Mar. 16 at 7:17 PM
John Zito of Apollo Global Management warned UBS clients that private-equity firms may be misvaluing software investments, as declines in comparable public tech stocks suggest valuations are outdated, according to The Wall Street Journal.
Concerns have increased as investors sell public software shares amid fears that AI tools from Anthropic and OpenAI could disrupt existing providers, raising questions about private-credit loan valuations and prompting some investor withdrawals.
Zito said software firms taken private between 2018 and 2022 are particularly exposed and warned lenders in smaller software deals could recover only 20–40 cents on the dollar if companies struggle in the AI-driven environment.
He added the private-credit market should survive, though concentrated bets could end poorly. Apollo noted software accounts for less than 2% of its AUM and said it has no exposure to private-equity stakes in software firms.
$APO