Apollo Exec Says PE Software Marks Wrong, Lenders Face 20–40 Cent Recovery
Apollo co-president John Zito warned private equity firms have overstated software valuations and lenders to small-to-medium buyouts may recover just 20–40 cents on the dollar. Apollo reports software holdings under 2% of its assets under management and holds zero private equity stakes in software firms.
1. Executive’s Warning on Valuations
Co-president John Zito stated private equity firms have broadly misstated software valuations, noting declines in comparable public tech stocks driven by new artificial intelligence tools.
2. Credit Loss Estimates
He warned that lenders to small-to-medium sized software firms could recover only 20 to 40 cents on the dollar, implying potential credit losses of 60% to 80% if valuations correct downward.
3. Implications for Private Credit Lenders
Such write-downs could trigger redemptions in private credit vehicles and substantial losses for investors backing these loans, especially those concentrated in lower-quality buyouts from 2018 to 2022.
4. Apollo’s Exposure and Positioning
Apollo notes software represents under 2% of its assets under management and holds no private equity stakes in software firms, insulating the firm from major sector losses.