(Bloomberg) — Apollo Global Management Inc. increased its loan to SoftBank Group Corp. to $5.1 billion, according to a person with knowledge of the matter.
SoftBank, which first borrowed $4 billion from New York-based Apollo in December, closed an additional $1.1 billion backed by holdings of SoftBank Vision Fund 2 on Tuesday, and drew substantial investor interest despite market volatility, the person said, asking not to be identified discussing a private transaction.
All in, the $5.1 billion unitranche loan represents the largest of its kind in the private-credit market, according to data compiled by Bloomberg. The addition comes amid an increase in Vision Fund 2’s holdings, the person said. The fund’s fair value was $48 billion as of Dec. 31, according to a presentation by the Japanese conglomerate.
The loan bears an interest rate of roughly 5%, the person said. Apollo led the deal, which included participation from mutual funds, insurers, endowments and financial institutions.
Representatives for Apollo and Tokyo-based SoftBank declined to comment.
SoftBank Vision Fund 2 has invested more than $42 billion in companies including athletic-apparel maker Vuori, senior-assistance startup Papa and crypto-analytics firm Elliptic. Some of its companies, including IonQ Inc., Pear Therapeutics Inc. and Exscientia Plc, are now publicly traded. Of Vision Fund 2’s companies, 41% are in the U.S., followed by 26% in Europe, the Middle East and Africa, 12% in China and 9% in India, the company presentation shows. The rest are elsewhere in Asia.
Vision Fund 2 counts SoftBank and its billionaire founder and Chairman Masayoshi Son as key investors. SoftBank has expressed interest in taking on more debt. The company has asked banks jostling for roles on the potential initial public offering of Arm Ltd. to underwrite a margin loan of about $8 billion, Bloomberg has reported.
Son has a zealous focus on SoftBank’s loan-to-value ratio, or LTV, checking it multiple times a day. The measure, calculated by dividing its net debt by the equity value of its holdings, jumped to 22% at the end of last year from 8.8% in June 2020.
Apollo’s capital-solutions arm, overseen by Craig Farr, has been growing, hiring senior executives including Dennis Cornell, Mike Shapiro, Eric Meyers, Tom Turner and Derek Dillon in the past nine months. Last month, John Zito, the firm’s deputy chief investment officer for credit, told Bloomberg Television that the New York-based firm committed to more than 50 $1 billion transactions in 2021. Apollo is among direct lenders supporting Thoma Bravo’s leveraged buyout of Anaplan Inc., announced this week.
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