'US Apollo with Assets of 731 Trillion KRW Also Reaches Out to Korean Market'

James Zelter CEO's Recent Visit to Korea
Meeting with Pension Fund CIO
Establishing 1.4 Trillion KRW Blind Fund
Forming JV with EMP Belstar
Capital Market Act Amended Late Last Year
PEF Managers Now Allowed Loans
Financial Sector Begins Risk Management
Corporate Funding Channels Blocked
Expected to Replace Traditional Financial Sector Roles

[Asia Economy Reporter So-yeon Park] Apollo Global Management (Apollo), a global private equity fund (PEF) manager managing assets worth 731 trillion KRW, has begun full-scale activities ahead of its entry into the Korean market.

According to the investment banking (IB) industry on the 31st, James Zelter, CEO of Apollo Asset Management, recently visited Korea and met with chief investment officers (CIOs) of major pension funds and mutual aid associations to discuss various investment strategies.

A senior official from a mutual aid association said, "Global major private equity fund managers who used to cover the Asian market mainly from Hong Kong are recently registering their own management companies directly in Korea as the Korean market grows in size," adding, "Recently, CEO James Zelter visited Korea and contacted major institutions."

Apollo is considered one of the four major U.S. PEF managers alongside Blackstone, Kohlberg Kravis Roberts (KKR), and The Carlyle Group. Apollo plans to establish a joint venture (JV) in Korea with EMP Belstar, a U.S.-based alternative investment manager, with a 50-50 equity structure.

Apollo specializes in providing various financing options to companies that need to secure liquidity due to restructuring or discovering new growth engines.

As many domestic companies are struggling with borrowing due to the recent sharp interest rate hikes by commercial banks, Apollo is expected to propose various solutions such as private credit loans, asset securitization, and acquisition financing.

The newly established Apollo entity in Korea will raise a $1 billion (approximately 1.4255 trillion KRW) blind fund as its first product simultaneously with the JV establishment. The fund will be raised from Korean and overseas institutional investors and is expected to supply funds to companies under competitive interest rates and loan-to-value (LTV) conditions compared to large banks. It is anticipated to provide various private credit services such as asset securitization solutions, secured loans, and acquisition financing targeting domestic large and mid-sized companies as well as fund managers.

The investment banking (IB) industry views Apollo’s entry into Korea and the establishment of the JV with keen interest. It is expected that private credit funds (PCF) will play a role in replacing existing financial institutions. Apollo is expected to gradually expand its scope from PCF formation to private equity funds (PEF) and real estate.

While the domestic market for PEFs focused on management participation has grown, the private credit market is still at an early stage. Until the revision of the Capital Markets Act last year, private equity fund managers were restricted from handling loans and credit products. The variety of financial services provided by banks in Korea, such as project financing (PF), is also cited as a reason why the private credit market has not developed.

However, recently, major financial institutions have started thorough risk management, cutting off PF loans, and with the rapid rise in interest rates, domestic companies have faced the need to raise funds from channels other than the first and second-tier financial sectors. At the same time, the revision of the Capital Markets Act at the end of last year opened the door for private equity fund managers to handle credit products such as loans. The world’s number one PCF manager has seized this opportunity without hesitation.

Meanwhile, Apollo is a U.S.-based alternative investment firm established in 1990. As of the first quarter of this year, it manages total assets of $513 billion (approximately 731 trillion KRW), making it a mega-sized manager. Its core credit assets exceed $373 billion (approximately 531.7 trillion KRW), ranking first in the world. Last year, Apollo appointed Matt Rykielini as senior partner and Asia-Pacific regional head, marking a full-scale push into the Asian market. This is its first entry into the Korean market.

This content was produced with the assistance of AI translation services.