Origination: The $40 Trillion Engine of Private Credit

This is The View From Apollo podcast, an ongoing conversation on alternative investing, economics, and the trends shaping up financial markets. Recent growth in private credit markets has been driven in part by a surge in new loan originations by private lenders. In this episode of The View From Apollo, Chris Edson, Apollo's global head of origination, discusses the evolving role that origination plays both in private credit markets broadly and here at Apollo. When you read press on what private credit might be, there's a lot of reference to the traditional high-yield market, the leverage lending market, the OBO finance market. This is really a one to two trillion dollar market. The market that we're talking about is way bigger. This is a 40 trillion dollar market. This includes everything from trade finance, commercial real estate, mortgages, consumer finance, warehouse lending, especially finance companies, equipment and fleet finance, aircraft, of course the general corporate loans. In a wide-ranging discussion, Chris explains why private market originations are growing and how both borrowers and private credit investors can benefit from the expansion of private loan originations into a bigger and more diversified market. So, without any further ado, let's get started. Hello everyone, I'm Brad Young, the head of client content strategy here at Apollo and I'm your host for this episode of the View from Apollo podcast. My guest today, Chris Edson, he is the global head of origination at Apollo. As head of origination, Chris is central to so much of what we are doing across business and product lines here at the firm and from his seat has a great perspective on what's going on across capital markets today. So Chris, thank you so much for joining us today. Thanks, it's great to be here. I can't believe it, but this is your first time on the View from Apollo podcast and origination has clearly become such an important part of not just what we do here, but capital markets writ large. It's absolutely vital to so much of what we're involved with. And so to be able to talk about it today, devote a whole episode to it, really excited about that. It's great. All right, let's dive right in. As I just mentioned, many of our listeners might not be as familiar with origination and what we mean when we talk about origination. So start off by maybe just defining it for everybody. Yeah. I'm glad you started there. At Apollo, we think about things a little differently from an origination standpoint. In fact, my job really doesn't exist at a lot of other firms. Sometimes when we talk about it, you know, people say, we've never even heard of a position like this. So maybe just to start, what is origination? So we define origination as something where we're directly sourcing, underwriting and funding direct to a borrower or to a counterpart or to a client as we think about them. And this is not stuff that we buy in the secondaries markets. This is not stuff that we're buying through brokers or intermediaries. This is something where we're directly talking to the counterpart. And for us, the scale of this, which we publicly disclose every quarter now, is about $260 billion of origination on a last 12 months basis through the second quarter. You know, when we think about what we're doing, this is really about providing a win-win solution for clients. This is something where it can be credit, it can be equity, it can be hybrid, it can be high grade or it can be high yield. It can be corporate or traditional structured or it could be asset backed. And when we think about returns, it's a pretty wide range of yields that we participate in all the way as low as sort of mid single digits called 5%, all the way up to traditional private equity style rates of return at 20% and kind of everything in between. This is a change from really how asset managers were set up historically. Historically, managers were structured by products. There were niche funds. Their absolute return targets for these niche funds, someone that's looking at say a private equity buyout would only look at that type of structure, which is sort of a high yield structure. Someone that was looking for credit investment would only look at that credit investment. You know, as opposed to thinking about the whole spectrum of different things that client or counterparty could be interested in. So for us, it's really the latter. It's really about being cross-platform. It's all products. It's all industries. It's all funds. And this is what really requires this integration. We have 400 investment professionals across the firm. We have 4,000 people across our origination platforms, which I'm sure we'll talk more about. This is really about building recurring and diversified deployment. Lending is really about risk reward, not these absolute targets, and helping provide solutions. Absolutely. And as you think about that, is this new? Has something happened recently that sort of sparked this? Yeah, it's a great question. A lot of this is stuff that's been around for many decades. So corporate lending is not new. Trade and equipment finance is not new. Infrastructure, real assets, mortgage, consumer, all the things we do is a traditional type of lending. Really what's different now is that there's more demand for capital, there's more demand for solutions, and there's more providers of those solutions. I'll allow the insurance space, I'll allow the credit fund space, and what's really driving this? Well, first, it's