(Bloomberg) – Apollo Global Management Inc. sees a growing opportunity to provide large corporate loans, a business long dominated by the world’s largest banks.

The company has raised $ 1.8 billion for Apollo Origination Partnership, a new direct lending fund that seeks an 8% to 10% internal rate of return, excluding leverage, according to a letter sent to investors on Tuesday.

The first investment will be a senior secured term loan facility at a UK-based insurance brokerage platform, New York-based Apollo told investors. The alternative asset manager plans to raise $ 3 billion for the fund by the first quarter of next year, according to a person familiar with the matter.

An Apollo spokeswoman declined to comment.

Institutional investors have invested liquidity in private credit. Just a year or two ago, big deals were rare. Today, lenders estimate that 10% of new leveraged US business loans could end up in the private market over the next five years.

Apollo and some rivals, including Ares Management and GSO Capital Partners of Blackstone Group Inc., are entering a market traditionally controlled by the largest banks, which close private deals in excess of $ 1 billion and sell them to institutional investors. Its new fund follows a $ 12 billion platform launched last year and backed by Abu Dhabi state fund Mubadala Investment Co. Apollo has already made around $ 3 billion in loans to giant companies over the past two years.

“The shift in corporate finance from public to private markets is expected to continue and accelerate,” said John Zito, deputy director of investments for Apollo’s 320 billion credit business. of dollars, in a white paper sent to investors with the letter.

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