(Bloomberg) -- Citigroup Inc. and Apollo Global Management Inc.’s “impossible to replicate relationship” is what brought the landmark private credit partnership to fruition, said Richard Zogheb, the bank’s global head of debt capital markets.
The partnership allows Citigroup to become a one-stop debt shop, Zogheb said in an interview on Bloomberg Television on Friday, meaning they can provide private credit deals in addition to syndicated debt deals.
“Private credit is growing by leaps and bounds,” he said. “It is going to be a large component of the financing markets going forward and our view is that we need to embrace that and if we’re going to be increasing our relevance to our clients, we need to offer that product.”
“We can’t be an ostrich and a stick our head in the sand and pretend it doesn’t exist,” he added.
Citigroup and Apollo are teaming up in the fast-growing private credit market, agreeing to work together on $25 billion worth of non-investment grade deals over the next five years, Bloomberg reported on Thursday. This marks the latest tie-up between Wall Street banks and private credit firms. Bankers have lost out on lucrative debt deals funding acquisitions and leveraged buyouts to direct lenders, and these partnerships are a way to stay involved in those transactions.
Mubadala Investment Co. and Apollo’s insurance unit Athene will also participate in the venture, which will initially focus on North America.
The size of the deal was also important, Zogheb said. He stressed that if Citigroup was going to offer the solution to clients, it needed to ensure that it had a partner who’d stick with the firm.
“It’s larger than what you’ve seen in any of the partnerships,” Zogheb said.
Zogheb also said that he’s received a number of calls from other managers also interested in partaking in the partnership and that Citigroup is open to welcoming them into the fold.
“We’d love to expand the size of the partnership and bring others in,” Zogheb said.
--With assistance from Paula Seligson.
(Updates with Bloomberg Television clip.)
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