what we refer to as the industrial renaissance. We've put a bunch of information out on this. Tens of trillions of dollars of capital is needed for AI spending, energy, defense, things like that. I think second is the need for longer duration funding. Banks are great providers of short duration funding, and insurance companies and credit funds are really better providers of long duration funding. And many borrowers, when they think about what they want to do, they want to de-risk their funding models. And if you just look at the last five years, there's been a number of times where the capital markets or short-term borrowing has been interrupted. You have COVID, you have the Russia war, you have the interest rate rise that then caused the regional bank crisis. And then just earlier this year, you had tariffs or liberation day. All of these things are creating volatility in the markets, and companies want to de-risk against this. And so what we're finding is that, actually, our capital is pretty complementary with bank capital. And so we've done a lot of these partnerships, and that's really because the banks are great providers of the short-term funding, they're great providers of other products, whether that be M&A advice, cash management, derivatives, other things like that. And the right home for the long-duration asset really sits on either insurance company balance sheet with long liabilities or it sits in a credit fund. And then lastly, there's been this increased desire for customization. And this is really, historically, if you were a company and you wanted to borrow money, you had two options. You had either call a bank or do a public bond. These are great for regular-way type things. But when you need something a little bit more custom, maybe over a longer duration or to solve some sort of a problem that you might have, having access to this customized solution is valuable. If you could talk a little bit more about what you mean by customization, what are some of the options that people are looking for most commonly? What are the opportunities? And what are they asking us for? What are they asking you for? Yeah, sure. So, I mean, if a company wants something fast and standard, typically they'll just issue public debt or they'll call their bank. That's pretty easy, typically low spread. But it needs to fit in a standard format. It needs to fit in that public-clusive format. It's not negotiated. It can't be drawn over time. And so what are companies thinking about and why are they thinking about this customization? Well, sometimes we have companies that call us and say, "I have this construction project. I need money over the next five years. I don't need it all now. I don't want to start paying interest in all this money and hold it up. But I also don't want to take that risk of market volatility in the future. So can you help me de-risk that funding plan over a longer period of time?" So that's one reason. Another reason, you know, we've had a lot of companies think about supply chain interruptions over the last couple of years, really since COVID. How do we de-risk that supply chain? How do we have more of a buffer of inventory? Is there a partner that can help me build that buffer and help me provide that financing or funding for that buffer to provide that inventory on a just-in-time basis? So we have a lot of large clients that look for these sorts of things. Some companies say it's not efficient for me to hold and own my fleet of vehicles or my real estate on my balance sheet. I should be allocating this capital more to growth. There's more efficient funders or better ways to do that. You know, some companies might not want to have public debt. They might have competitively sensitive things. And if you have public debt, you have to reveal a whole bunch of information financially about your business. And so private debt can be a solution to that. Or if there's a sensitive acquisition of a public company, you know, or if a company wants to upgrade their credit rating, they might need a private partner to just help them go through that whole process. So these are the types of things that private credit can provide. Really interesting. And the other seat at the table, you know, all of that is the investor seat at the table. So how does this all translate to what investors are looking for? Yeah. So typically in private credit, you're not buying a publicly traded bond. You're speaking directly to a company. Historically, the performance of this private credit has been stronger than in the public markets. Typically, there's a little bit of higher yield. Sometimes that can be 50 to a couple hundred basis points. And typically there's also lower losses. And you know, when we think about what might drive some of these lower losses, it's really that if you're talking directly to the company, you can do a different level of due diligence. These loans often are also structured with collateral. This collateral, you know, provides protection against what we refer to as single point of failure risk, i.e., you know, this is another way for us to have downside protection. And then typically the documents much stronger because it's negotiated directly with the counterpart with the client. And then lastly, they also have some, these types of deals sometimes have amortization, which helps de-risk them over time as opposed to, you know, sort of taking a bullet repayment risk. From a returns perspective, historically returns have been a little bit higher. You know, this is partially because, you know, we're