- Apollo’s lending machine hit a record. Apollo Global Management lent $114 billion in the third quarter, up more than 50% from the second quarter, with deals including a chip-financing transaction for Anthropic and a $500 billion financing effort for Nvidia. It has lent more than $350 billion over the past 12 months, nearly a third more than the year before and on par with large banks such as HSBC and Citigroup.
- Insurance premiums fund the loans. Apollo invests premiums from insurance clients, mainly its in-house life insurer Athene, and aims to earn a spread of 0.3% to 0.4% above high-rated corporate bonds by making its own asset-backed loans. Borrowers have included Anthropic, Elon Musk’s SpaceX and xAI, and Nvidia, through financings that use valuable chips as collateral.
- Not every rival is following. Ares Management CEO Michael Arougheti has said his firm avoids lending against AI chips because he does “not know how to underwrite the decline in depreciation curves on that type of technology,” and some big banks fear overexposure to individual tech giants after a multitrillion-dollar borrowing binge.
- The quarter itself was mixed. Apollo wrote down its $1 trillion investment portfolio by $3.2 billion as rates rose, producing a net loss of $1 billion, while adjusted net income of $1.3 billion was slightly worse than expected. Inflows into its insurance unit fell to $19 billion, the lowest this year.
What Happened?
Apollo reported third-quarter results showing record lending volume as it poured insurance premiums into the AI borrowing boom. Lending jumped more than 50% from the second quarter, and the firm also made large loans to a US pipeline network in Oklahoma, German drugmaker Bayer and the New York Yankees. But higher interest rates and heavy competition caused some activity to fall short of forecasts: spread profits at its insurance operations declined on higher funding costs, and the firm pulled back from writing new insurance business because competition was eating into potential profits.
Why It Matters?
Apollo is becoming one of the key lenders to big tech as companies raise billions for AI infrastructure, giving it a central role in how the AI buildout is financed. That brings risk: lending against chips depends on how fast their value depreciates, the very question that has kept Ares out of the market. The quarter also shows the cost of rising rates for an insurance-funded model, with markdowns and narrower spreads offsetting record origination.
What’s Next?
Apollo is on track to attract about $80 billion of new insurance cash this year, roughly the same as last year, which would mark the end of a multiyear stretch of rapid growth. Investors will watch whether AI-related lending keeps growing and whether chip-backed loans perform as the technology ages. Further rate moves will affect both the value of its portfolio and the spreads its insurance business can earn.
Affected Tickers and Coins: APO, NVDA, ARES
Source: Financial Times
