(Bloomberg) — Chief Executive Officer of Apollo Global Management Inc. Marc Rowan is seeing the public and private markets converging with the latter attracting more competition for trading on Wall Street.
Rowan said Apollo will remain disciplined as it continues to grow its assets under management and that its biggest constraint will be finding enough opportunities to invest.
“We as an industry will be limited by our capacity to find good investments and not in the long term, not in the short term, by our capacity to raise money,” Rowan said Tuesday at the CAIS Alternative Investment Summit in Beverly Hills.
Apollo is one of the largest providers of private equity, with $700 billion in assets under management and nearly $500 billion of that tied to its credit businesses. Previously, Rowan has said Apollo is looking to grow annual origination volume for private debt deals by almost 70% over the next five years.
Demand for private loans will come as firms launch more paths to liquidity and allow investors to trade in and out of deals.
Last month, Apollo and State Street Corp. were presented documents to start an exchange-traded fund, part of which will be devoted to private credit. As part of this proposal, Apollo has agreed to bid for the investments it sources. The firm has also outlined plans to build a trading desk for investment-grade private loans.
“We're going to attract a lot of competition,” Rowan said during the event. “Once that happens, what's the difference between public and private?”
Rowan challenged the idea that private markets were inherently risky, adding that there is generally a need for more liquidity in fixed income. He referred to the UK bond investment crisis in 2022, when pension managers were forced to sell treasuries to raise cash when bond yields rose.
Pension funds should also be a source of capital for the private markets, Rowan said. Most retirement plans are currently allocated toward liquid public stocks listed in the S&P 500, he said, adding that asset managers have “helped the future of retirement in four stocks.”
“In hindsight, that would have been an irresponsible thing for us to do,” he said of the pension splits.
As far as private equity is concerned, Rowan suggested the industry needed to have an “extinction”.
“Most of our industry over the last 10 years was mistaken for being a good investor for the benefits of printing $1 trillion in the US and when the music stopped they were caught holding the bag,” he said.
Apollo's CEO defended that while the firm was planning to grow into private lending, it would do so responsibly.
“We're not going to grow up to the sky,” Rowan said.
Read more about Apollo's private credit strategy:
Apollo's bet to weather banking shock hurdles ahead of Atlas CEO exit
Apollo projects $10 billion in annual revenue in five years
Apollo, State Street tries to prove that private debt ETFs can work