Apollo's loans help power SoftBank's $65 billion OpenAI wager

How Apollo became SoftBank's go to private lender

After years of knocking, Apollo got its break in 2021 when Rajeev Misra asked if it could pull together a $4.5 billion deal in 45 days. SoftBank had Goldman Sachs and JPMorgan on deck, but assembling a wide bank group takes time. Speed won.

Apollo structured a net asset value loan against the stated worth of more than 150 Vision Fund 2 holdings, and made the economics pencil out by acting like an arranging bank, taking a 1% fee and distributing pieces to others. Part of the loan went to Pacific Investment Management Co. Queries to Pimco and JPMorgan went unanswered, according to their representatives. Goldman Sachs declined to comment.

Filings earlier this year show the loan matures in 2029 and pays a floating 7.3% rate; those documents indicate this is priced higher than SoftBank's current debt, which carries a rate near 4%. Over the last 15 months, Apollo has increased the NAV facility on two occasions, bringing it to $9.2 billion. In parallel, it joined recent large financings tied to Broadcom, Anthropic and SpaceX.

Managing concentration risk and the Athene angle

A chunk of Apollo's exposure sits on its insurer's balance sheet. As of late September, Athene had at minimum $4.8 billion in SoftBank-related debt. That is about 1% of its gross invested assets, making it one of Athene's biggest single-name positions and pushing up against its concentration limit.

The NAV loan was built with limits to spread risk. OpenAI cannot represent more than one fifth of the collateral, a cap meant to buffer any single-asset hit. Even so, OpenAI's surge has reshaped Vision Fund 2 into a fund dominated by one asset, with the AI company accounting for about three quarters of the fund's fair value.

The latest funding round puts OpenAI's value at $1.25 trillion. As a result, the loan to value ratio has risen since inception, though it remains under 20%.

Apollo also stepped in as the only non bank lender in August when SoftBank struggled to lock down a separate $10 billion loan. That facility is guaranteed by SoftBank and includes protections if OpenAI's value falls sharply, including provisions for early repayment.

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Insurance capital and the next wave of AI financing

Apollo has been exporting this model. Last year it signed almost $20 billion of NAV loans for Athene with private equity managers including Vista Equity and Warburg Pincus. These deals are designed to be funded with insurance capital, giving junk rated borrowers like SoftBank access to larger pools typically reserved for investment grade debt.

SoftBank's broader AI bet is also flashing risk. On Tuesday, the company disclosed a $7 billion loss after several tech investments fell in value, its shares have dropped more than 50% since June, and its credit risks have climbed. In a recent fundraising round, OpenAI pared back its ambitions.

Privately, several Apollo executives acknowledge that recent declines across AI equities and corporate debt have led them to adopt a more guarded stance. They said it is unlikely Apollo will commit more OpenAI related capital for SoftBank until markets are clearer, though there may be room to increase the existing $9.2 billion NAV loan slightly. "Apollo is a clear example of how private credit is bridging the capital gap for the AI buildout," observed Anna Wu, who is an investment strategist and the founder of Floodlines Research. "But risk is starting to surface at the edges."

The capital needs for AI are huge. His caution is straightforward: if "technology valuations suddenly deteriorate," the risk rises. "The real question is not whether we can find enough capital to build all these data centers," Forestier said. "It is whether they will generate sufficient cash flows to justify the capital invested." Representatives of Apollo and SoftBank declined to comment.

Why it matters for your portfolio

In plain English: private credit is supplying funding when banks cannot, and Apollo's SoftBank deals show both the reach and the guardrails. A $4.5 billion NAV loan swelling to $9.2 billion, Athene nearing single borrower limits, and protections baked into the $10 billion loan all point to a careful balance between fueling AI growth and containing downside.

The bottom line: watch lenders' willingness to extend more capital and the cash flows behind the assets securing these loans. If lenders pause or those cash flows underdeliver, the pace of private credit funding in the AI buildout could slow, with knock ons for names across the AI supply chain.

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