(Bloomberg) — Apollo Global Management has created a new private credit fund that will invest money from affiliates of Mubadala Investment Co. and other institutional investors free of charge in the first year and exempt in the second year. half the cost.
The fund is structured as a business development company, and typically such vehicles tend to offer little to no fee relief to their retail and high-net-worth investors.
Mubadala and an Apollo affiliate have contributed more than $290 million to the fund, which has more than $790 million in assets, according to documents filed Friday. The remaining assets are purchased through the use of leverage.
The new fund, called Middle Market Apollo Institutional Private Lending, is part of the asset manager’s existing relationship with Mubadala, Abu Dhabi’s sovereign wealth fund.The two companies agreed to collaborate in 2020 and join forces on a number of businesses, including projects worth $2.5 billion private credit last year’s platform.
With seed commitments totaling $450 million as of March 15, the new fund will invest up to 70% to 80% of loans in U.S. middle-market companies, generally defined as those with earnings before interest, tax, and depreciation of less than $75 million. company. Documents show amortization.
Representatives for Apollo declined to comment.
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There is also a stipulation that if the fund does not double its investment commitments to $900 million within five years, Apollo will give back to investors cash received from the sale or repayment of loans, the filing said. Typically, BDCs can reinvest these earnings permanently.
When fully effective, investment adviser fees will include a 1% management fee and a 12.5% incentive fee after reaching a 6% threshold rate, according to the filing.
Mubadala added Fabrizio Bocciardi, head of credit investments, to the fund’s board, documents show. Board Chairman Howard Widra also serves as Apollo’s direct origination executive and executive chairman of Midcap Financial Investment Corporation, one of Apollo’s BDCs open to high-net-worth investors.
