Apollo has generated around $250m in paper gains from a recent private credit investment backing Elon Musk’s artificial intelligence venture xAI, according to a report by Bloomberg citing people familiar with the matter.
The gains stem from roughly $7bn of debt Apollo has provided to xAI, which was structured to help the company secure access to graphics processing units supplied by Nvidia. The value of the debt reportedly increased following xAI’s merger with SpaceX.
Apollo is understood to have purchased about $3.5bn of the debt in December at around 99 cents on the dollar, with a coupon of roughly 10%. Following the SpaceX transaction, the loans have traded as high as 106 cents.
Apollo had syndicated around half of that exposure to clients at issuance, retaining the remainder and generating approximately $120m in paper gains on its retained position. A further $100m in paper gains was booked after Apollo acquired an additional $3.5bn of loans in February that have since traded higher, the people said.
All of the xAI-related debt is held in a special purpose vehicle managed by Valor Equity Partners and is earmarked to support chip leasing for xAI’s Colossus 2 data centre in Memphis.
