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Apollo to Fund $2B PowerGrid Acquisition with $1B Private Debt

Apollo Global Management Inc. (NYSE:APO) is financing its ~$2 billion acquisition of PowerGrid Services from Sterling Group through a ~$1 billion private debt package, as reported by Bloomberg on Tuesday. This financing is being provided by the direct lending businesses of Brookfield Asset Management, Blackstone Inc., and JPMorgan Chase & Co.

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The debt package includes a $650 million term loan, a $200 million delayed-draw term loan, and a $125 million revolving line of credit. The larger term loan will mature in 7 years and will be issued at a discount of 99 cents on the dollar, where PowerGrid will pay an interest rate of 4.75 percentage points over the US benchmark. This interest rate has the potential to decrease by 0.25 percentage points over time.

This transaction highlights the growing trend of private credit firms increasing their involvement in financing private equity acquisitions, particularly as M&A activity has seen a slowdown in the broader market. Apollo Global Management Inc. (NYSE:APO) is a private equity firm that specializes in investments in credit, private equity, infrastructure, secondaries, and real estate markets. Apollo announced the acquisition of a majority stake in PowerGrid Services earlier on May 13. PowerGrid Services is a US provider of electric utility maintenance and construction.

While we acknowledge the potential of APO to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than APO and that has 100x upside potential, check out our report about the cheapest AI stock.

READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy Right Now.

Disclosure: None. This article is originally published at Insider Monkey.

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When Jeff Bezos said that one breakthrough technology would shape Amazon’s destiny, even Wall Street’s biggest analysts were caught off guard.

Fast forward a year and Amazon’s new CEO Andy Jassy described generative AI as a “once-in-a-lifetime” technology that is already being used across Amazon to reinvent customer experiences.

At the 8th Future Investment Initiative conference, Elon Musk predicted that by 2040 there would be at least 10 billion humanoid robots, with each priced between $20,000 and $25,000.

Do the math. According to Musk, this technology could be worth $250 trillion by 2040.

Put another way, that’s roughly equal to:

  • 175 Teslas
  • 107 Amazons
  • 140 Metas
  • 84 Googles
  • 65 Microsofts
  • And 55 Nvidias

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Even if that $250 trillion figure sounds ambitious, major firms like PwC and McKinsey still see AI unlocking multi-trillion-dollar potential.

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  • Bill Gates sees artificial intelligence as the “biggest technological advance in my lifetime,” more transformative than the internet or personal computer, capable of improving healthcare, education, and addressing climate change.
  • Larry Ellison — through Oracle, is spending billions on Nvidia chips and partnering with Cohere to embed generative AI across Oracle’s cloud and apps.
  • Warren Buffett — not known for tech hype — says this breakthrough could have a ‘hugely beneficial social impact.

When billionaires from Silicon Valley to Wall Street line up behind the same idea — you know it’s worth paying attention to.

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