Abu Dhabi's Mubadala taps Apollo ties for $2.5 bln global private credit plan

Mubadala Investment Co. formed a joint venture to lend about $2.5 billion over the next five years through a private credit platform that will leverage the Abu Dhabi wealth fund’s partnership with Apollo Global Management.

Mubadala set up the entity with Alpha Dhabi Holding, the third-largest publicly listed firm in the United Arab Emirates, to co-invest in credit opportunities, according to a statement. Mubadala will hold 80 percent of the venture and Alpha Dhabi the rest.

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Investors seeking higher yields have poured money into private credit for years, turning the asset class into a $1.4 trillion market.

Private-credit firms have also been seizing marketshare from banks as international markets grow wary of the Federal Reserve’s aggressive monetary tightening meant to combat inflation.

Mubadala’s venture comes after Abu Dhabi’s Chimera Capital, part of a business empire overseen by a leading member of Abu Dhabi’s royal family, made a foray into the $1.4 trillion global private-credit market last year.

“The asset class provides further diversification to our portfolio and attractive risk adjusted returns,” Alpha Dhabi Chief Executive Officer Hamad Salem Al Ameri said in the statement.

Mubadala, the $284 billion Abu Dhabi wealth fund, is anchoring the $12 billion private credit platform that Apollo started in 2020. Also, the fund and KKR & Co. last year jointly earmarked at least $1 billion for private lending in the Asia Pacific region.

Private credit involves businesses getting money directly from a fund, which often offers more contractual flexibility than getting a loan from a bank or even borrowing from a shadow lender.

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