(Bloomberg) -- Apollo Global Management Inc. clinched $5 billion in fresh firepower from BNP Paribas SA as it looks to grow a key lending business, muscling deeper into turf once dominated by banks.
The French bank is committing funding for investment-grade, asset-backed deals originated by Apollo, as well as the Atlas SP arm it acquired from Credit Suisse. BNP will start by pledging a $5 billion facility and plans to increase that over time.
“This is one of – if not the – largest-ever, long-term private credit financings,” said Jim Zelter, Apollo’s co-president. If securitizations follow, the companies will partner on them.
Atlas SP is central to Apollo Chief Executive Officer Marc Rowan’s ambitions to build a credit machine that rivals Wall Street banks. He wants Apollo’s 16 origination platforms — which offer mortgages, aircraft loans and other debt that can be structured into private credit investments — to generate $200 billion to $250 billion in annual volume in five years. Apollo bundles private credit that can be sold to Athene, its annuities business, and other insurance companies.
Atlas was a securitized-products unit at Credit Suisse that goes back to Wall Street’s early mortgage-bond days in the 1980s. It became one of Credit Suisse’s riskiest and most lucrative units — at times printing profits that shored up the entire investment bank before its collapse into the arms of UBS Group AG last year.
Atlas debuted under its new name and ownership with $40 billion under management in February 2023, providing funding to mortgage lenders and other businesses. It has been seeking financing to help fund assets such as mortgages that will eventually be packaged into securities and sold to investors.
The unit received backing from a subsidiary of Abu Dhabi Investment Authority in June 2023 and secured a minority investment from Massachusetts Mutual Life Insurance Co. this year.
The tie-up between Apollo and BNP is the latest sign that banking giants that once had the most ground to lose to the burgeoning world of private credit keep finding more ways to pump into the sector.
What Is Private Credit and Why Is it Growing So Fast?: QuickTake
Asset-based lending is a burgeoning part of the borrowing market in which lenders rely on contractual cash flow generated by a defined pool of assets — such as financing for real estate, cars or equipment leasing. The business has been gaining traction in private markets where investors are looking beyond directly negotiated loans in the hunt for more lucrative returns.
The debt can also later be repackaged into bonds of varying risk and size to be sold to investors in the asset-backed securities market. That market has boomed this year, with sales of bonds up by about 26% compared a year earlier, according to data compiled by Bloomberg.
Last month, Atlas said CEO Jay Kim was departing. It installed Carey Lathrop as the interim chief while it hunts for a longterm successor. Lathrop, who previously led Citigroup Inc.’s trading business, had joined Apollo in 2022.
New York-based Apollo has previously said that the Atlas securitization business could grow to become a $70 billion origination unit in the coming years. In recent weeks, Atlas has helped sell bonds tied to Pagaya Technologies Ltd.’s consumer loans, BBAM Aircraft Leasing & Management’s aircraft debt and Ascent’s career loans.
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