the Financial Times.
Matt Nord, formerly co-head of private equity at Apollo, will helm the newly separated group known as hybrid capital, which crafts complex debt structures that are often attached to minority equity investments.
Reed Rayman, a rising star who was behind Apollo’s lucrative takeovers in 2021 of Yahoo and AOL, was appointed deputy head of hybrid investing alongside veteran Apollo credit investor Chris Lahoud.
The move highlights how chief executive Marc Rowan is pinning Apollo’s future on lending to businesses, a strategy that has transformed the group into a formidable challenger to the world’s biggest banks.
It also comes as Rowan, who was elevated to CEO in 2021 after the exit of its billionaire co-founder Leon Black, has told Apollo’s employees and shareholders that splashy corporate buyouts are no longer a growth driver.
“Private equity is an amazing asset class. It’s just not a growth business,” Rowan said at an investor conference on Wednesday.
He added: “I think the growth you will see in our equity business will come in two places. One will be hybrid, and the second will be a reimagination of what private equity is as an industry.”
David Sambur, Apollo’s veteran dealmaker, will be the sole head of its $127bn private equity business, which also includes real estate deals and second-hand fund stakes.
Nord will remain co-head of Apollo’s flagship PE funds alongside Sambur, but will be less involved with the unit’s day-to-day operations.
Apollo declined to comment.
Rowan has positioned Apollo to be a lender to companies at the centre of the artificial intelligence and energy infrastructure boom that require complex financings suited for private capital groups with locked-up capital and not regulated banks funded with flightier deposits.
By offering companies such as Intel customised borrowings, Apollo has been able to appeal to groups that need financing that does not resemble a traditional bond or common equity. For example, in the chipmaker’s transaction, Apollo designed an off-balance sheet joint venture that allowed it to raise cash that still resembled a high-rated loan.
Rowan has presented these lending commitments as opportunities for Apollo’s traditional private equity dealmakers to underwrite large, complex investments but outside of the mould of traditional buyouts — a crowded marketplace with little differentiation among buyout firms.
Apollo’s prominent recent hybrid deals include financing a takeover of members club Soho House and the carve-out of a large unit of waste management group GFL Environmental. The division has also worked with large companies such as Keurig Dr Pepper.
Nord and Rayman were also part of a recent partnership with venture firm 8VC to invest several billions of dollars of hybrid investments into what Apollo has called the “next wave of American industrial innovation”.
In recent years, Apollo’s hybrid business has earned far higher returns than its traditional buyouts. Since the beginning of 2024, hybrid deals earned nearly 20 per cent returns annualised, while recent buyouts earned less than 8 per cent, according to company filings.
However, Apollo continues to believe its private equity business will see a good reception from investors as it raises a new flagship corporate buyout fund. The group is seeking to raise $25bn for its newest buyout fund, an increase from a predecessor fund that raised $20bn, according to people briefed on the matter.
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