Back in December 2023, when the market was pricing in six or so rate cuts, Apollo Asset Management’s co-president Scott Kleinman had a more contrarian view: He said he’d be betting against any rate cuts in 2024. 

That call so far has paid off. But higher-for-longer rates haven’t necessarily been a tailwind for the private-equity industry as they keep financing costs higher.

Buyout deal count in the year through May 15 is tracking down 4% globally on an annualized basis compared with the already-muted activity from 2023, according to a report from Bain & Co. And the lack of investing has left a mountain worth $1.1 trillion of dry powder within buyout funds that ultimately needs to be deployed. 

However, Apollo’s Kleinman said he’s “very comfortable” with rates where they are now. 

“We’re probably the only private-equity firm that has been hoping for higher rates for many, many years,’ Kleinman said in an interview for the Delivering Alpha Newsletter from the SuperReturn Conference in Berlin. “As a value-oriented investor, higher rates force more value discipline on corporate valuations, which just means more interesting companies to buy and more-reasonable valuations.” 

As for Kleinman’s current view on rates? He said, “It is possible that one cut gets thrown in there, maybe, for political reasons, perhaps, but certainly, the data we’re looking at, wouldn’t call for a rate cut.”