Private Credit's New Era: Apollo's £4.5 Billion Hinkley Point Deal and the Infrastructure Shift

The UK's Hinkley Point C nuclear project, once a symbol of stalled progress in European energy infrastructure, has become a proving ground for a transformative trend: the rise of private credit as a critical capital source for large-scale, long-duration projects. Apollo Global Management's landmark £4.5 billion bond deal with EDF, finalized in June 2025, underscores a strategic realignment in how governments and corporations fund essential infrastructure amid geopolitical volatility and the EU's decarbonization push. This deal is more than a financing milestone—it signals a high-potential investment theme, blending ESG alignment and long-term capital returns, and it should compel investors to prioritize exposure to firms like Apollo capable of capitalizing on infrastructure gaps.

The Deal: A Blueprint for Private Credit's Role

Apollo's financing package for Hinkley Point C—a £4.5 billion unsecured note issuance at an interest rate below 7%—is a masterclass in modern infrastructure funding. The deal taps into EDF's investment-grade creditworthiness while leveraging the UK government's Contract for Difference (CfD), which guarantees a minimum £128/MWh for the plant's electricity. This structure mitigates price risk and aligns with investors' demand for stable, inflation-linked returns. The sub-7% rate, though undisclosed precisely, reflects Apollo's confidence in EDF's ability to service debt even as the project's total cost exceeds £40 billion—a stark contrast to traditional banks' reluctance to underwrite such scale and risk.

Apollo's stock, up 38% since 2020, reflects investor recognition of its expertise in structuring bespoke, long-term deals. The Hinkley Point transaction amplifies its position as a leader in private credit solutions for energy infrastructure.

The Strategic Shift: From Banks to Private Markets

The withdrawal of China General Nuclear Power (CGN) in late 2023—due to geopolitical tensions—exposed a critical truth: traditional banking systems, still risk-averse after the 2008 crisis, cannot single-handedly fund multi-decade, multi-billion projects. Private credit, now a $1.5 trillion market, has stepped into this void. Apollo's deal exemplifies this shift: it provides capital at a competitive rate while offering flexibility absent in public markets. For investors, this means opportunities to access projects like Hinkley Point, which are too large or complex for equity markets but too risky for conservative lenders.

The EU's push for 40% renewable energy by 2030 and its phaseout of coal by 2038 have created a $1.1 trillion infrastructure funding gap by 2030. Private credit firms like Apollo are uniquely positioned to fill this void, deploying patient capital in projects with 20- to 30-year payback periods. The Hinkley Point deal's success—securing financing amid rising interest rates—demonstrates the sector's resilience.

ESG Alignment: A Tailwind for Long-Term Capital

Hinkley Point's ESG credentials are undeniable. As the UK's first new nuclear plant in decades, it will supply six million homes with low-carbon energy, reducing reliance on fossil fuels. The project's CfD, which transfers price risk to taxpayers, aligns with governments' goals to decarbonize without burdening public budgets. For investors, this structure offers a “win-win”: access to infrastructure with inherent ESG value and a revenue model insulated from market volatility.

Private credit's focus on long-duration assets also suits ESG strategies. Unlike short-term equity investors, credit providers can align with projects' 20- to 30-year lifecycles, capturing steady cash flows as climate policies tighten. Apollo's deal, with its emphasis on nuclear energy—a contentious but critical bridge to renewables—reflects the nuanced ESG calculus required in this space.

Risks and Opportunities: Navigating the New Landscape

No infrastructure deal is without risk. Hinkley Point's delays, cost overruns, and reliance on government guarantees highlight execution and political risks. Geopolitical shifts, such as the UK-China rift, could further disrupt funding flows. However, the Apollo-EDF partnership mitigates these risks through EDF's balance sheet strength and Apollo's deal-making prowess.

For investors, the broader theme is compelling: private credit's role in infrastructure is here to stay. The sector's growth—from $500 billion in 2015 to $1.5 trillion in 2024—signals a structural shift. Firms like Apollo, with $100 billion deployed in infrastructure since 2020, are well-positioned to capitalize.

Investment Thesis: Prioritize Infrastructure Credit Exposure

The Hinkley Point deal is a buy signal for investors seeking exposure to two megatrends: decarbonization and infrastructure modernization. Here's how to act:

1. Direct Exposure: Invest in Apollo's stock (APO) or its credit-focused funds, such as the Apollo Credit Income Fund (ACIFX), which targets 7-8% yields via private debt.
2. Sector Plays: Back infrastructure ETFs like the Global X Future of Infrastructure ETF (PAV), which includes firms involved in energy, transport, and utilities.
3. Thematic Funds: Allocate to ESG-oriented infrastructure funds, such as the BlackRock Global Infrastructure Trust (BGI), which focuses on low-carbon projects.

Avoid chasing short-term gains in volatile public equities; instead, prioritize the steady, long-term returns of private credit.

Conclusion: A New Era of Capital Allocation

Apollo's Hinkley Point deal is not just a financing event—it's a manifesto for private credit's future. In a world of geopolitical turbulence and climate urgency, infrastructure projects like this one will rely increasingly on flexible, patient capital. Investors ignoring this shift risk missing a decade-defining theme. The message is clear: allocate to firms that can bridge the gap between infrastructure needs and public markets' limitations. Apollo's success here isn't an outlier—it's the new normal.