Apollo Global Management Tokenizes Its First Fund Focused On Wall Street's Hot Private Credit Space

In another step toward integrating blockchain technology with TradFi, Apollo Asset Management, a $733 billion alternative asset manager, announced

Apollo Global Management (APO) is venturing into the world of tokenized assets with the launch of a private credit fund in partnership with Securitize. The move marks a significant step in integrating blockchain technology with TradFi.

The Apollo Diversified Credit Securitize Fund (ACRED) will provide on-chain investors with access to an investment strategy spanning five pillars: Corporate Direct Lending, Performing Credit, Dislocated Credit, Structured Credit, and Asset-Backed Lending. The fund is managed by a team specializing in fixed income and leveraged loan investments.

Since its inception, the Apollo Diversified Credit Fund Class A Shares have boasted an annualized distribution rate of 9.02%. As of the end of Q3 2024, the fund had an average duration of 1.7 years and was invested in a portfolio of 158 companies.

This initiative aligns with Apollo's broader strategy to expand into digital assets, spearheaded by Christine Moy, Head of Digital Assets, Data & AI at Apollo. Moy expressed optimism for the role of crypto and DeFi in enhancing access to institutional-quality products.

Securitize, as Apollo's exclusive tokenization and distribution partner, will offer the fund on several blockchains, including Aptos, Avalanche, Ethereum, Ink, Polygon, and Solana. Notably, this marks the first integration for Securize with the Solana and Ink blockchains.

Solana's momentum in January has been fueled by a surge in trading activity, the re-filing of spot ETF applications, and its latest partnership with Securize. This caps a month of positive news for Solana, with a doubling of its stablecoin supply—a key indicator of increased activity in individual cryptocurrency and token transactions as well as decentralized finance (DeFi) trading.

While not the first fund tokenization by an asset manager, Apollo's foray into the space underscores the growing acceptance of blockchain and digital asset technologies within the institutional investment community.

Earlier this year, Franklin Templeton, a U.S.-based global investment manager with $1.7 trillion in assets under management, launched the first U.S.-registered fund to use a public blockchain to process transactions. The Franklin OnChain U.S. Government Money Fund (FOBXX) became available to Benji wallet holders, with each BENJI token representing an on-chain investment in one share of the fund.

TradFi asset managers have also applied tokenization to a diverse range of assets. In 2022, Hamilton Lane (HLNE) partnered with Figure to launch the first tokenized private markets-focused funds on the Provenance Blockchain. The underlying asset in Hamilton Lane’s inaugural effort was their $3.22 billion Private Assets Fund, a ’40 Act registered investment fund.

Figure, led by CEO Mike Cagney, has been at the forefront of TradFi and blockchain integration. The company was selected as NovaWulf Digital Management's technology partner in the Celsius Network reorganization.

The partnership proposed the tokenization of the reorganized company's common equity. However, management of Celsius' reorganization was ultimately awarded to Fahrenheit Holdings, a group led by Arrington Capital and U.S. Bitcoin Corp.

In addition to financial assets, industry experts have explored the tokenization of intangible assets such as art, music, and patents. For instance, Hermes International won a case regarding the replication of its Birkin Bag by an NFT creator.

Both Apollo and Securize have highlighted their commitment to expanding the availability of tokenized assets in the future.

"This partnership and launch with Securitize is an exciting milestone in our journey to make private markets more accessible and efficient, including Apollo Diversified Credit Fund which offers diversified exposure to a range of corporate and asset-backed credit," said Earl Hunt, Apollo Partner and President of Apollo Diversified Credit Fund.

"The next wave of demand for tokenized assets has emerged around fixed income, including private credit," said Carlos Domingo, Co-founder and CEO of Securize. "Apollo's expertise in private credit makes them an ideal partner in tokenizing this category of real-world assets (''RWA''), unlocking broader opportunities for investors."

However, it is crucial to note that ACRED will only be available to accredited investors, despite both Hunt and Domingo's emphasis on broadening investor access to a wider range of assets.

Accredited investors must either have a net worth, excluding their primary residence, of at least $1 million, earn at least $200,000 in each of the past two years ($300,000 combined with a spouse), or be an investment professional in good standing with current FINRA licenses.

This highlights another concern raised by technology leaders. While advancements in technology have put investments in reach for more investors, financial services regulations restrict investor participation in “sophisticated” financial products in the name of consumer protection.

Christopher Perkins, President of Coinfund, a leading cryptocurrency and blockchain