going direct, you know, there's not a lot of friction through intermediaries. It's also because a solution is being provided, you know, these sort of protection against confidentiality, the funding over time, the longer duration, all these sorts of things are providing that solution that adds some value. It's great. And does this sort of all hinge on corporate lending? Is that really what we're talking about when a lot of stuff in the press about private credit, obviously? And is it really, it's a corporate lending conversation? It's a great question. And it isn't just about corporates. It's really the broad market. And when you read press on what private credit might be, there's a lot of reference to the traditional high yield market, the leverage lending market, the LBO finance market. This is really a one to $2 trillion market. The market that we're talking about is way bigger. This is a $40 trillion market. This includes everything from trade finance, commercial real estate, mortgages, consumer finance, warehouse lending, especially finance companies, equipment and fleet finance, aircraft, of course the general corporate loans as well, but not just a high yield companies, also two investment grade companies. We've really spent the last 10 years building out an ecosystem to help provide solutions across all of these different markets. This is the 400 investment professionals that we have at Apollo. These people are industry experts. They're structuring experts. They send out our credit and equity and hybrid teams. This is all part of this. These 400 investment professionals are really in our asset management business. Separate from that, we also have our origination platforms. This is where we have 4,000 people. These people at the platforms are sourcing deals. They have thousands of relationships, and many of the deals in the platforms can be smaller because we can more efficiently do this through these larger businesses. They also have a lot of servicing capabilities, which can be complicated for what we're providing. Then we also have our partnerships. We have dozens of partnerships. These are both with banks, but also with third-party origination platforms. What this really does is across all of this ecosystem that we put together, it gives us the broadest access to the widest array of assets, which really helps us find the best risk reward. That's incredible scope and scale of all that is involved with that. As we said right from the very beginning, it's obviously critical to us and critical to capital markets overall. We said earlier that your job doesn't really exist anywhere. I can see why it exists here. Based on what we've been talking about, just give me a little bit of background in terms of how did it come to be and how did you get where you are? Yeah, sure. Look, this has been 15 years in the making. We started Athene, our insurance company, right after the GFC in 2009. This is what really created our balance sheet. 80% of what we do now is really a broad credit business. Just Athene in perspective for a minute, Athene's about 400 billion of assets, which is about half of our total, 840 billion or so of AUM today. Athene is also important to our investor partners, our LPs, and investors in our fund because it drives significant alignment. But given this is about half of our AUM, when we think about investing, everything that we're doing, we're typically buying between 25 and 50% of. From just an alignment perspective, this compares to traditionally a fund might have a two and a half to a 5% GP co-invest. At 25 to 50, we're 10 plus X the level of alignment that others might have. As we think about scaling this credit business, growing Athene, this is really what drove the need and the desire to want to build out this origination ecosystem. This is to help us find the best assets, to give our retirees the best value, to give our credit fund investors the best value, and a lot of these assets as we'll talk about our investment great. This focus on origination really increased in 2018. I'll always remember because it was a couple of days after my daughter was born, I get this phone call from Jim and Scott saying they want me to spend 100% of my time in origination. The firm saw a real opportunity to keep growing in credit, and this needed to be a full-time focus. Thanks. Great. Here's the girl dance, by the way. But then how did it work right from the beginning? What were you thinking? What was the approach? Where'd you start? How'd you get it going? Yeah, it started with origination platforms. We were buying and building these platforms. These are really specialty finance, specialty lending businesses. They're standalone businesses. We have 16 of these platforms now in our ecosystem. They focus on everything from mortgage and consumer finance, to equipment and aircraft lending, to vehicle fleets, ABLs, infrastructure debt, fund finance, structured products. When warehouse lending, this is where the 4,000 people sit. We've invested 15 billion of equity to help build this over the last decade. It's not just about providing financing. It's really about capabilities. Take Atlas, the warehousing business that we bought from Credit Suisse. This business sends millions of wire transfers a year. Our fleet business, wheels, this business has hundreds of people. They help with everything from vehicle registration, to maintenance, to break fix, our inventory finance business, Alliance, this is the partnership we have with BNP. This is buying billions of dollars of inventory direct from companies, tracking