Rowan identifies hybrid as a $30 billion business offering mid-teens returns with lower risk than opportunistic strategies.
“This thing called hybrid, which is 30,000,000,000, is actually really interesting because it is neither yield nor opportunistic. It is never going to be the highest rate of return.”
Rowan believes hybrid strategies offer the best risk-reward with downside protection and equity upside in uncertain times.
“You're getting downside protection because the world is uncertain from a geopolitical and an economic point of view. You have enough equity upside that you should have pretty good returns.”
Rowan says data center credit should amortize before renewal given strong near-term demand, ensuring safe cash flows for debt repayment.
“Therefore, for the next period of time based on contracts going in today, we should have very safe cash flows in which to amortize credit.”
Rowan says Apollo avoided single-asset AI bets, instead spreading across positions with structures creating convex upside and downside protection.
“We have spread across with the right structures and the right protections with the right risk reward to kind of create convex convex upsides while getting some amount of downside protection and some notion of our money back.”