Key Takeaways
- • Apollo Global Management plans to spend roughly $350 million over the next 24 months on new software, custody and settlement infrastructure, and data systems to build a more liquid market for private credit assets, according to CEO Marc Rowan on the company's earnings call.
- • Rowan said Apollo will write off its existing software and retire the systems it previously relied on, with the first phase focused on credit and a launch targeted for 2027.
- • Apollo's move follows the launch of daily NAV disclosures for its lending portfolio, a step that many private credit lenders had downplayed at a recent Miami conference.
- • The new businesses expected to emerge from the investment will be based in Austin, Texas, and Apollo anticipates being the first mover in a potentially lucrative new market.
- • Rowan argued that 90% of the US investment-grade market already marks to model daily, rejecting the view that private credit cannot be valued on a daily basis.
Summary
Apollo Global Management will spend approximately $350 million over the next two years on new software systems, infrastructure, and data upgrades aimed at making markets for private credit assets. CEO Marc Rowan announced the commitment on a Tuesday morning earnings call, saying, "We have decided to double down." The initiative follows Apollo's launch of daily net asset value disclosures for its lending portfolio.
Rowan outlined a vision in which private assets have visible prices and CUSIP identifiers and can be traded without intermediated structures. He said the firm's next step is custody and settlement, to be pursued in partnership with other market participants. "We will start with credit, and we will get after this in 2027," he said. Apollo has been active in secondary markets, primarily in investment-grade private credit trading, and has long advocated for greater liquidity in the asset class.
As part of the plan, Apollo will write off its existing software and eliminate systems it previously relied on. According to people familiar with the plan, the $350 million outlay will also cover changes across Apollo's technology stack, including data-related items. Rowan said the investment is expected to generate "lots of new businesses" based in Austin, Texas.
The move has drawn a cool reception from parts of the private credit market. At a recent Miami conference, lenders downplayed the need for more frequent private credit marks and questioned their usefulness, noting that they do not receive borrower information often enough to update valuations daily. Rowan rejected that view, stating, "Those who said this could not be done just simply don't understand." He cited data that 99% of investment-grade bonds do not trade on most days and 90% do not trade in most weeks, arguing that 90% of the US investment-grade market effectively marks to model on a daily basis. "So much of our industry is anchored to the world not changing until they retire. That is just not going to work given the pace of change," he said.
Rowan outlined a vision in which private assets have visible prices and CUSIP identifiers and can be traded without intermediated structures. He said the firm's next step is custody and settlement, to be pursued in partnership with other market participants. "We will start with credit, and we will get after this in 2027," he said. Apollo has been active in secondary markets, primarily in investment-grade private credit trading, and has long advocated for greater liquidity in the asset class.
As part of the plan, Apollo will write off its existing software and eliminate systems it previously relied on. According to people familiar with the plan, the $350 million outlay will also cover changes across Apollo's technology stack, including data-related items. Rowan said the investment is expected to generate "lots of new businesses" based in Austin, Texas.
The move has drawn a cool reception from parts of the private credit market. At a recent Miami conference, lenders downplayed the need for more frequent private credit marks and questioned their usefulness, noting that they do not receive borrower information often enough to update valuations daily. Rowan rejected that view, stating, "Those who said this could not be done just simply don't understand." He cited data that 99% of investment-grade bonds do not trade on most days and 90% do not trade in most weeks, arguing that 90% of the US investment-grade market effectively marks to model on a daily basis. "So much of our industry is anchored to the world not changing until they retire. That is just not going to work given the pace of change," he said.
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