SKUs and titles, selling it just in time to the large clients as they need it. All of these things are complicated. They're providing value added solutions to our partners. These are things that can't be funded through traditional corporate debt or public bonds. As origination expanded, it wasn't just about the platform's business. We have a large sponsor finance business. This is about 70 billion a year of origination. Our corporate business has hundreds of people that are focused on it. People have probably seen some of the large deals we've done for companies like Anheuser-Busch, Air France, Intel, P, AT&T, Vinovia, Sony. There's been about 35 deals like this done in the market and we've done 30 of them. And a lot of this really is culture. We're not siloed as a firm. People are incentivized to work across the firm. This culture shift has really been led by Mark and our other senior leaders and has been critical to the build out for origination. How do you think about the total size of our origination today and who are our typical counterparts of all of that? Yeah, so overall, we're directly originating about 260 billion of assets a year. Most of this is investment grade, mostly long duration. These are solutions as we think about them to clients and really generating high quality assets for our balance sheet. Through this, we've really changed what the definition of counterparty client, client really our partner is. And it used to be that our clients were just fund investors, either our LPs or investors in our credit funds. But now we think about this client universe much broader than that. Includes large corporations. Some of our largest clients also include other asset managers, people that used to be our competitors. Now they're our clients and our partners. And then also banks, banks used to think of us as the client and now we really are partners. And with the banks, we've done about a dozen partnerships so far. So that's great. And obviously that creates demand and it creates a need to evolve from a capability standpoint. So how have we sort of changed the way we're doing things over the last few years to meet that demand? Yeah. So look, it started with the culture shift that we talked about, which is moving from siloed funds, absolute return targets to really thinking about things risk reward and thinking across the platform. So whether or not our teams work in a specific fund or for a vertical, they're thinking across the platform all the different types of solutions that we can provide. So that's sort of the first thing. The second is when we think about what we're doing, the majority of what we're providing is investment grade solutions. And we need to be an efficient funder and we really built an efficient system for this. So first we have long duration insurance liabilities, which are very efficient to fund long duration assets. But also we've built these platforms. Each of their capital structures are built very efficiently. So wheels is an investment grade business. It's got a 90 year track record. Its financings are backed by almost a million vehicles. That's what helped drive a low funding costs at wheels and sort of 50 to 75 basis points of spread. Atlas, this is an investment grade business. It's backed by about 300 warehouses, millions of diversified line items. This is what helps drive an efficient cost of funds there. We also do non-investment grade assets by having really this breadth of products, whether it's from our funds or otherwise, you know, this gives us really the full range of yield from investment grade to non-investment grade, really this five to 20% as we sort of think about that breadth. This allows us to be relevant to clients. This drives repeat business, cross sell, win-win, allows us really to think across the system. Its capabilities, you know, we talked a little bit about this, but it's the servicing, it's the millions of wire transfers at Atlas, it's the ability to buy and hold inventory, it's the servicing of vehicles, it's consumer, it's mortgage, it's equipment, it's the thousands of people that we have in the platforms that allows us to do this. And then lastly, it's the scale. Most high grade lenders have a 1% rule. This is really how they think about a concentration limit. If someone wants to borrow $5 billion, they need to find someone that has a $500 billion capital base in order to do that. So having scale is a real differentiator in the market. And as you think about scale, this is obviously a huge market and it's been growing fast. So how are the funds getting too big for the opportunity? Is there still opportunity? How do we think about it as it's continued to grow to the point where it is today? It's really about supply and demand. We see really strong demand across the globe. The pipeline continues to expand. It's really a market growth game. Borrowers are looking for additional and diversified lenders. They're looking for custom solutions. They're looking for long duration funding, really that certainty to limit market risks. All the things that they're trying to protect against, the COVID, the Russia, the rates, the bank crisis, the tariffs, and all of this drives borrowers to long term stable partners. Even if it's a little bit more expensive, it helps reduce that volatility and allows these companies and borrowers to focus on their primary focus area of driving their business. That's great. And obviously, it's going to continue to move. Nothing stays the same. So when you look at it from your seed across all that you see, what