(Bloomberg) --Apollo Global Management Inc. Chief Executive Officer 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 rather than in the long term, not in the short term, our capacity to raise money,” Rowan said on Tuesday at the CAIS Alternative Investment Summit in Beverly Hills.
Apollo is one of the largest private capital providers, 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 increase annual origination volume for private debt deals by almost 70% over the next five years.
Demand for private credit 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. filed documents to launch an exchange-traded fund, a portion of which will be dedicated to private credit. As part of that proposal, Apollo has agreed to provide bids on investments that it sources. The firm has also outlined plans to build out a trading desk for investment-grade private credit loans.
“We will attract lots 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 there’s generally a need for more liquidity in fixed-income. He referred to the UK’s liability-driven investment crisis in 2022, when pension managers were forced to sell gilts to raise cash when bond yields rocketed.
Retirement 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 on the S&P 500, he said, adding asset managers have “leveraged the future of retirement to four stocks.”
“In hindsight this will have been an irresponsible thing for us to have done,” he said of retirement allocations.
On private equity, Rowan suggested the industry was due for a “shakeout.”
“Much of our industry over the past 10 years mistook being a good investor for the benefits of the US printing $1 trillion and when the music stopped they got caught holding the bag,” he said.
The Apollo CEO hedged that while the firm was planning to grow in the private credit, it would do so responsibly.
“We’re not going to grow to the sky,” Rowan said.
Read More on Apollo’s private credit strategy:
Apollo’s Bet to Take on Banks Hit Snags Before Atlas CEO’s Exit
Apollo Projects $10 Billion of Annual Earnings in Five Years
Apollo, State Street Strive to Prove Private-Debt ETFs Can Work
