Citi Partners with Apollo for $25 Billion Private Credit Program, According to Reuters

By Niket Nishant

Citigroup and Apollo Global have joined forces to launch a $25 billion private credit and direct lending initiative, signaling a growing collaboration between traditional banks and non-bank lenders vying for a share of the $2 trillion market.

The program will also see participation from Abu Dhabi’s Mubadala Investment Company and Apollo’s annuity and retirement services division, Athene, as announced by the companies on Thursday.

In afternoon trading, Citigroup’s shares increased by 2.4%, while Apollo’s shares saw a rise of 0.6%.

Private credit refers to loans extended by non-bank entities, such as Apollo, which face less regulation than traditional banks. These loans are typically provided to higher-risk borrowers or companies seeking to finance significant buyouts through debt.

Such loans can be processed more swiftly, making them a vital funding source for borrowers turned away by conventional banks due to perceived risks.

Initially seen as a threat to traditional banks, private credit firms have recently begun partnering with these institutions. Banks can more easily identify clients, earn fees, and avoid risking their own capital in these transactions.

Earlier this year, Citigroup introduced another private lending initiative in collaboration with alternative investment firm LuminArx Capital.

Viswas Raghavan, head of Citigroup’s banking division, stated, "The combination of Citi’s banking and capital markets expertise with Apollo’s substantial capital resources will offer clients various options to address their evolving financing requirements."

While the program will initially target North America, there is potential for expansion into additional regions and beyond the $25 billion initial goal.

Ana Arsov, global head of private credit at Moody’s Ratings, remarked, "This partnership underscores the rapid integration of private credit into mainstream finance."

Last week, Apollo also secured a $5 billion commitment from BNP Paribas to bolster its private credit capabilities.

An IMF report published in April advised that the private credit market deserves closer scrutiny, as its opaque and intertwined structure could pose systemic risks to the broader financial ecosystem.