Citi Joins Apollo For $25-Billion Private Credit Program

Citigroup and Apollo Global have partnered for a $25 billion private credit and direct lending program, illustrating a growing alliance between banks and non-banks looking for a slice of the lucrative $2 trillion market, Niket Nishant reported for Reuters.

Initially viewed as a threat to banks, private credit firms have rushed to partner with traditional lenders in recent months. I Photo: Apollo Global

Abu Dhabi's sovereign wealth fund, Mubadala Investment Co., and Apollo's annuity and retirement services unit, Athene, will also participate in the program, the companies said.

Citi shares were last up 2.4% in afternoon trading, while Apollo's rose 0.6%. Private credit refers to loans provided by non-bank lenders like Apollo, which are not subjected to the same degree of regulation as banks.

These loans are typically made to risky borrowers or companies seeking to clinch mega buyouts with debt. These loans can be processed more quickly and serve as an important source of funds for borrowers deemed too vulnerable by conventional banks.

Initially viewed as a threat to banks, private credit firms have rushed to partner with traditional lenders in recent months.

Banks can help find customers more easily and collect fees without risking their own capital. In January, Citi launched another private lending vehicle in partnership with alternative investment manager LuminArx Capital.