Alex: Europe is a fascinating market, particularly for credit. What do you see in European credit markets today, both on the public and private sides?

Tristram: The themes that we're seeing in the European credit market are really echoing those you're seeing on this side of the Atlantic—some angst over AI disruption, software exposure. So it's a similar picture on that front, but really there's something more interesting and structural going on as well. Europe is becoming a much more exciting market, especially on the private side, because Europe is facing enormous investment needs, probably higher than anywhere else on the globe because Europe has underinvested for so long. And so CapEx into big strategic priorities—defense, infrastructure, energy security—needs to be met, and it needs to be met in the credit market largely, be that public credit markets or private credit markets.

Europe is becoming a much more exciting market, especially on the private side, because Europe is facing enormous investment needs, probably higher than anywhere else on the globe because Europe has underinvested for so long. 

Alex: My experience in European markets over the years was it was a bank-dominated market much more so than in the US, and obviously regulation is changing that on both sides of the Atlantic. Maybe go a little bit further with the structure of moving from bank-financing-heavy to now investors coming over in a much more mature way.

Tristram: Regulation is pushing banks to be more capital light and to be more discerning about where they want to apply that capital. And that's creating a huge opportunity for the likes of us. If you're able to commit scale to be a sophisticated underwriter of credit risk, that opportunity is growing all the time, in part because of banks pulling back, in part because of the episodic nature of European public capital markets.

European investment grade markets are not particularly liquid. They're not particularly deep. So straddling public and private as our European credit business does, being able to pivot between the two, underwriting risk and taking that risk in whichever format works for the borrower and is appropriate for us, that's a huge opportunity, and it's only growing as the demand for capital goes up and the traditional source of that capital in the banks is actually getting lighter.

Regulation is pushing banks to be more capital light and more selective in where they deploy capital, and that’s creating a significant and growing opportunity for alternative lenders.

Diana: In the US, private credit for many is synonymous with direct lending or the corporate side of things. Many of our investors are really just scratching the surface on the asset-backed piece of the market. Is that the same in Europe?

Tristram: It's the same. What we're seeing change now is that European banks are lending against collateral, but they can't keep all of it. They have to be more disciplined about their capital. So we see week-in, week-out these days European banks call us up and say, “Can you bid this portfolio of loans, can you bid these NPLs, can we set up a forward-flow agreement so you can be an off-taker of some of this risk with us?”

There's a range of opportunities for us to partner with European banks that are pressured in the amount of capital they can devote to their traditional asset-backed lending activities. We can find attractive pricing, we can deliver solutions at scale, and as banks come under pressure, especially if it's in a more volatile market, we are in a position to lean in and take advantage of that opportunity.

Diana: Is there anything we should be parsing out here regionally between different countries in terms of what you're seeing in your market?

Tristram: Europe is an incredibly exciting opportunity, but it's not easy. The European Union alone is 27 different member states with different regulatory regimes, legal regimes, jurisdictional considerations, languages, cultures. Then on top of that, you've got the UK, Norway, Switzerland all doing their own thing as well.

So looking at Europe as a monolith is the wrong way to approach it. Europe requires a lot of sophistication to prosecute the opportunity effectively. You have to understand these jurisdictions, you have to have people who are familiar with how these things work and what the nuances between jurisdictions are.

For us, being at the scale we're at in Europe, 550 people on the ground doing these things day in and day out, gives us real edge.

Diana: You're here in Miami, you're partaking in the broader credit meeting, and so you're seeing themes come up from US-based LPs. Are you hearing and seeing different themes in Europe from your LPs separate from what we see here, or do you think some of the trends in asset allocation and investing are parallel?

Tristram: One of the most important nuances is that, frankly speaking, in the last year or so, a lot of global LPs have actively looked to allocate to Europe. Whether that's push factors or pull factors, people are saying we want to be more balanced in our global asset allocation. And there are more reasons for optimism around Europe now than there have been for a while, both in terms of the private credit opportunity and some sense that Europe might be able to get out of its own way a little bit in terms of its economic stagnation.

There's nuance in terms of other considerations as well. A lot of worry about software at the moment—Europe is much less exposed to that theme than the US. A lot of talk about BDCs at the moment—Europe doesn't have BDCs. But the global trends are relevant to markets, and the strength of conviction we have in the European opportunity set is something that underlies those conversations.

Our focus is on deepening and broadening our origination capabilities, as there is still a significant amount of opportunity to capture across European credit markets.

Alex: Maybe give us a little glimpse into the future as to where we think we might take the business from where it is today.

Tristram: It's deepening and expansion, deepening and broadening of our origination capabilities as much as anything. There is so much for us to go after in Europe as we refine the way we originate.

Foremost is how we originate from large corporates, creating systematic ways of engaging in dialogue with large corporates, finding ways of meeting their needs with our scaled and sophisticated capital. That's a really important area you'll see us develop into.

You'll also see us try and find ways of capturing broader portions of the market, including through bank partnerships. Because of the centrality of banks in the European market, especially in the mid-market, if you can partner with those banks and source risk you really like and underwrite it with an Apollo risk lens, that's a very attractive opportunity set that traditionally has been closed to private capital.

Q&A is edited for clarity

This interview is part of the "Inside Apollo's Private Credit Platform" series, featuring perspectives from Apollo partners. View all interviews.