Banking & Finance

Mubadala partners with Wall Street for private credit drive

September 27, 2024, 9:56 AM

Jim Zelter, co-president of Apollo, said the Mubadala programme will 'better serve our clients and other stakeholders in a reliable, scalable and capital-efficient manner' — Jim Zelter, co-president of Apollo, said the programme will 'better serve our clients and other stakeholders in a reliable, scalable and capital-efficient manner'

Mubadala works with Citi and Apollo
$25bn private lending programme
‘Win-win arrangement’

Abu Dhabi’s sovereign wealth fund, Mubadala, is to participate in a $25 billion programme of private credit direct lending that has been launched by the New York Stock Exchange-listed bank Citigroup and the alternative asset manager Apollo.

Mubadala will act as partner in the programme to Apollo, which is based in New York.

Athene, Apollo’s insurance unit, will also take part in the venture, which will initially be aimed at the North American market “with the potential to expand to additional geographies”, according to a statement.

The programme is designed to “improve access for corporate and sponsor clients to the private lending capital pool”.

Private credit loans is an umbrella term used to describe the provision of credit to businesses by lenders other than banks. They are considered vital for borrowers seen as too risky by traditional banks.

The size of the private credit market at the start of 2024 was $1.5 trillion, up from around $1 trillion in 2020. It is predicted to grow to $2.8 trillion by 2028, according to Morgan Stanley.

“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,” said Apollo co-president Jim Zelter.

Citigroup will identify potential debt deals across its clients, earning fees from the transactions, while Apollo and partners, including Mubadala, will provide the funding.

Mubadala Capital launched in 2011 with a remit to invest primarily in private equity and public markets in North America and Europe.

As of March this year it had $24 billion of assets under management, $18 billion being from external investors including other sovereign funds, foundations, public pension funds, insurance companies, wealthy individuals and other asset managers, according to its website.

Mubadala Capital has made 138 investments in 94 companies. The median size of the funding rounds in which it participated was $70 million and the median value of the companies at the time of these deals was $374 million, according to PitchBook.