Apollo and National Bank Investments: A Strategic Play for Canadian Investors in the Private Credit Landscape

In a world of heightened market volatility and historically low yields, accredited investors are increasingly turning to alternative assets to bolster returns and diversify risk. The recent partnership between Apollo Global Management (APO) and National Bank Investments (NBI) marks a significant step toward democratizing access to private credit—a sector poised to redefine the investment landscape. By leveraging Apollo's global scale and expertise, the collaboration offers Canadian investors a compelling avenue to participate in an asset class that is both resilient and growth-oriented.

The Partnership: A Blueprint for Access

Launched in May 2025, the NBI Apollo Private Credit Fund is designed to provide Canadian accredited investors with exposure to senior secured loans, broadly syndicated loans, and middle-market direct lending opportunities. The fund invests in Apollo Debt Solutions BDC, a U.S.-based non-traded business development company (BDC) that focuses on credit instruments with structured risk profiles. This structure aligns with Apollo's proven track record: managing $785 billion in assets as of March 2025, the firm's 16 specialized origination platforms originate tens of billions in loans annually, emphasizing senior debt and investment-grade exposures.

The partnership's strength lies in its complementary strengths. NBI, with $98.9 billion in assets under management, brings local market insights and distribution channels, while Apollo offers a global ecosystem of 4,000 professionals and a 35-year legacy in credit markets. Together, they are addressing a critical gap: the growing demand for alternatives in Canada, where traditional fixed-income assets struggle to deliver meaningful yields in a low-rate environment.

Strategic Advantages: Yield, Diversification, and Liquidity

The fund's focus on senior secured loans—a category with a historical default rate of less than 2% in stable economic cycles—provides a risk-return profile that sits comfortably between government bonds and high-yield corporate debt. This aligns with Apollo's philosophy of prioritizing capital preservation while pursuing income generation.

Investors also benefit from Apollo's liquidity initiatives, such as partnerships with JPMorgan and Goldman Sachs to enhance secondary market trading for private credit. While the non-traded BDC structure introduces some illiquidity (redemption timelines are typically 12–18 months), the fund's focus on senior debt reduces the risk of prolonged lockups. This trade-off is increasingly acceptable in an era where alternatives are becoming a core portfolio component, not just a tactical allocation.

Navigating Risks and Considerations

No investment is without risk, and private credit is no exception. While senior loans are relatively secure, their performance can be sensitive to economic downturns and rising interest rates. The fund's exposure to middle-market lending also carries sector-specific risks, such as industry concentration or geographic exposure. Investors must ensure the allocation aligns with their risk tolerance and liquidity needs.

Moreover, the $2.5 trillion private credit market's rapid growth (as projected by Cerulli Associates) raises questions about overvaluation in certain segments. Apollo's rigorous underwriting standards and focus on investment-grade exposures mitigate these concerns, but investors should remain vigilant about market cycles.

Investment Implications: A Call for Prudent Allocation

For accredited Canadian investors, the NBI Apollo Private Credit Fund offers a structured entry into an asset class that is both defensive and income-driven. The fund's yield potential—estimated at 5–7% net of fees—compares favorably to the paltry returns of traditional fixed income, while its senior loan focus provides downside protection.

However, this is not a “set it and forget it” investment. Investors should:
1. Assess Liquidity Needs: Allocate only funds that won't require immediate access.
2. Diversify Within Alternatives: Pair the fund with other uncorrelated assets like real estate or infrastructure.
3. Engage Advisors: Leverage professional guidance to evaluate suitability and monitor performance.

Conclusion: A New Era for Canadian Investors

The Apollo-NBI partnership underscores a broader trend: the democratization of once-exclusive asset classes. By combining Apollo's global scale with NBI's local reach, Canadian investors gain access to a strategy that balances yield, diversification, and risk management. In a market where volatility is the norm, this fund offers a disciplined pathway to navigate uncertainty while pursuing growth.

For those willing to embrace the discipline of alternatives—and the patience they require—the partnership represents more than just an investment opportunity: it's a strategic move to adapt to a shifting financial landscape.

Investors should proceed with caution, but the partnership's alignment of expertise, scale, and demand suggests this is a move worth watching closely.