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Apollo is behind a $600 million loan to a public company and it's the latest sign that it's serious about taking on big banks in the lending business

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Private equity firms broadly have expanded their credit divisions since the financial crisis as their investors have sought to balance their portfolios with safer assets.

When public companies want massive loans to finance their operations, they typically go to a group of large banks that can lend hundreds of millions of dollars by banding together pools of money.Apollo Global Management said on Wednesday that it will provide $600 million as the sole lender to YRC Worldwide in a refinancing of the $2 billion shipping company.

The YRC loan caps two loans to public companies in as many months. In August, Apollo also agreed to provide $1.8 billion of debt financing to a public company newspaper merger — New Media's proposed merger with Gannett.These arrangements are called"direct lending" and allow companies to access financing through a single lender, without a broker or investment bank involved.

Today, Apollo has a huge credit division, with $200 billion assets under management — more than double the size of its private equity portfolio. Other firms, too, have been raising massive credit funds, with Blackstone announcing in JuneDirect lending, however, has mostly been done in the middle market and with private companies.

 

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