Mubadala to participate in Citi and Apollo's $25bn private credit programme

It will initially focus on North America, with the potential to expand to other markets

Mubadala has been allocating more investments to the private credit market in recent years. Victor Besa / The National

Abu Dhabi sovereign investor Mubadala Investment Company will participate in a $25 billion private credit, direct lending programme announced by Citigroup and alternative asset manager Apollo.

The programme will include participation from Mubadala as Apollo’s strategic partner, and from Athene, Apollo's annuity and retirement services subsidiary, a statement on Thursday said.

It aims to improve "access for corporate and sponsor clients to the private lending capital pool, at a scale and size which can provide funding certainty in strategic transactions", Citi and Apollo said.

The programme will initially focus on North America, with the potential to expand to other markets.

Citi and Apollo said they expect "strong client demand" and maintain the flexibility to "significantly expand" the size of the programme beyond the initial $25 billion.

“Combining the strength of Citi’s banking and capital markets franchise with Apollo’s deep capital resources will provide clients with a range of options to meet their evolving financing needs and achieve their strategic goals," said Viswas Raghavan, head of banking and executive vice chairman at Citi.

Demand for private credit – lending to companies by financial institutions other than banks – has grown significantly in recent years.

Unlike most bank loans, private credit solutions can be modified to meet borrowers’ needs in terms of size, type or timing of transactions.

Global investors are increasingly allocating resources to the private credit market, with banks and asset managers pouring capital into the fast-growing industry.

The size of the private credit market is estimated to grow to $2.3 trillion by 2027, from about $1.4 trillion at the start of 2023, according to a report by Morgan Stanley.

Mubadala has been allocating more investments to the private credit market in recent years.

In February, it signed a $1 billion partnership with Goldman Sachs to co-invest in private credit opportunities in the Asia-Pacific region. They plan to invest the amount in long-term capital in “high-quality” companies across the private credit spectrum in the region, with a particular focus on India, the companies said at the time.

The partnership will be managed by the private credit team at Goldman Sachs Alternatives, with an on-the-ground team across several Asia-Pacific markets.

Last September, Mubadala also teamed up with New York-based alternative asset manager Blue Owl Capital to co-invest in private credit opportunities. The partnership was established with a $1 billion commitment to Blue Owl’s credit platform and an initial focus on its technology lending strategy, Mubadala said at the time.

Mubadala also signed a joint venture with Alpha Dhabi Holding in January 2022 to co-invest in private credit opportunities.