are you looking for as we move forward? What do you think is going to drive things moving forward? Look, we see a growing need. And we see this in the industrial renaissance, the tens of trillions of dollars that we think are needed for digital infrastructure, energy, defense. But there's also a shifting market dynamic, especially in Europe. There's a lot of stats on the European funding markets. Most of the funding in Europe is from the banking system. This is much more of a static pool of capital. The capital markets are a fraction of the size of the US, both in nominal terms or as a percentage of GDP. The securitization market's very small over there coming out of the GFC. It's less than a tenth of the size of the US. And they're looking for a lot of capital. They're making a lot of investments in infrastructure and defense and other things, and they're looking for long duration capital. So they're looking for incremental lenders to come in and help supplement the banking system. And it's a big focus of our partnership effort with the banks is in the European markets. And then in the IG markets, we see continued growth for a lot of IG companies. These CFOs and Treasures are really focused on diversifying their borrowing bases as they think about their own franchise value. Diversification of all suppliers drives value, including funding suppliers. So having multiple sources of capital, having the ability to get customized financing, having more downside protection from these longer term financings, having capital efficiency through the right types of asset-backed finance, and then being able to partner with people for repeat business and other things like that is really something of value. So in getting to know you, I know you have a ton of energy around this, obviously a lot of excitement around it. You seem to enjoy what you do. And so what are you most excited about moving forward of all those opportunities where things are going next? What excites you the most? Look, Origination really connects the whole firm. I love spending time with my partners from all parts of the business, all regions. The energy level at the firm, the drive, the excitement, it's all firing on all cylinders. We really live by this anti complacency or always day one as Amazon calls it sort of a mentality, this failing forward, this change is constant. This is what really is helping us consistently improve and provide better solutions for clients. Wow. Thanks for all of that. A terrific perspective, Chris. And now as we wrap up here, it's time for our personal recommendation portion of every episode of You From Apollo, which is basically a question about what you do when you're not living, breathing, sleeping, eating origination. So what's your personal recommendation for today? I have three young children. My oldest is seven. I don't always get to spend as much time with them as I would like during the week. That's the way of this little ritual of going to breakfast on the weekends. Just the four of us. Even my wife gets to stay home, take a little break. Sometimes we'll drive 45 minutes away to try somewhere new. We've been to dozens of restaurants. Even the two year old gets to come now. We try to find the best French toast or some new donut place. We know where the best hot chocolate is or where they can get cool toys like wiki sticks. It's become a tradition. They wake up excited. I wake up excited. We get captive time together. I love it, except now I'm thinking about French toast, which is not necessarily a good thing. So for mine, we'll stay with restaurants as well, actually. So starting in high school and then all through college, I worked in restaurants, I waited tables. And I always thought that a great restaurant show would be like awesome TV. And the bear is that show. I don't know if any listeners have spent time with the bear, but my wife and I are deep in season four right now. We're a little behind, but that's okay. And if you've seen it, you know, it's supremely well acted, really well shot, beautifully shot, authentically written for a restaurant guy and has a killer soundtrack on top of it all. But then there's also this notion to the show, they have a sign in the kitchen of the restaurant. It says every second counts. I actually bought the same sign and put it above my desk, above my computer in my office. And every second counts is not just about working every second of the day or efficiency or those kinds of things. It's really about the way the show portrays it as cherishing every second of your time. And so I like the idea of that and trying to live up to that as much as I love the show itself. So if you haven't watched the bear, definitely check it out. And I'll join you for some French toast sometime soon. Sounds great. All right. Well, so thanks. This has been really a great discussion, Chris. I really appreciate your time. I feel like I definitely have a better grasp of how we think about origination and the role that it plays in capital markets. So thanks so much for talking to us about it. And we'll have you on again soon. Thanks for having me, Brad. This podcast was recorded on September 15, 2025. Thanks for listening. A quick reminder that you can subscribe to this podcast on Spotify, Apple Podcasts and Audible, or by visiting ApolloAcademy.com, our educational website dedicated to alternative investing, where you can also sign up to have Torsen's Daily Spark economic blog delivered directly to your inbox. Once again, thanks for listening. 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