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Apollo targets individuals with non-traded BDC, platform investment

The manager expands its reach into the mass affluent market with the launch of a $1bn vehicle and a stake in CAIS.

Apollo, in a bid to broaden its reach into the market for mass affluent individual investors, said it has launched a non-traded business development company with more than $1 billion in assets under management, and that it invested in a platform that will give it greater access to those investors through independent advisers.

Apollo Debt Solutions BDC was launched in the fourth quarter of 2021 and, with leverage, exceeds $1 billion. ADS, a continuous offering, is the first non-traded BDC sponsored by Apollo affiliates and it is already actively investing $657 million of the proceeds. It is focused on large-scale, direct origination.

At the same time, Apollo said it led a funding round of $225 million into CAIS, a platform that gives independent financial advisers, and ultimately their clients, access to alternative investment products. The investment reportedly values CAIS at more than $1 billion. Other backers included fintech-focused private equity firm Motive Partners and Franklin Resources, parent of Franklin Templeton.

“Individual investors have long been under-allocated to alternatives, and we believe this strong initial fundraise for ADS demonstrates the pent-up demand investors and their wealth advisers have for strategies of this kind,” Stephanie Drescher, Apollo’s chief client and product development officer, said in a news release.

The manager and its peers recently have been intensifying their push into the market for individual investors. Apollo’s CAIS funding followed its investment in another technology platform, iCapital, as well as its purchase in December of wealth distribution and asset manager Griffin Capital.

Apollo’s Global Wealth Business, which targets individual investors, constitutes one of the firm’s key growth strategies. Indeed, at an investor presentation in October, the manager pegged the market for high-net-worth and mass affluent individual investors at $178 trillion, vastly more than even the institutional market’s $102 trillion. Drescher noted at the time that those individuals are 2-5x under-allocated to alternatives. Casey Quirk has projected the retail market for alternatives will grow by a compounded 8.5 percent over the next four years, with growth in the market for private credit estimated to outpace that at 12.9 percent.

Apollo, a global alternative asset manager based in New York, had approximately $481 billion of assets under management as of 30 September 2021.