Apollo Global Management (NYSE:APO) is doubling down on U.S. infrastructure with its $2 billion acquisition of PowerGrid Servicesbacked by a nearly $1 billion private credit package. The firm is tapping Brookfield, Blackstone, and JPMorgan's direct lending units to fund the deal, according to sources with knowledge of the matter. The financing includes a $650 million term loan, $200 million in delayed-draw debt, and a $125 million revolvermarking another big swing by private lenders as they continue to eat into Wall Street's turf.

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PowerGrid will pay 4.75 percentage points above the U.S. benchmark on the term loan, which comes with a seven-year maturity and a 1% discount on issuance. There's room for a 25-basis-point cut if certain conditions are met, making the deal potentially attractive to lenders looking for yield with upside optionality. While no one involved is commenting publicly, JPMorgan reportedly advised Apollo on the transaction, which gives the firm control of a business that services electric utilities across the country.

Private credit is having a moment. Lenders have financed $32 billion worth of leveraged buyouts so far this yearalready blowing past the $23 billion figure from this time in 2024. With public M&A volumes still tepid, deals like PowerGrid suggest direct lenders are stepping into the void and reshaping how large buyouts get done. For Apollo, this isn't just another infrastructure playit's a bet that essential services, funded outside traditional banks, could offer stable returns in an uncertain macro backdrop.

This article first appeared on GuruFocus.

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