Cranes surround one of the two reactors being constructed at Hinkley Point C on September 27, 2024 in Bridgwater, England.
Anna Barclay | Getty Images News | Getty Images
U.S. asset management giant Apollo is set to provide a £4.5 billion ($6 billion) loan to U.K. nuclear project Hinkley Point C, as the private credit market hunts for European opportunities.
The deal was first reported by the Financial Times on Friday and supported by two sources speaking to CNBC on condition of anonymity because of the sensitivity of the matter.
Apollo will provide an investment-grade debt financing package for the project at an interest rate below 7%, a source said.
Apollo and Hinkley Point C majority owner EDF declined to comment.
The unsecured lending to EDF won’t be tied to the U.K.’s nuclear project, according to one of the sources. However, funds are believed to be earmarked for Hinkley Point C. Credit rating agency Fitch has noted that “EDF injects equity monthly into the UK subgroup to fund Hinkley Point C” construction. The rating agency also said that EDF’s British subsidiary had 6.7 billion euro in debt as of March.
The Apollo deal would be among the biggest private capital investments in a project of U.K. national interest.
Completion of two nuclear reactors at the Hinkley Point C site, the first nuclear power station to be built in Britain in decades, has been delayed multiple times and swelled in budget.
State-owned China General Nuclear Power Corp (CGN) halted its funding for Hinkley Point C in late 2023 amid tensions with the British government, which took over the company’s stake in another U.K. nuclear project, Sizewell. That left EDF to pay to complete the project alone, for a bill estimated at more than £40 billion in early 2024. The first reactor in the projected is expected to come online in 2029.
CGN’s participation had drawn public scrutiny over concerns about broader Chinese involvement in critical U.K. infrastructure.
While nuclear projects remain controversial in Europe, the current British government has pledged to approve construction of more such plants at home. Hinkley Point C is expected to generate electricity for around six million homes when complete.
Private markets are meanwhile eyeing opportunities to capitalize on an expected boom in European infrastructure projects over the next decade, from energy and transport to housing and data centers. Apollo Global Management President Jim Zelter earlier this month said that he saw the opportunity to put $100 billion “in the ground” in Germany over the next decade.
Private credit has boomed in the years since the 2008 Financial Crisis, increasingly being used as an alternative funding source to risk-averse banks. The size of the market was around $1.5 trillion in 2024, according to Morgan Stanley.
“Apollo’s private credit deal with Hinkley Point is a major signal to the increasing maturity of the private credit industry. The market is growing increasingly competitive, underscoring its growing role in funding large-scale infrastructure, typically dominated by public markets,” Marc Scheipe, CEO at private markets management platform Allvue, told CNBC.
“We expect more U.S. private credit firms to target European opportunities, particularly in sectors requiring long-duration capital, to diversify their portfolio and secure undervalued European assets that offer the potential for strong returns.”
— CNBC’s Lily Meckel and Ganesh Rao contributed to this story.
