LONDON — One of the world’s biggest private-credit firms is looking at a much larger opportunity once dominated almost entirely by governments, banks and public bond markets: financing the public sector itself.
Apollo Global Management is exploring ways to provide more capital to heavily indebted governments and state-backed companies as governments—particularly in Europe—struggle with higher interest bills, enormous infrastructure requirements and increasingly limited fiscal room.
Apollo President Jim Zelter told Bloomberg Television that European governments increasingly view private capital as “part of the solution” as they search for ways to fund investment without simply adding more conventional public borrowing.
One structure Apollo is examining would allow government-backed companies to move infrastructure or other hard assets into separately financed subsidiaries, bringing in long-term private capital while reducing pressure on their own balance sheets.
That may sound like an obscure financing technique.
It is potentially much bigger.
With global public debt heading toward levels not seen since the aftermath of World War II, governments need trillions of dollars for energy grids, nuclear power, defense, transportation, data centers and industrial policy—all while investors are demanding increasingly high yields on traditional government bonds.
Private capital managers such as Apollo see an opening.
The World’s Public Debt Problem Is Getting Bigger
The International Monetary Fund estimates that global public debt reached 93.9% of GDP in 2025 and is projected to rise to about 100% by 2029.
Interest expenses have risen from around 2% of global GDP to nearly 3% in only four years, as governments refinance older, cheaper debt at much higher market rates.
That creates a brutal fiscal equation.
Governments still need to spend on:
defense,
healthcare,
pensions,
energy security,
industrial policy,
AI infrastructure,
and climate investment.
But more tax revenue is being consumed simply by interest payments.
The United States alone now has more than $40 trillion of federal debt and is spending around $1 trillion annually on interest, with debt service absorbing roughly one-fifth of federal tax revenue.
Europe faces its own pressure.
France’s debt has risen to around 119% of GDP.
Britain is dealing with some of its highest long-term borrowing costs in decades.
And governments across the continent are being asked to spend more on defense and energy independence at precisely the moment bond investors are becoming more demanding.
That is the environment Apollo wants to finance.
This Is Not Traditional Government Lending
The headline “Apollo lends to governments” can easily be misunderstood.
Apollo is not suggesting that France, Britain or Germany should stop issuing government bonds and borrow directly from one private-equity firm.
Instead, the firm is targeting the layer underneath sovereign borrowing:
state-owned companies,
regulated utilities,
infrastructure projects,
energy networks,
and other assets ultimately linked to government priorities.
The idea is to bring private capital into long-lived assets that governments want built but may not want fully financed on the public balance sheet.
Apollo already describes its European strategy as providing long-term capital to companies and governments for strategic priorities including energy security, infrastructure and technology.
The firm says it has deployed more than $60 billion in large-scale, high-grade financings across European assets and companies in recent years.
That track record explains why Zelter believes the opportunity could become significantly larger.
Apollo Has Already Put Billions Into Europe’s Energy System
The theory is already being tested.
In 2025, Apollo committed £4.5 billion to finance projects at French state-controlled electricity giant EDF, with proceeds primarily intended for its UK investments—most notably the Hinkley Point C nuclear power station.
Apollo described the transaction as one of the largest sterling-denominated private-credit financings on record.
The firm also committed €3.2 billion to a joint venture with German utility RWE.
That vehicle holds RWE’s 25.1% stake in transmission-grid operator Amprion and is intended to help finance major electricity-grid expansion across Germany.
And Apollo-managed funds committed $6.5 billion for a 50% interest in Ørsted’s giant Hornsea 3 offshore wind project in Britain, including funding for construction costs.
When completed, Hornsea 3 is expected to generate enough electricity for more than three million UK homes.
Those are not small private-credit deals.
They are infrastructure financings on a scale traditionally associated with governments, public bond markets and multinational banks.
Apollo Sees Infrastructure as a $75-Trillion Opportunity
The opportunity is likely to get much bigger.
Apollo estimates that global infrastructure could require more than $75 trillion of investment over the next decade.
Data centers alone could require as much as $5.2 trillion by 2030 to support the AI ambitions of major technology companies, according to estimates cited by the firm.
That means governments face two simultaneous capital demands.
They need traditional public infrastructure:
roads,
grids,
power plants,
water systems,
railways,
and defense.
And they increasingly need new digital infrastructure:
data centers,
fiber networks,
AI computing facilities,
semiconductor plants,
and enormous amounts of new electricity generation.
Governments cannot easily finance all of that from tax revenues.
