Apollo's John Zito: Private equity software valuations are wrong

John Zito, a senior executive at Apollo Global Management, delivered blunt remarks in investor sessions questioning the reliability of private-equity software valuations, saying many marks are materially off and should be scrutinized.

The comments appeared in closed investor forums and were picked up by market reporters and industry newsletters; they reflect a broader internal repositioning at some firms, with Apollo among managers that have publicly trimmed software exposure in recent quarters. Executives described a split in the industry between managers rotating away from concentrated software risk and those defending existing marks as appropriate for long-duration private assets.

Markets have reacted with greater volatility in pockets of private credit and credit funds, showing divergent marks across lenders and renewed redemption pressures at some vehicles. Observers note more frequent markdowns, gating actions and a rise in demand for asset-backed strategies as institutions seek collateralized exposure with clearer recovery values. These dynamics have increased scrutiny of valuation governance and stress-testing practices across the sector.

The critique comes as artificial intelligence and rapid technological change challenge legacy software economics, compressing multiples for public peers and exposing leveraged private deals that were struck at historic highs. UBS and other analysts have modeled severe AI-driven repricing scenarios for private credit that would produce material defaults in stressed outcomes, while some managers argue such scenarios represent a severe tail case.

Looking ahead, market participants expect a bifurcated outcome: conservative managers will accelerate de-risking and favor asset-backed or lower-obsolescence loans, while others will defend marks and hunt for selective opportunities. For investors the near-term focus will be on transparency in marks, independent valuation oversight and stress-tested portfolio construction as the industry navigates potential repricing in software-exposed loans.