This region is going to spend a trillion dollars hardening their infrastructure, building alternative routes, alternative transport systems, and all of the other things that this level of hostility has now pointed out need to be done in this region. What they're going to do is long-term, and it's going to be complex. That is where someone like us comes in.
A special inside brief from Abu Dhabi on the day that Apollo takes a stake in Mubadala Capital. The man behind that deal is Marc Rowan. He's the founder and the CEO of Apollo. They manage more than a trillion dollars in assets. And our interview comes at a pretty interesting time. Anthropic has just filed for their IPO. The valuation, $2 trillion, is the tag. Will it make it? This man possibly has those answers.
Marc, welcome to The National. Good to see you today, sir.
Good to see you. No promises on antics, though. [laughter]
We'll get there. But I want to kick off with your deal with Mubadala Capital.
Just very simply, why now?
Well, it's been in the works for quite a while. And Mubadala is, among the sovereign funds, probably the most advanced in the creation of its own asset manager. And this is a chance for us to help them accelerate their growth, particularly in North America.
The speculation is that you've taken a minority stake. What is the size that you've taken?
It's approximately a 10% stake. A little over a billion dollars.
Okay. So we've got the price and the size. The one thing that goes through my mind, I look at their business and, as you say, a lot of it's outside of the United Arab Emirates, but the other question is, are you competing with one another? Because they're going after the same pools of capital that you are at Apollo.
Yes, the asset management business is incredibly competitive. And the notion that it's a zero-sum game, I think, is a false notion. We're all friends and competitors. So I look at our business more broadly. If you think about what we do, we originate credit. We take a lot of that for our own balance sheet and for our own funds, but we are a much more powerful originator when we can speak for everything. Even though we don't want everything, as I sometimes say, 25% of everything and 100% of nothing. And so we power competitive insurers with Athene. We power competitive asset managers. And with Mubadala, we get to power someone who is a partner, and they will build an asset management competitor to what we do. All good.
And what do you think you add to them for that North American exposure? It's the natural expertise, I know, but what else do you bring to that minority stake?
So when you're a public asset manager, you get to buy everything that already exists. That's why when you give a public asset manager an infinite amount of money, they will invest it. When you give a private asset manager money, they can only invest as much as they can originate. We only get to buy what we create. And so the depth of our business, the growth of our business, is dependent on origination.
Mubadala, as a newish asset manager in the North American market, is not going to be long on origination. An asset manager like us, we're very focused on origination, and partnering with other like-minded asset managers who we respect and have economic alignment with is good for them and good for us.
It's almost like a symbiotic moment for the two of you.
Absolutely. And it's not just with Mubadala. As I said to you, we power rival insurance companies, we power rival asset managers. No permanent friends, no permanent enemies.
So you and Kaldun — a very, a new healthy level — Kaldun Al Mubarak, obviously, who leads Mubadala, the Abu Dhabi government — a healthy level of new competition and respect. Let's just, let's leave it there.
Look, it's undeniable we are in the midst of a very tense time in this region, and yet here you are flying into Abu Dhabi and striking a deal. What do you see in terms of risk here relative to the rest of the world? Because you're quite well steeped in here.
We've been here a really long time, and we are a trusted capital partner for this region. And we are not just a raiser of capital. We're a massive investor in the UAE, whether it is our stake in Aldar, our stake in ADNOC, or any of the other things that we do here. I think you're going to see us ramp up our activity here tremendously.
It goes to this whole notion of what is risk. Is it riskier today here, or was it riskier a year ago? Common sense says it's riskier today. The way we think, it was riskier a year ago. Everything — all the tectonic plates that were hitting each other. It was only a question of when.
Now they've hit each other, and the forces have been degraded. Everyone has adapted to the situation. We now know what the outcome is. It doesn't mean there won't be continued hostilities, but in terms of the unknown, we have less risk today than we did a year ago.
This region is going to spend a trillion dollars hardening their infrastructure, building alternative routes, alternative transport systems, and all of the other things that this level of hostility has now pointed out need to be done in this region. What they're going to do is long-term, and it's going to be complex. That is where someone like us comes in.