Bond issuance is becoming more expensive.
That makes long-duration private capital more attractive.
Higher Government Bond Yields Are Strengthening Apollo’s Case
The global bond market has become far less forgiving.
U.S. 10-year Treasury yields recently touched 5.34%, their highest level since 2002.
Long-term yields in France, Britain and Japan have also risen sharply.
Higher yields matter in two ways.
First, governments themselves pay more when they borrow.
Second, investors receive increasingly attractive returns from safe public bonds, meaning any infrastructure or private-credit project must pay enough to compete.
That sounds like a problem for private lenders.
But for firms such as Apollo, it can also increase demand for creative financing.
A government-owned utility that finds public bond issuance expensive may prefer to sell a minority interest in an infrastructure subsidiary.
A state-backed energy company may prefer long-term private financing tied directly to an asset.
A government may decide that bringing in institutional capital is politically easier than adding more debt directly to its own balance sheet.
This is where private credit moves from corporate finance into something much closer to public policy.
Governments Can Monetize Assets Without Selling Them Entirely
One of the structures highlighted in Bloomberg’s reporting involves moving hard assets into a subsidiary and raising money against that vehicle.
The government or state-backed company can retain operational control while private investors provide equity or debt capital.
This can produce immediate funding without a full privatization.
Imagine a state power company owns a large electricity network.
Instead of issuing another multibillion-dollar corporate bond, it could place a minority interest in the grid inside a joint venture.
Private investors contribute capital.
The utility keeps operating the asset.
Revenue from the regulated grid supports investor returns.
The government receives financing for expansion without bearing every dollar of the capital requirement itself.
Apollo’s RWE transaction in Germany follows a version of this logic.
Why Governments May Like This Model
There are several attractions.
Private capital can provide:
longer maturities,
large upfront commitments,
bespoke repayment structures,
and financing directly linked to specific assets.
It can also reduce dependence on volatile public bond markets.
Apollo’s credit platform is built precisely around this type of customized financing.
As of June 30, the firm reported about $849 billion in credit assets under management, including $291 billion in asset-backed finance.
For governments, that represents a large pool of capital that does not require waiting for another traditional bank syndicate or sovereign bond sale.
But Private Money Is Not Free Money
This is where the story becomes more complicated.
Private capital can reduce the amount a government has to borrow directly.
It does not eliminate the economic cost.
Private investors expect returns.
Often, they expect returns higher than government bondholders because their investments can be less liquid, more complex and riskier.
Those returns ultimately come from somewhere:
electricity tariffs,
tolls,
lease payments,
government-backed contracts,
taxpayer-supported subsidies,
or asset appreciation.
So moving infrastructure financing away from the sovereign balance sheet does not magically erase the liability.
It changes how the cost is structured and who receives the payments.
That distinction will become increasingly important as governments make heavier use of private capital.
The Risk Is ‘Hidden’ Public Debt
Economists and public-finance experts have long warned that governments can sometimes shift liabilities outside traditional debt statistics without actually eliminating them.
Public-private partnerships can create obligations that do not immediately appear as headline sovereign debt.
State-owned companies can borrow separately.
Governments can guarantee project revenues or future payments.
Those arrangements can be entirely sensible.
But if governments ultimately remain responsible when projects fail, the risk can migrate back to taxpayers.
That makes transparency critical.
Private-sector financing should ideally move genuine commercial risk away from governments—not simply hide borrowing under another corporate structure.
Europe Is the Natural Testing Ground
Apollo appears particularly focused on Europe.
That makes sense.
European governments face enormous strategic investment needs.
They want to:
expand electricity grids,
build nuclear power,
increase defense spending,
reduce dependence on imported energy,
support semiconductor manufacturing,
and compete with U.S. and Chinese industrial policy.
At the same time, fiscal rules limit how freely governments can borrow.
France is already battling over deficit reduction.
Germany faces political disputes around debt and infrastructure spending.
Britain is dealing with expensive borrowing.
Private capital offers policymakers another source of financing without requiring every project to be funded through annual government budgets.
Pension and Insurance Money Could End Up Funding Public Infrastructure
There is another important layer.
Apollo does not finance these deals with one giant corporate bank account.
Its capital ultimately comes from:
pension funds,
insurance companies,
retirement savers,
sovereign institutions,
and other long-term investors.
Apollo also owns retirement-services business Athene.
That means public infrastructure can increasingly create long-duration assets designed to match long-duration retirement liabilities.
A 30-year power-grid financing can generate predictable cash flows.
