Apollo Global's enthusiasm for Credit Suisse's securitisation team may now be diminished

As we have observed here before, Apollo Global has been hitherto enthusiastic about its acquisition of Credit Suisse's securitisation business in 2023. As of yesterday, though, it might be more muted. 

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Apollo shares have fallen by 7% in the past two days, triggered by the revelation that its Atlas SP Partners unit has £400m ($538m) of exposure to Market Financial Solutions Ltd., a UK mortgage finance company that's collapsed into insolvency amidst allegations that it pledged the same collateral multiple times for loans. 

People with keen memories should recall that Atlas SP Partners is the name that Apollo gave Credit Suisse's old securitisation group. Speaking in late 2023, Jay Kim, the former head of Atlast SP and previous head of fixed income at Credit Suisse, gushed that 95% of the Credit Suisse team were there. At Atlas, Kim said he was surrounded by people he knew and loved from Credit Suisse and that this was a source of competitive advantage. 

Kim disappeared from Atlas SP nine months later, but many of his Credit Suisse companions are still around. 20 out of 34 executives listed on Atlas SP's website are from Credit Suisse, including nine people on the 16 person executive team. The Credit Suisse DNA runs deep. 

For all Credit Suisse's fate, Atlas's links to the failed bank seemed like a good thing until now. Credit Suisse's securitisation group was one of the Swiss bank's strong points. The group was born of Credit Suisse's involvement in the mortgage securitisation market in the 1980s and was one of Credit Suisse's most profitable businesses. Bloomberg reported in 2024 that 180 Credit Suisse employees transitioned across and that Atlas supplemented them with 170 hires of its own. Some Credit Suisse people then left, disheartened by late night calls and Apollo's hard driving culture. 

Remaining employees may now find themselves bearing the brunt of Apollo's anger. Although £400m is only 1% of Atlas SP's balance sheet, the loans it made to Market Financial Solutions have acted as a reminder that there may well be other rats in that particular woodshed. It's not clear who originated the loans or when for Atlas SP, but someone in London is surely implicated. 

The potential exposure also comes after Apollo boasted that it has zero exposure to software in its private equity business and said that software assets accounted for less than 2% of loans across its entire platform. 

In a presentation at this month's investor day, Apollo said it had 16 origination platforms, one of which was Atlas SP. Others have names like MaxCap and NewFi. These origination platforms are "best-in-class businesses, teams and technologies that originate assets with excess risk-reward on a sustainable and recurring basis," said Apollo, which didn't respond to a request to comment for this article. It seems that's not always the case.

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