Steve Eisman, the investor who shorted subprime mortgages before the 2008 collapse, said the next credit cycle is brewing inside private equity’s software loan book, and generative AI is the trigger.
Eisman pressed Apollo Global Management Inc (NYSE:APO) co-head of global originations Chris Edson on his “Real Eisman Playbook” podcast about how the buyout industry’s largest single sector exposure may be quietly unraveling.
A Third Of Every Buyout
Software has accounted for roughly a third of all private equity buyouts over the past five to six years, Edson said, with total capital exposure across the direct lending market running into “hundreds of billions of dollars.”
That matters because the loans behind those buyouts were underwritten on the assumption that SaaS revenue is the most reliable cash flow in business.
Eisman summarized the model as “future number of seats multiplied by the average price,” calling …
This post was originally published here