That can be attractive to an insurer that must make payments to retirees over decades.
The structure essentially links two long-term needs:
governments need patient capital,
while retirement investors need predictable income.
AI Is Accelerating the Shift
Artificial intelligence is adding another huge capital demand.
Apollo is already part of a group working with Nvidia to establish AI-compute financing platforms intended to mobilize more than $500 billion in third-party capital for AI infrastructure over time.
That is significant because governments increasingly view AI infrastructure as strategically important.
Data centers need:
electricity,
transmission grids,
land,
fiber networks,
cooling,
and semiconductor capacity.
Those are infrastructure assets.
Private-credit firms therefore increasingly sit at the intersection of:
government policy,
technology investment,
energy transition,
and capital markets.
Apollo’s push into public-sector-linked financing fits directly into that broader trend.
The Boundary Between Public and Private Finance Is Blurring
Historically, the lines were simpler.
Governments issued sovereign bonds.
Banks lent to businesses.
Asset managers bought the bonds.
Private-equity firms bought companies.
That model is changing.
Today, giant alternative managers can:
finance nuclear plants,
fund transmission grids,
own parts of airports,
lend against infrastructure,
finance AI data centers,
and provide capital to state-controlled companies.
The distinction between lender, asset manager and infrastructure financier is becoming increasingly blurred.
Apollo’s strategy illustrates that transformation.
Private Credit Is Moving Up the Quality Spectrum
Private credit was once associated mainly with lending to smaller, highly leveraged companies that could not easily issue public bonds.
That image is increasingly outdated.
Large alternative managers now routinely finance investment-grade companies and infrastructure projects.
Apollo says its European business has increasingly focused on large, high-grade capital solutions.
The EDF deal is a perfect example.
EDF is state-controlled and central to France’s energy system.
Financing projects tied to EDF is dramatically different from providing a leveraged loan to a mid-sized private-equity buyout.
Private credit is moving closer to the center of the global financial system.
That Creates New Regulatory Questions
The deeper private capital moves into public infrastructure, the more regulators will pay attention.
Private credit is generally less transparent than public bond markets.
Individual transactions may not trade daily.
Prices can be harder to observe.
Structures can be complicated.
If state-backed entities become increasingly dependent on private funds, policymakers may eventually want clearer rules around:
disclosure,
valuation,
contingent government liabilities,
and investor concentration.
The IMF is already warning that nonbank financial institutions are playing a growing role in global bond markets and that rising leverage and opacity deserve closer scrutiny.
Apollo’s expansion could make that debate even more important.
The Opportunity Exists Because Governments Have Few Easy Choices
The central reason Apollo sees an opportunity is simple:
governments need money.
And the traditional sources are becoming more expensive.
Tax increases are politically difficult.
Spending cuts are unpopular.
Bond yields are rising.
Infrastructure requirements are enormous.
Private capital offers a fourth option.
Politicians can bring outside investors into assets that produce long-term cash flows.
For some projects, that may be economically sensible.
For others, it could be an expensive way of postponing difficult fiscal decisions.
The challenge will be distinguishing between the two.
Apollo Is Positioning Itself as a Government Financing Partner
Apollo is already one of the world’s largest alternative asset managers.
It has built huge businesses in:
private credit,
asset-backed finance,
infrastructure,
insurance,
and investment-grade lending.
Government-related financing may therefore be a natural next step rather than a completely new strategy.
Its recent deals suggest what that future might look like:
£4.5 billion for EDF-linked nuclear investment.
€3.2 billion supporting Germany’s electricity grid.
$6.5 billion for a giant British offshore-wind project.
And potentially much more capital directed toward governments and state-backed enterprises as public balance sheets become increasingly constrained.
The Bigger Question Is Who Bears the Cost
Private money can help governments build infrastructure sooner.
It can spread financing over decades.
It can transfer some risk away from taxpayers.
And it can bring massive pools of pension and insurance capital into projects that might otherwise remain unfunded.
But there is no such thing as free infrastructure.
Someone eventually pays.
If it is not the government through taxes and sovereign bonds, it may be households through energy bills.
Drivers through tolls.
Businesses through regulated tariffs.
Or governments themselves through long-term contractual payments.
That is why Apollo’s expansion into government-linked finance could become much more consequential than another private-credit growth story.
The world’s governments are reaching the limits of how cheaply they can borrow just as their investment needs are exploding.
Apollo believes private capital can fill the gap—but the real debate will be whether that financing genuinely shifts risk away from taxpayers, or merely moves public debt into places where it is harder to see.
