(Bloomberg) -- Apollo Global Management Inc. has built a $5 billion multi-strategy credit fund with a 30-year maturity as private capital firms increasingly look for novel ways to attract insurance-industry cash.
The fund is bundling together different types of investment-grade credits, including publicly-traded bonds and private debt, but also has scope for some leveraged deals, people with knowledge of the matter said, asking not to be identified because they aren't authorized to speak publicly.
Apollo's product is similar to a rated feeder, which packages stakes in credit funds into bonds of varying risk and return, making it cheaper for insurers to buy them by effectively cutting the amount of regulatory capital that they need to hold against those investments.
But Apollo's strategy strays from the norm in that it's bundling together several different types of credit in the same underlying fund. And at 30 years, it also has a much longer life, helping insurers match assets with long-term liabilities.
Buyers
The most senior slices — rated AA — were sold to insurance companies, including Apollo-owned Athene, the people said. The riskiest portion of the securitization, known as the equity, was placed with investors including sovereign wealth funds, pension funds and family offices, the people added.
A representative for Apollo and Athene declined to comment.
The largest players in private credit including Apollo and Blackstone Inc. are increasingly looking to grow their assets by striking deals with insurance firms to manage billions of dollars of capital.
Apollo itself predicts the private credit market could balloon to as much as $40 trillion, fueled by the rapid growth of private investment-grade debt.
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