If you think about the role of capital in the world, equity financing, equity markets. But debt financing only comes from one of two places. It comes from the banking system or the investment marketplace. There's no third choice. The banking system is the single best provider of short-term financing in the world because it funds itself with deposits. On the other hand, if you want something long-dated and complex, you come to the investment marketplace — either the public investment marketplace or, increasingly, the private investment marketplace. What we are doing, not just here but around the world, I think of as sophisticated project finance.
Think about what the world is building. We are going through this global industrial renaissance. We're building infrastructure. We're doing next-gen manufacturing. We're building energy — not just the capacity to produce, but energy transition, energy transmission — and we're building AI and data. The demand for capital is like nothing we've ever seen.
You've used some phrases there, and I want to sort of focus on our region first before we go global. You talk about ramping up, and it's interesting you talk about the infrastructure. So I'm curious to know, what does ramp up kind of mean for this region? And in the infrastructure panel play, where do you want to be? Is it the rebuild? Is it the defense? Is it the pipelines? Where do you envisage taking debt or equity?
So, let's start with yes. Yes, we will be there. But all of the things you mentioned are things the region is going to do. They're going to build alternative transport systems, alternative pipelines, alternative means of water production, hardening of facilities. Yes. And AI and data, and all of the other things that are happening in this region that make it so dynamic. We want to be a part of all of it. That doesn't mean we will do all of it, because the scale of capital is beyond anything one firm or one organization can do. And I think what we're seeing in the region is a recognition that the capital needed to do everything that these countries need to do will have to be global capital.
We're meeting, and I'm interviewing, on the day that Israel elections are taking place. We're a week away from the midterms in your own country. A little bit earlier this year, you called the war in Iran stabilizing. Now it feels as if it has changed. How do you describe where we are now? You've talked about the tectonic plates colliding.
I think we're de-risked from before this happened. Iran, with a full missile arsenal and on its way, as some said, to producing a nuclear weapon, was a destabilizing risk for the world, not just for this region. We are further away from that today, notwithstanding active hostilities and the potential for the renewal of active hostilities.
This is a perception of risk. People sometimes close their mind to the notion of risk just because there's nothing visible. It doesn't mean the risk is not there. The way we look at the world, we had more risk a year ago than we do today. It does not mean we will not have continued hostilities, but we've now seen the region adapt. We've seen what is possible. We've seen how this region will behave under a variety of circumstances. My own view: we have less risk today.
Tell me this: what made you the risk taker that you are? I mean, you now manage over a trillion dollars. You've been in the game a reasonable period of time.
It's beyond a reasonable period of time. Let's just say that it's now — I think we're not far off in terms of age. But what shape — it's now 42 years.
Okay. What shapes Marc Rowan?
Look, I won't speak for me personally, but the entire firm — we are different than almost every firm out there because we are taking a risk as a principal. If you look at the trillion, trillion-one that we manage, half of that is our own money, half of that is client money. Therefore, we don't get to just say what we think. We actually have to do it. We do not sell anything to a client that we are not prepared to own ourselves.
And so, if you think about how we approach risk, we manage a variety of funds that have different risk profiles. The vast majority of capital that we manage is credit, and most of that credit is investment grade. In the investment grade credit business, you are not supposed to lose money, and we manage a book not to lose money. You then look at opportunistic credit, and there you want to make loss-adjusted returns that compensate you for any risk that you are taking. And in the equity business, you have unlimited upside, but you also have the chance for downside.
We approach each of those three areas with the same principal lens. And in a world that's changing fast, in a world with lots of buzzwords, where you have, quote, hot assets and hot ideas, we're not very faddish. We do with our own money that which we think is prudent, and clients like to invest alongside us. It does not guarantee success, but it guarantees that we have the same outcome. There is nothing better than a principal mentality to lead you to smart risk-taking.
