Regional Q&A: Apollo in Australia with David Moffatt

In a recent Q&A, Apollo’s Chair of Australia and New Zealand David Moffatt joined us from Sydney to discuss trends impacting the Australian investment and retirement landscape, and what excites him most about the future of Apollo’s platform in the country. 

Apollo has a strong on-the-ground presence in Australia, with headquarters in Sydney and capabilities spanning the firm’s full asset management and retirement services platforms. David Moffatt, Apollo’s Chair of Australia and New Zealand, recently discussed market and investment trends, where the team is seeing opportunities today, and what excites him most about Apollo’s future in the country.

Could you describe Apollo’s ambitions in Australia?

At a high level, in Australia we’re focused on capital formation and deployment, retirement services and global wealth, and partnerships at scale with strong counterparties, all of which are fueled by major market trends. Some of these trends – whether decumulation in the retirement system and the need for fixed income, increased regulation driving borrowers to non-bank alternatives, or the hunt for reliable, lower-risk yield – align with Apollo’s core strengths globally. We leverage our significant experience and creativity every day as we strive to meet the evolving needs of Australian corporates, investors and retirees.

About two years ago, Apollo launched a dedicated Asia-Pacific Credit Strategy with Hostplus. How has the market developed since then? In Australia specifically, what’s driving companies’ adoption of private credit solutions?

Apollo’s pan-Asian credit strategy is a great example of a scaled partnership in action, and in Hostplus we have an anchor partner that shares our disciplined investment philosophy. The demand for non-bank capital has grown across developed Asia-Pacific and accelerated in Australia in recent years, especially as the cost of capital has risen. We’ve observed that borrowers in this higher-cost environment desire greater flexibility and customization of capital solutions, leading them to increasingly seek private financing solutions like those we’re able to provide. We’re seeing this across corporates and sponsors, and in real assets and asset-backed transactions. Overall, we believe Apollo’s capital solutions can also enable borrowers to better navigate short-term volatility and propel long-term growth.

In addition, trends such as the clean energy transition or capital charges limiting development of long-term financing solutions within the banking and insurance systems have accelerated Australian corporate demand for private credit. Most of these companies are globally competitive and have long-term growth priorities that are often better funded by long-duration private capital as opposed to shorter-term, rolling bank debt. Like Apollo’s credit business globally, most of the credit solutions we’re focused on in Australia are investment grade, senior, or secured.

Apollo also has some other great partners on the ground in Australia. Could you walk us through these partnerships, and the needs they’re helping to serve in the market?

We are fortunate to have exceptional partners in Australia, who we believe are helping us to address unmet market needs.

Through our strategic alliance with MaxCap, a leading non-bank commercial real estate lender, we’re able to help expand the availability of real estate development financing, a market from which banks have meaningfully retreated. All the while, we’re originating senior-secured assets that we can distribute to help meet the needs of institutions, including insurers domestically and globally.

One such insurer is Challenger Life, which shares our goal to bring Australian retirees and savers much-needed long-term yield investment products. We partner with Challenger in a variety of ways, providing its policyholders with access to our privately originated credit opportunities as well as other alternative products. These strategies span asset classes and risk profiles and are designed for individuals to help with wealth generation and accumulation.

And finally, we’re excited to continue building out ATLAS SP, our affiliated warehouse finance and securitized products platform, to meet the needs of Australian financial market participants. For example, ATLAS SP is helping a range of Australian customers – who have very high credit standards but generally small equity bases – to access capital facilities typically unavailable to them. This financial firepower enables these businesses, particularly financial institutions, to service critical financing needs in the Australian marketplace, from car loans to personal loans, and more.

Australia’s retirement savings system has been called ‘the envy of the world.’ What opportunities do you see for Apollo to deepen its relationship with Supers?

The Australian retirement system has been superb at accumulation. But like many mature societies around the world, its participants are aging, and their need for steady-yielding assets deep into retirement is running ahead of the current rate of product development and regulatory adaptation. A systemic response is therefore required, and has begun, but it is now urgent.  

I believe Apollo is well positioned due to our deep experience in retirement services and investment management. We’re able to share best practices, and work across the system, from the regulators to superannuation funds to distribution channels, to drive innovation. These shifts will most likely happen in partnership with the top Supers, who have already started to change their approach to asset allocation. The $2+ trillion in the system must be prudently invested, and the Supers have increasingly recognized the benefits of asset classes that Australia has largely been missing, such as long-dated capital or hybrid solutions, that Apollo has a long track record of providing.

We’re approaching one year since you transitioned from Senior Advisor to Apollo’s Chair of Australia and New Zealand. What surprised you the most about year one, and what excites you the most about what lies ahead?

The biggest word in business to me is alignment: alignment of values and culture, objectives and performance, and purpose. Apollo’s leadership is crystal clear on these points. The commitment to Australia from our senior leadership across the globe both inspires our local team and speaks to the importance of the Australian market within our overall global strategy. While I was not necessarily surprised by this, I was incredibly encouraged, and I think our aligned, differentiated approach will propel us to greater heights in future.