Apollo Global Management Inc.’s John Zito argued private credit is the safer place for investors to be even as the rise of artificial intelligence is dramatically shifting the environment for “the whole ecosystem of investing.”
“Everyone is acknowledging” that we’re going to be in a higher-volatility regime, Zito, co-president of Apollo Asset Management, said in an interview Monday with Bloomberg TV on the sidelines of the Milken Institute Global Conference in Beverly Hills.
“But they are not acknowledging credit is actually typically the safer place to be because it’s senior in the capital structure,” he added.
The rapid development of AI has stirred up anxiety about private credit because of its exposure to software firms that are seen as vulnerable to disruption by the technology.
In recent weeks, more investors in business development companies — a type of private credit fund for retail clients — have tried to redeem their shares. That has spurred a number of alternative asset managers, including Apollo, to cap redemptions.
Zito, who helped build Apollo’s private credit platform, acknowledged that credit will have to reorient itself to thrive amid the rise of AI, but he also said the technology will be a boon for the asset class. That’s partly because of the capital expenditures that will come along with the AI build-out, according to Zito.
“To go asset heavy is actually the exciting part of private credit,” he said. “The actual excitement is investment-grade lending for all this CapEx for a lot more asset heaviness.”
Still, Zito acknowledged that AI will lead to more “efficiencies” in companies.
“People are just using AI as a mechanism to actually tighten up their businesses, get their data cleaner, run their business more efficiently,” he said. “And whether or not AI takes their business to the next level will be a question.”
Asked about whether Apollo will open its second headquarters in Texas or Florida, Zito said the firm has yet to make a final decision.
“I love Miami, but there’s lots of good places,” said Zito, a native of that city. “Both Texas and Florida have incredible options.”
Written by: Preeti Singh — With assistance from Dani Burger @Bloomberg
The post “Apollo’s Zito Calls Credit Safer Bet in High-Volatility Times” first appeared on Bloomberg