And before we move on to the AI risk, just round off, thread the needle for me on credit. There's a lot of different speculation about there's not enough meat on the bone in the spread. There's a risk, there's big economic risk going into 2027. How do you look at credit before we move on?
So let's frame the assets. In the equity market, you have unlimited upside and the chance of losing money. But because you have unlimited upside, you are prepared to take concentrated bets. Look at the S&P: 10 stocks are 50% of the S&P. All 10 stocks are levered to exactly the same trend. We sleep at night. At least I sleep at night. I don't know about you, but we're okay with that.
In the credit market, particularly the investment grade credit market, you only get back your interest and your principal. Therefore, you are not paid to be concentrated. So, if someone wants you to be concentrated, they have to give you two things, not one thing. They need to give you more compensation, but also more safety, because more compensation by itself is not enough, because any losses you suffer in investment grade credit are not going to be made up by compensation.
And that's literally what we see happening in the marketplace today. We've gone from a diversified credit market to a concentrated credit market, particularly in the buildout of AI and data. And we're going to see it in energy, and we may see it in country-specific credit as regions like this rebuild. Concentrated credit anywhere in the world is going to require more compensation and more safety. That's where I see the marketplace.
And there is so much demand for credit today that we are watching market distortion. And we're not at the end of this, we're at the beginning of this. The US is well along in its investment cycle of this global industrial renaissance. Canada, for those who were in Canada over the past few months, is going to spend a trillion dollars. This region is going to spend a trillion dollars. Europe needs to do everything that the US is doing and does not have the financial flexibility that the US has in terms of capital markets or otherwise. They will need credit. And so, we're going to watch this go on for quite a while.
And again, I come back to: equity can be concentrated because of unlimited upside. Credit needs to be diversified, or paid for with additional compensation and additional safety.
Speaking of equity, we have the beautiful headlines in the past 24 hours. I don't know how beautiful they are, but Anthropic set to file for an IPO. $2 trillion is the banner headline. Marc, you know the numbers better than most people in that world because of your Broadcom deal and exposure. Is $2 trillion the right bumper price?
There's no right price. Whether it is Anthropic or OpenAI or SpaceX, we're talking about companies that are literally changing the world and whose business models are not predictable at this point, notwithstanding the incredible momentum that they have.
And we're also watching unusual occurrences in terms of market dynamics. Right now, Anthropic, OpenAI are in the private market, just like SpaceX was prior to its IPO. Something in the private market establishes a valuation based on rounds of funding. When it moves to the public market, because of the structure of our market, particularly if you are included in the index, everyone has to buy you.
And so what we saw with the big IPO of SpaceX is a trillion-dollar-plus market valuation in the private market, two trillion as it went public, as everyone had to buy them, three trillion as people filled out their position, and then ultimately settled into whatever valuation it was going to have.
Something tells me we may see a little bit of the same phenomenon with respect to Anthropic. We can't deny that the structure of our equity market today is different than certainly you and I grew up with. It is not the IPO market of old, when active managers decided what they wanted to buy and sell and put prices on new issues. So much of the market is passive today. They need to own the entity, particularly one of a size that trillion-dollar-plus entity.
And if we take the corollary to that statement, then this is passive majority of — I presume what I have, some of it is active, some of it's passive — but it's the retail investor essentially delivering partially the exit opportunity for founders. But we're going to have this sort of huge concentration moment in quoted equity markets with a valuation like that. Is this going to tip the scales of that?
I don't think it will tip the scales. This will lead to further concentration. But you know, I say it this way: 10 companies are 50% of the S&P. All 10 companies are leveraged to the same trend. That is retail investors, that's 401k investors, that's institutional investors, and we sleep at night. We have this notion that because it's public, it's safe.
And so far, it's actually been a really good thing for investors because these companies have outperformed a much broader market. Whether that continues to be the case or not remains to be seen.
In their filing, Anthropic say that they are warning that the technology could pose a catastrophic existential risk to humanity. But look, these are warnings that they put in there, but it does speak to a much bigger debate, Marc, which is about regulation. When somebody warns around this, does it fuel the regulatory debate and need?
