Apollo Global Management (NYSE:APO) President Jim Zelter used a discussion at Bank of America’s 34th Annual Financial Services Conference to outline the firm’s view of the macro environment, the evolution of private credit, and Apollo’s strategic priorities across origination, retirement services, and private wealth.
Macro view: strong “fairway,” narrow margins for error
Zelter said several major forces shaping markets appear “a bit interest rate insensitive,” pointing to what he described as a “massive AI build,” a “massive global industrial renaissance,” and the “benefits from one big, beautiful build.” He added that a pro-growth U.S. administration and a large capital expenditure cycle were supportive, but cautioned that the environment also carries meaningful downside if conditions deteriorate.
Private credit: broader than direct lending
Addressing Apollo’s “Private Credit: Fact or Fiction?” white paper, Zelter said “private credit” is often narrowly defined by direct lending, but Apollo views it as much broader—encompassing assets that historically sat on bank balance sheets or were not part of liquid markets. He traced the rise of sponsor-backed direct lending as a third leg of non-investment-grade financing alongside high-yield bonds and leveraged loans, describing its growth from “zero to $2 trillion.”
However, he emphasized that direct lending represents only a portion of what Apollo considers private credit. Zelter said Apollo sees private credit as a roughly $40 trillion asset class when including areas such as:
- Commercial real estate debt
- Residential real estate debt
- Asset-backed securities (ABS)
In Zelter’s view, the evolution of banking post-global financial crisis—driven by regulatory and return-on-equity considerations—has shifted more financing activity toward non-bank investors. He argued the idea that private credit growth will “stall” ignores broader economic changes.
Strategic priorities: origination and multi-channel distribution
Zelter said Apollo’s leadership has increasingly highlighted origination as a key driver of its model, framing the “limiting factor” as access to attractive investments rather than the ability to raise capital. He said the firm has invested “$ billions” in origination platforms and described Apollo’s role as providing capital solutions across investment-grade and non-investment-grade markets.
He pointed to several themes discussed at Apollo’s investor day as shaping the next three to five years, including the global industrial renaissance, expansion in the individual/retail channel, public-private convergence, and what he described as “replacement” opportunities globally. Zelter also referenced Apollo’s work with traditional managers and distribution partners, citing Schroders and State Street’s PRIV initiative as examples of taking Apollo’s sourcing and packaging capabilities into additional channels such as wealth management and defined contribution/401(k) markets.
Liquidity and convergence: private markets may evolve, but premiums may persist
On whether private credit will trade more like liquid markets over time—and whether that would compress spreads—Zelter said some compression logic exists, but argued the premium for “offering a private solution in scale” can remain even with more transparency and liquidity. He compared the potential evolution to the leveraged loan market, noting that loans once did not trade but later developed into a large and relatively liquid market.
Zelter said Apollo has facilitated liquidity in certain high-grade capital solutions and stated that last year Apollo traded “a shade under $10 billion” of these assets. He also said companies may increasingly view their capital structures as a toolbox combining public and private equity, public bonds, and private financing.
AI infrastructure: selective financing and avoiding residual risk
Zelter estimated AI infrastructure capital needs at roughly $5 trillion to $7 trillion over the next five years, describing a rough split among funding sources: operating cash flows, existing investment-grade markets, and a remaining “question mark.” He said Apollo has sought to participate where its capital is “structurally advantaged” and where it can provide bespoke value rather than compete in commodity-like financings.
Discussing a transaction involving xAI and Valor, he described it as a “sale-leaseback of chips” with a four-year duration and “negligible residual risk,” emphasizing Apollo’s preference to be “contractually paid back” rather than relying on uncertain long-term trends. Zelter said Apollo’s advantage includes the duration of its capital and ability to extend beyond typical bank financing tenors.
Private wealth and Fund XI: product breadth and fundraising expectations
In the private wealth channel, Zelter said Apollo built out a broader product set over the last five to six years, adding education, technology, and distribution resources. He said Apollo’s next franchise opportunity in wealth may be ABS/asset-based finance, pointing to a flagship vehicle that remains “sub-$5 billion” but which he described as the largest in the market. He also said eight Apollo products raised more than $500 million each last year.
On private equity fundraising, Zelter said Apollo began the official kickoff for Fund XI late last year and in January, adding that the firm has received a “great reception.” He said Apollo would like to replicate Fund X and described a target in the “low- to mid-20s,” stating he felt “very comfortable and confident” in raising $22 billion to $25 billion. He also said he expects a first close before mid-year and that fundraising could extend into 2027 to some degree.
Athene and retirement: confidence in core channels and global expansion
Zelter said Apollo remains confident in Athene’s ability to sustain growth, citing leadership in fixed annuities supported by balance sheet strength, ratings, operating expense advantages, and distribution. He outlined four channels Athene uses to raise capital: M&A (which he described as “a bit quiet”), organic retail, funding channels including FABN and FABR markets, and pension risk transfer (PRT). He argued that few players can compete across all four channels at scale with a highly rated balance sheet and low operating costs.
He described a “retirement crisis” in the U.S. tied to long-term shifts from defined benefit to defined contribution systems and said demand for guaranteed income solutions remains compelling. Outside the U.S., Zelter highlighted the UK pension risk transfer market in connection with Athora’s purchase of PIC (pending regulatory approvals) and identified potential growth geographies including Japan, Korea, Taiwan, Australia, and Hong Kong, alongside selective opportunities in Western Europe depending on solvency regimes.
About Apollo Global Management (NYSE:APO)
Apollo Global Management, Inc (NYSE: APO) is a global alternative investment manager that specializes in private equity, credit and real assets. The firm originates, invests in and manages a broad set of strategies across distressed and opportunistic credit, direct lending, structured credit, buyouts and real estate. Apollo provides investment management and advisory services to institutional clients and individual investors through pooled funds, separate accounts and publicly listed investment vehicles.
Its private equity business pursues control and non-control investments across industries, often focusing on complex or distressed situations where operational improvement and capital solutions can create value.
