Apollo Global Management, citing the disruptive potential of AI to enterprise software business models, placed short bets in 2025 on the debt of several PE-backed software assets (including Internet Brands, SonicWall and Perforce) — positions it has since closed and which accounted for under 1% of its roughly $700bn credit portfolio while the bonds still trade above ~80% of face. At the same time Apollo has cut private‑credit exposure to software from about 20% at the start of 2025 to roughly half that level and is targeting below 10% of net assets, reflecting CEO Marc Rowan’s view that AI could trigger significant credit-market dislocation and that lenders should avoid directional bets. The steps, echoed by peers such as Blackstone, highlight a broader risk that high LBO-era valuations and concentrated software allocations could face a painful revaluation if AI materially undermines recurring‑revenue software economics.
Apollo Global Management, a firm with over $900 billion in AUM, placed targeted short positions in 2025 on the debt of several private-equity–owned software companies — cited examples include Internet Brands (KKR), SonicWall (Francisco Partners) and Perforce (Clearlake) — though those positions have been closed and reportedly represented less than 1% of Apollo’s roughly $700 billion credit asset portfolio. The FT notes the bonds subject to shorting had sold off earlier in the year but continue to trade above ~80% of face value, indicating market repricing rather than immediate default stress. Concurrently Apollo materially cut private-credit exposure to software, trimming positions from about 20% at the start of 2025 to roughly half that level and setting a goal below 10% of net assets, driven by management concerns that AI may materially disrupt recurring-revenue enterprise software economics. CEO Marc Rowan’s explicit avoidance of directional bets and Blackstone’s parallel demand that teams quantify AI risk underscore manager-level reassessment of technology-driven credit risk. The move signals a potential wider revaluation risk for LBO-era software credits given elevated past valuations and a higher-for-longer rate environment; the combination of concentrated allocations and refinancing risk could transmit losses through private credit if AI materially erodes business models. Near-term market read: elevated caution and selective repricing rather than systemic distress, but monitor covenant quality, refinancing timelines and secondary bond levels for signs of escalation.
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