Apollo's Tristram Leach on European Private Credit, Defense Financing, and Football Deals

European Private Credit Market Growth

• 🎯 Private credit is emerging as a significant rival to mainstream lending across Europe, though it has yet to match the scale seen in the US.
• 💡 Concerns about industry opacity and resilience during a prolonged recession persist.
• 🚀 Apollo sees significant opportunity in lending to large corporates and investment-grade companies, particularly for infrastructure, defense, and energy investments.

Investment Grade Private Credit and Risk Appetite

• 🧠 Apollo believes there is sufficient risk appetite in Europe for investment-grade private credit, emphasizing the provision of flexible, long-dated capital to safe, large companies.
• 💰 The focus is on delivering these opportunities at scale, with Apollo's balance sheets ready to deploy capital.

Defense and Football Financing

• ⚠️ While defense financing is an area of engagement, large-scale private financings in Europe are still in early stages due to a recent awakening to defense spending needs.
• ⚽ Apollo is involved in football player financing, viewing it as an interesting asset-backed business with compelling risk-reward, despite the $5 billion figure not being gigantic in the broader credit market scale.

Private Credit vs. Public Markets and Systemic Risk

• 📈 Private credit offers more compelling risk-reward compared to public markets, especially currently, and Apollo advocates for broader access to these products for savers.
• ⚠️ Concerns about systemic risk in private credit are seen as overstretched, with Apollo noting declining liquidity in public credit markets as well.
• 📊 Differentiation in fund and manager performance is expected, which Apollo welcomes due to its robust research and resources.

Future Evolution and European Market Potential

• ⚡ Private credit markets are becoming more liquid, converging with the liquidity profile of public credit markets.
• 📈 Europe's corporate financing landscape has enormous growth potential, with only 12% currently from non-bank financing compared to 75% in the US.
• 🇪🇺 Initiatives like the Capital Markets Union could accelerate this growth by simplifying cross-border investment across the EU.