Asset management giant Apollo: AI boom helps private credit grow

The Zhitong Finance App learned that the rapid development of artificial intelligence (AI) makes predicting next month's market extremely challenging. However, John Zito, co-president of Apollo's asset management division, said that this uncertainty provides opportunities for private credit, which has the adaptability needed to fund this rapidly growing industry.

“Being able to provide flexible loans for 15 to 20 years to hyperscale enterprises, grid providers or power companies has not received enough attention in the private credit sector,” Zito said on Tuesday.

Many technology companies are already using private capital to build physical infrastructure, including large data centers equipped with computing chips that run artificial intelligence models. Meta Platforms (META.US) is one of them, and the company is seeking to raise billions of dollars to build data centers in the US. Apollo and KKR & Co. are potential investors.

Some estimates suggest that over $1.8 trillion will be needed over the next five years to meet the demand for artificial intelligence. However, there are also those who believe that this boom may lead to depression, and that some borrowers pursuing advanced artificial intelligence will not be able to repay their debts.

Zito said, “The calculation requires long-term capital and locked in capital, and this doesn't just happen in the US. In Europe, they don't want to leverage government balance sheets; they need private capital.”

Private credit also targets Americans' 401 (k) plans and other fixed-contribution retirement plans. Apollo is one of several companies starting to offer private assets in retirement portfolios.