Once associated primarily with middle-market borrowers unable to tap public markets, private credit has emerged as a strategic capital solution for investment-grade companies—especially those navigating complex challenges and opportunities that don’t fit within the constraints of traditional funding channels.
- That was the focus of a recent session co-sponsored by Apollo Global Management at NeuGroup’s Treasurers Symposium earlier this year, where a corporate who partnered with Apollo on a large-scale private capital raise to fund strategic acquisitions presented alongside Dennis Cornell, Apollo’s Head of U.S. Corporate Origination, and Marc Fratepietro, Deutsche Bank’s Global Head of DCM, a finance executive who has advised multiple issuers on strategic transactions executed with Apollo.
- “Private credit is not just another sleeve of capital,” Mr. Fratepietro said. “It’s the corporate finance Swiss Army knife.”
From situational to strategic. Some investment-grade companies are finding that while traditional capital markets provide size and scale, they don’t always offer the flexibility needed to support increased capital expenditures and strategic growth efforts. The capital markets come with constraints including a need for credit ratings and rigid structures that don’t always accommodate balance sheet goals or M&A timelines.
- One large technology company recently partnered with Apollo on a multiyear structured capital investment to finance new manufacturing facilities. The structure offered a fixed cost of capital, long-term control and equity treatment for balance sheet purposes—classified in a way that preserved credit ratios and reduced reported leverage.
- In these private deals, that treatment can often be achieved without obtaining a public credit rating, giving companies greater flexibility in how deals can be structured. In this case, it allowed the company to retain ownership and unlock value over time, benefits difficult to achieve through traditional financing.
- This type of transaction, which often involves elements of auction, negotiation and bespoke structuring, can resemble an M&A process as much as it does a traditional capital raise. Treasurers are expected not only to evaluate cost and flexibility, but also to weigh considerations like credit treatment, long-term control and internal accounting impacts—especially on large or ratings-sensitive transactions.
- The corporate presenter noted that while their company had ample internal and traditional bank financing, private credit presented a compelling opportunity to pursue a strategic acquisition with flexibility and speed—without disrupting its broader capital structure.
- The presenter also said the higher cost of capital for private credit can be worthwhile—particularly when the deal offers sufficient scale, longer duration or a customized structure that aligns with strategic objectives.
Control and customization. Apollo’s platform, Mr. Cornell said, offers differentiated scale and control—using the firm’s own balance sheet capital to fund transactions directly. “We use our own capital, so we own the decision-making process,” he said.
- Athene, Apollo’s retirement services platform, is a significant source of that capital. “Ninety-five percent of Athene’s capital has to be investment grade and is rated by the same agencies rating IG bonds in the public markets,” Mr. Cornell added.
- Scale and control enable Apollo to move quickly and offer creative structures. In one case, a corporate needed to deconsolidate an asset from its balance sheet, and Apollo provided a 50-50 equity solution that allowed the company to unlock value without giving up operational control.
Treasury’s expanding role. Many bespoke financings may begin with borrowers’ M&A or corporate development teams but as the structure and implications crystallize—on ratings, cost of capital and governance—treasury often steps in and takes the lead.
- Mr. Cornell cited a recent transaction with a global consumer company that began with an asset sale evaluation but evolved into a hybrid capital solution. “The deal started in M&A, but finished with a strong treasury role,” he said. “Whether that’s evaluating the cost of capital, impact on ratings or how it fits within the broader capital structure—treasury played an important part in all of those things.”
- For treasurers, that expanding role means engaging early, collaborating across internal functions like tax and accounting, and working with external capital partners who can tailor solutions. “Flexibility is an asset,” Mr. Fratepietro said, “but you have to know how to find it.”
