Apollo taps ex-Goldman partner to lead credit secondaries unit

The credit behemoth has earmarked $1bn of insurance client capital for its launch into private debt secondaries.

Apollo Global Management has launched a credit secondaries business, just weeks after affiliate title Secondaries Investor reported the alternatives giant was plotting an entry to the market.

Earl Hunt, an incoming partner from Goldman Sachs, will co-lead the effort which will be overseen by co-president and chief investment officer of credit Jim Zelter, a spokeswoman for the firm told Secondaries Investor. 

Apollo is hiring for the other co-lead and will add more team members in the coming months, the spokeswoman said.

Apollo Credit Secondaries will have $1 billion to deploy, backed by the firm’s insurance clients, according to a statement. The firm expects to raise a dedicated third-party fund in the future.

The platform will have an opportunistic strategy and focus on LP stakes in private credit funds, the spokeswoman said.

“We believe the scale of our platform, flexible capital base and strength in underwriting will allow us to source and execute on opportunities unavailable to many other industry participants,” said Zelter.

Apollo has a near $330 billion credit business, according to the statement.

The debt secondaries market has welcomed several buy-side entrants over the past 18 months. In March, Ares Management acquired Landmark Partners in a deal worth $1.08 billion. Ares chief executive Michael Arougheti said that the credit secondaries market would be a key area of growth for Landmark, in addition to its existing PE and real estate businesses.

In September 2020, Pantheon raised $800 million for its secondaries-focused Global Private Credit Fund series. Tikehau Capital is in market with its debut debt secondaries vehicle, Secondaries Investor understands.

It is understood that Manulife Investment Management, Coller Capital and Strategic Partners have an allocation to the strategy in their flagship funds.

“With $100 billion to $125 billion of private debt capital raised each year, and a current estimated $500 billion of unrealised value in net asset value terms, a conservative estimate of 1-2 percent of NAV trading hands each year gives us an annual market of $5 billion to $10 billion,” Daniel Roddick, founder of advisory firm Ely Place, told affiliate title Private Debt Investor in February. “This is also consistent with what we have heard credit secondary investors tell us about the volume they have seen in the past 12 months.”

At the same time, just 12 percent of LPs said they plan to commit capital to debt secondaries in the year to September, compared with 48 percent for private equity secondaries, according to PDI’s LP Perspectives 2021 study.