Happy Monday afternoon.
Today’s news is Apollo moving its fast-growing lending unit out of PE - and what it signals.
Let’s get into it:
In October, Apollo and 8VC announced a partnership to deploy several billion dollars into what they called "the next wave of American industrial innovation." 8VC founcer Joe Lonsdale's words from the announcement: "Venture capital is well suited to funding technological breakthroughs, but it's not sufficient to fund the huge projects required to increase national productivity."
This past Friday the FT reported that Apollo is making an organizational move to match the thesis. The firm is carving hybrid capital out of private equity entirely.
Marc Rowan's words: "Private equity is an amazing asset class. It's just not a growth business."
The same team - Matt Nord and Reed Rayman - will now run both the 8VC partnership and the standalone hybrid unit. The returns tell the story. Since early 2024, Apollo's hybrid deals have earned nearly 20 percent annualized. Traditional buyouts? Less than 8 percent.
Apollo sees where this is going. The question is whether the rest of private markets do too…
$9 trillion is coming to private markets
Bain projects nine trillion dollars of new retail wealth flowing into private markets by 2032 (you can see the numbers here, and CAIA covered it in a podcast here).
And of course the industry has a plan for that: Build distribution. Launch interval funds. Create evergreen structures. Make access more liquid…
That plan solves half the problem.
Where will nine trillion of deals come from?
You can't absorb that much by recycling the same buyout deals. And private credit, while a massive growth space, won’t get there as a stand-alone strategy either. At that scale, capital needs new frontiers. Hybrid ones.
The answer maps to the economy’s biggest emerging needs: energy, compute, manufacturing, defense, logistics, infrastructure.
The companies addressing these challenges are capital-intensive by design. They bend metal. They pour concrete. They deploy fleets. And they cannot scale on venture equity alone.
A company raising $500 million to buy GPUs dilutes founders into oblivion. A company borrowing against those GPUs keeps the cap table intact.
This isn't theory. It’s well underway.
Apollo designed an off-balance-sheet joint venture for Intel: customized borrowings that let the chipmaker raise cash while resembling a high-rated loan. Crusoe secured a $750 million credit facility from Brookfield to scale AI data centers, on top of a $225 million facility from Upper90 and a $15 billion joint venture with Blue Owl for a 1.2-gigawatt facility in Texas. Oak Hill Advisors committed $825 million in long-term debt financing to Resilience, a biomanufacturing company building one of the largest sterile injectable facilities in North America.
Sceptics will point to the risks of debt and leverage of course. But it’s clear new forms of physical technology infrastructure should be financed like… infrastructure.
Capital structure should match asset structure. Risk grows on opacity, not real assets.
And asset-backed structures (should) force explicit underwriting. Ring-fenced exposure. Contained failure. This isn't about adding debt. It's about better-matched capital. And better-matched capital is more resilient than misused equity.
And so the industry needs to build in a proper infrastructure for asset-backed technology as we scale this vital new segment of growth.
Asset-backed finance for hard tech requires infrastructure that doesn't fully exist. Lenders need real-time visibility into whether a robot is working or sitting idle. Borrowers need systems that track collateral performance without rebuilding spreadsheets every quarter.
Traditional securitization was built for mortgages and auto loans - asset classes with decades of standardized documentation and performance history. GPU clusters don't have that. Neither do autonomous trucks. Neither do modular reactors.
So we need to build a new financial infrastructure to securely deploy new forms of capital.
It happens faster if we gather operators, credit investors, and infrastructure builders in the same room.
That’s why I’m bringing this cohort together in San Francisco on April 16 at the inaugural Asset-Backed Technology Summit.
If it sounds interesting please reach out, or apply to attend here.
Marc.
ps: This is me signing off for the year, as the family and I head to Maui tomorrow.
THANK YOU to everyone who made 2025 incredible. As recently as April all of this was just an idea. It’s amazing. Very excited for 2026…
Happy holidays everyone!
and, very much related!
Matt Schwartz, John Markell and I had a terrific conversation recently on “growth credit” on the podcast. Listen here:
