Apollo’s New AI-Proof Investment? The New York Yankees

Apollo Global Management (NYSE:APO) described its recent $2.6 billion financing deal with the New York Yankees’ owners as an "AI-resilient" leisure investment in a letter to investors in its private credit fund.

Apollo Debt Solutions BDC said it sees appealing opportunities in leisure and other sectors less exposed to the rapid evolution of generative AI, Bloomberg reported, citing the investor letter.

• Where is APO stock headed?

The $1.8 trillion direct-lending market has faced growing scrutiny this year amid concerns about credit quality, particularly for the potential for AI to disrupt software companies, leading to a surge in investor requests to withdraw tens of billions of dollars.

Apollo’s non-traded business development company has also capped redemptions this year. Last month, the $26 billion Apollo Debt Solutions BDC fund capped redemptions at 5% of outstanding shares after investors sought to redeem 14.7% of shares, down from the 16.8% investors had sought during the prior period.

Apollo Debt Solutions saw $200 million of gross inflows during the third quarter, including dividends. Following $700 million in share repurchases, the fund expects net outflows of roughly $500 million, equivalent to 3% of NAV. 

As of Sept. 30, software accounted for roughly 10.5% of Apollo’s BDC portfolio, approximately half the allocation of comparable funds with more than $4 billion in net asset value, according to the firm.

Apollo also sees opportunities to capitalize on AI-driven growth, particularly through investments in digital infrastructure such as data centers, power generation and semiconductor manufacturing. 

Apollo and Blackstone (NYSE:BX) are also holding early-stage conversations with the NFL about becoming approved investors eligible to acquire minority stakes in league teams.

The conversations remain preliminary, and both firms would likely need to secure an investment opportunity with a team before moving through the league’s approval process.

Earlier this year, Apollo Sports Capital provided $2.6 billion in debt and equity financing to Yankee Global Enterprises, bringing the private-equity firm in as a new strategic backer of the New York Yankees’ holding company.

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