Private Equity

Orlando Bravo of Thoma Bravo believes AI is significantly impacting software valuations, causing deserved downturns for companies facing disruption. While some software firms are unfairly punished by market volatility, others are poised to thrive in the AI-driven “agentic era.” Bravo also admitted Thoma Bravo overpaid for Medallia, highlighting the challenges of private equity in rapidly evolving tech landscapes.

Peloton is expanding into the B2B fitness market with new equipment for gyms. Nvidia anticipates $1 trillion in orders for its AI systems, accelerating its expansion into autonomous vehicles and space computing. Geopolitical tensions in Iran impact oil prices, while shifting foreign policies affect regional stability. Private equity faces challenges in valuing AI-driven software assets, and Amazon intensifies its fast delivery services. Venture capitalists warn of a potential “AI reset” due to speculative investment.

Private equity’s alliance with AI firms like Anthropic signals a major disruption for enterprise software. Diversified PE firms can leverage AI to cut costs across their portfolios, potentially replacing existing software solutions. This poses a significant threat to software-focused PE firms like Thoma Bravo and Vista Equity Partners, whose business models rely on software acquisitions. While some see AI as an enhancement, the trend suggests AI could eliminate demand for certain software categories, forcing companies to shrink and invest in AI to remain competitive.

AI’s rapid advancement is set to disrupt credit markets, with UBS analyst Matthew Mish predicting tens of billions in corporate loan defaults within a year. Private equity-owned software and data services firms are most exposed. Mish warns of a potential credit crunch if a severe AI transition occurs, with estimates of $75-$120 billion in defaults by 2026. The market’s slow adaptation to AI’s speed exacerbates this risk.

Wingspire Equipment Finance has provided over $130 million in equipment financing to six portfolio companies of a major private equity sponsor, including a $40+ million transaction. This partnership highlights the growing trend of private equity firms seeking specialized equipment financing to optimize capital structures. Spanning energy, healthcare, and aerospace, the financing enables these companies to boost capacity and modernize infrastructure. Wingspire’s speed, scale, and alignment with private equity risk profiles are key differentiators, facilitating efficient funding and allowing firms to focus on core competencies.

Morningstar and PitchBook have launched the Morningstar PitchBook US Modern Market 100 Index, blending public and private market performance. The index comprises 90 publicly listed companies and 10 late-stage, venture-backed firms, reflecting the evolving capital markets where companies stay private longer. Utilizing transparent pricing from public exchanges and secondary private market transactions, the index offers investors a unified benchmark to assess both public and private market leaders. It aims to enhance diversification and unlock growth potential by incorporating innovative private companies like SpaceX and OpenAI.

RCP Advisors closed its primary fund-of-funds, RCP Fund XIX, at $314 million. The fund, backed by diverse investors, will maintain RCP’s two-decade-long strategy of investing in buyout fund managers focused on small-cap companies (enterprise value $10-$250 million) with a focus on control-oriented investments. The success of RCP’s established strategy is evidenced by its continued appeal to a broad investor base and approximately $17 billion in committed capital since 2001.