Private Credit Funds Understate Software Exposure, Fueling Investor Exodus

Private credit funds have increasingly provided corporate financing in areas where banks have a limited presence, with software companies becoming major borrowers because of their steady cash flow and predictable subscription revenue. If large firms such as Blackstone and Apollo underestimate their industry concentration, AI-driven disruption and falling software valuations could simultaneously hurt loan quality and fund liquidity.

A Wall Street Journal analysis showed that, as of the first quarter of 2026, the funds’ actual exposure to the software industry was about 25% of assets, 6 percentage points above the reported 19%. Investors submitted record redemption requests during the quarter amid concerns about software companies’ operating difficulties and the risk of AI substitution, though the report summary did not disclose the total amount sought for withdrawal.