Citigroup Inc. and Apollo announced Thursday that they have collaborated on a $25 billion private credit and direct lending program, initially focused in North America with potential expansion into other regions.
Citi and Apollo say they "expect strong client demand and maintain the flexibility to significantly expand the size of the program beyond the initial $25 billion".
Mubadala Investment Company, Apollo's strategic partner, and Athene, a subsidiary of Apollo, will also be involved in the program.
Citi said the program is "designed to significantly enhance access for corporate and sponsor clients to the private lending capital pool, at a scale and size which can provide funding certainty in strategic transactions."
Loans provided by non-bank lenders like Apollo are referred to as private credit, which is subject to less regulation than traditional banks. Usually, those who avail of these loans are risky borrowers or companies seeking major debt-financed buyouts, Reuters reported.
In a statement, the firms said that they "anticipate the program will finance approximately $25 billion of debt opportunities over the next several years, encompassing both corporate and financial sponsor transactions."
"Citi and Apollo expect strong client demand and maintain the flexibility to significantly expand the size of the program beyond the initial $25 billion."
Viswas Raghavan, Head of Banking and Executive Vice Chair at Citi, said, "Combining the strength of Citi's 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."
Apollo said it would allow them to reach a broader range of clients.
"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," said Apollo Co-president Jim Zelter.
He claimed that the arrangement is a win-win for both parties, more so as financial markets continue to evolve. Zelter added that the joint program will allow them to use their strengths to better serve their clients and other stakeholders.
