Apollo, a leading investment firm managing over $730 billion in assets, introduced a novel tokenized private credit fund in collaboration with security token experts Securitize.
This marks Apollo's initial foray into public on-chain offerings for accredited investors through the Apollo Diversified Credit Securitize Fund (ACRED) feeder fund. Additionally, it signifies the first instance of Securitize integrating with the Solana blockchain and Ink, a layer-2 network developed by the Kraken crypto exchange. The tokenized fund will also launch on Ethereum, Aptos, Avalanche, and Polygon.
The Apollo Diversified Credit Fund oversees more than $1.2 billion in managed assets, focusing on corporate direct lending, asset-backed finance, and various credit strategies. The fund has notably outperformed, yielding an 11.7% return in 2024, significantly surpassing the approximately 4.5% return on U.S. Treasuries.
Christine Moy, a partner at Apollo leading digital assets, data, and AI strategy, explained that the chosen fund's daily subscription and daily net asset value (NAV) structure aligns well with the operational efficiencies of blockchain-based markets.
Moy highlighted the fund's potential to act as a high-yielding addition to on-chain diversified portfolios, complementing stablecoins, tokenized treasuries, and money market funds, while offering diversification away from the volatility of crypto-native yield products.
The trend of tokenizing real-world assets (RWAs) is gaining traction within traditional finance, with blockchain-based U.S. Treasuries emerging as a significant and liquid market. As of 2023, the global private credit assets under management have surged to roughly $2.1 trillion, quadrupling over the past decade, as reported by Securitize.
Securitize CEO Carlos Domingo emphasized the burgeoning interest in private credit, noting the sector's recent expansion and its appeal as a high-yield alternative to treasuries, particularlywhen interest rates are declining. Securitize has previously pioneered tokenization in this space with a leading private credit fund token launched in partnership with Hamilton Lane (NASDAQ:HLNE).
For Apollo's tokenized offering, Securitize leverages its partnership with Wormhole, a developer platform facilitating cross-blockchain communication, to enable a multichain approach from the outset.
Apollo has also engaged in preliminary trials of tokenized assets, including a proof of concept in the previous year with JPMorgan (NYSE:JPM) under Project Guardian, led by the Monetary Authority of Singapore (MAS). Moy, with her extensive Web3 strategy experience, anticipates further exploration into decentralized finance (DeFi) and the potential for secondary liquidity in alternative assets.
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