Private capital is entering a period of strong deployment opportunities as companies face unprecedented funding requirements for investment and infrastructure, according to a report by Bloomberg citing Scott Kleinman, co-president of Apollo Global Management.
Speaking at the IPEM Private Equity Conference in Paris, Kleinman said corporate capital expenditure needs were greater than at any point in his career, while public markets were not providing sufficient funding to meet demand.
That is creating opportunities across private equity, private credit, structured finance and hybrid capital, as companies increasingly turn to alternative sources of funding, he said.
Apollo has evolved from a traditional buyout firm into a major provider of large-scale financing to corporates and infrastructure projects, often committing billions of dollars to individual transactions. In Europe, its activities have included financing offshore wind development by Orsted, an EDF nuclear facility, RWE’s electricity grid investment and infrastructure transactions with BP.
The firm has also expanded its financing activities around the artificial intelligence boom, providing large-scale capital to companies including Nvidia, Broadcom and xAI.
Kleinman said Apollo had no intention of becoming a bank, but argued that relatively few financial institutions have the ability to provide tens of billions of dollars through structured financing.
The surge in AI investment is creating particularly significant demand for capital to fund data centres and the energy infrastructure required to support them. At the same time, AI disruption is creating uncertainty for some software companies and their lenders, particularly within private credit.
Kleinman said, however, that there are currently limited signs of systemic stress in credit markets, pointing to relatively tight spreads as evidence that conditions remain healthy. He acknowledged that a credit downturn will eventually occur, but said he did not believe the market was currently in such a cycle.
He also rejected the idea that private equity’s difficulties in realising investments represented a structural problem with the asset class. Instead, Kleinman argued that much of the pressure stemmed from companies acquired between 2017 and 2022, when valuations were elevated before interest rates rose sharply.
The increase in borrowing costs during 2022, when rates moved by roughly 400 to 500 basis points, caused an immediate reset in valuations across many buyout portfolios, he said. The industry has been slow to fully recognise the impact of that adjustment, contributing to challenges around exits.
Kleinman said private equity firms can continue executing buyouts across different interest-rate environments, although a further 200-basis-point increase in rates would put additional pressure on valuations.
