Apollo Executive Warns of Misstated Private Equity Software Valuations

Apollo Global Management executive John Zito has issued a stark warning about the valuations of software holdings within private equity firms, asserting that current market assessments are broadly inaccurate. His comments, delivered to UBS clients last month and confirmed by CNBC, suggest potential significant losses for lenders and investors in the sector.

Concerns Over Stale Valuations

Zito, co-president of Apollo’s asset management division and head of credit, stated bluntly, “I literally think all the marks are wrong. I think private equity marks are wrong.” CNBC reports that this assessment comes as public software company shares have declined amid fears surrounding the impact of new AI tools from companies like Anthropic and OpenAI.

This downturn has fueled concerns that private credit lenders are relying on outdated valuations for their software loans, leading to a wave of redemptions as investors seek to withdraw funds from private credit vehicles. Approximately $10 billion has been pulled from private credit funds in the first quarter of 2026, according to analysis by the Financial Times. Yahoo Finance

Potential Losses for Lenders

Zito warned that lenders to smaller software companies could recover as little as 20 to 40 cents on the dollar, implying substantial losses. CNBC This is particularly concerning for companies acquired between 2018 and 2022, a period characterized by high valuations and low interest rates, which Zito described as often being “lower quality” than larger, public competitors.

Apollo’s Position

Apollo has sought to distance itself from the broader concerns, noting that software companies represent less than 2% of the firm’s assets under management and that it has zero exposure to private equity stakes in software firms. CNBC However, Zito pointed out that many companies acquired by private equity firms also carry private credit loans, meaning trouble with the loans would also affect the equity positions.

Broader Implications for Private Credit

While Zito’s comments focused on private equity valuations, they highlight a growing anxiety within the private credit market. Other Wall Street figures, including Jeffrey Gundlach and Mohamed El-Erian, have previously flagged risks in the sector. CNBC Zito cautioned that firms engaging in “stupid things…concentrated things…things that you’re not supposed to do in your vehicle” are likely to face negative consequences.

John Zito currently serves as Co-President of Apollo Asset Management, co-leading all investing activity and overseeing the day-to-day management of the Firm’s asset management business. Apollo