Citigroup Inks Deal to Form Private Credit Program With Apollo

Citigroup Inc. C and Apollo Global Management Inc. APO have inked a deal for a subsidiary of Citigroup and certain affiliates of Apollo to establish a revolutionary $25-billion private credit, direct lending program. The program will initially focus on North America, potentially expanding to additional geographies. 

Both companies expect the program to finance approximately $25 billion of debt opportunities over the next several years, including corporate and financial sponsor transactions.  Citigroup and Apollo anticipate robust client demand and the ability to extend the program beyond the initial $25 billion considerably.

The program will include involvement from Mubadala Investment Company as Apollo’s strategic partner and Apollo’s subsidiary, Athene, both of which will have the opportunity to join commitments appropriate for their respective mandates.

The partnership between the companies marks the largest to date in a string of tie-ups between banks and private credit managers.

Earlier this month, State Street Corp.’s STT asset management business, State Street Global Advisors, announced its partnership with Apollo and its affiliates to enhance investors' accessibility to private market opportunities.

Rationale Behind C & APO Collaboration

APO specializes in high-quality private credit origination that includes corporate lending and asset-backed finance. Apollo is one of the largest private capital providers, with nearly $696 billion of assets under management at the end of the second quarter of 2024. Of this amount, more than $522 billion is tied to its credit businesses.

With a scope and size that may guarantee finance for strategic transactions, the strategic program aims to greatly expand corporate and sponsor clients' access to the private lending capital pool. Through the program, Apollo's scalable, substantial capital base will be combined with Citigroup's broad banking client reach, origination and capital market capabilities.

“This exciting project brings Citi together with Apollo and other best-in-class partners to offer a full suite of innovative, private financing solutions to our clients,” stated Viswas Raghavan, head of Banking and executive vice chairman at Citi. “Combining the strength of Citis Banking and Capital Markets franchise with Apollo’s deep capital resources will provide clients with a range of options to meet their evolving financing needs and achieve their strategic goals.”, Raghavan added.

Apollo's co-president Jim Zelter said, “We are pleased to form a first-of-its-kind, scaled direct lending program with Citi, a preeminent banking partner and leader in capital markets and advisory. Our collaboration will allow Citi to enhance its client offerings and bring more private solutions to bear while enabling Apollo to increase origination flow and tap into Citi’s extensive client relationships. As financial markets continue to evolve, together, we believe this is a win-win arrangement that uses our respective strengths and assets to better serve our clients and other stakeholders in a reliable, scalable and capital-efficient manner.”

Citigroup’s Zacks Rank & Price Performance

Year to date, shares of Citigroup have risen 23.4% compared with the industry’s 21.8% growth. 

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Currently, C carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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