The wave of software sell-offs has affected the private equity giants in the US, and top executives are coming forward to appease investors.

Apollo (APO.US), Ares (ARES.US), Blackstone (BX.US), KKR (KKR.US) and other private equity firms are working hard to convince stock market investors that their investment portfolios will not be affected by the software industry sell-off. The root of this sell-off is the fear that artificial intelligence will make the software industry lose its competitiveness. Alternative asset management firms mainly invest in assets outside the traditional stock and bond markets. They have been unable to shake off concerns about private credit risks since the end of last year. Despite billions of dollars in new client funds pouring in and a revival in mergers and acquisitions (analysts believe this should more revenue and profits), the sell-off of software stocks continues to drag down the stock prices of these asset management companies. In the past two weeks, executives have been touting the quality of their investment portfolios when reporting earnings, which has helped to regain some lost ground in the short term, but has not been enough to reverse the months-long slump. Disruptive Risks Kort Schnabel, CEO of Ares's large debt funds, said on the fund's earnings call on February 4, "Artificial intelligence may be the most disruptive technological risk we can imagine. I don't want to sugarcoat it. But we still believe that the investment portfolio we have built will be able to withstand this risk." Ares told investors last week that about 6% of its overall assets are invested in software companies. CEO Michael Arougheti stated that their software investment portfolio is highly diversified, with only a "tiny fraction" considered to be at high risk of disruption from artificial intelligence. Following this, the stock price rose slightly, but it has still fallen by about 30% in the past six months. Apollo Global Management Inc. CEO Marc Rowan told analysts on Monday that the software industry accounts for less than 2% of their managed assets. He listed the company's extremely low exposure to the industry by business sector: the exposure of the private equity business is "close to zero", and the exposure of the investment portfolios held by the insurance department Athene is "close to zero, not one." Rowan also stated that the exposure of the software industry in their business development company Apollo Debt Solutions is only half that of their larger peers. The fund has invested in private loans that have been questioned in recent months. Disclosure information shows that software is their largest investment sector, accounting for 13.2% of their assets. Despite this, investors have sold off stocks of this private equity firm this week, leading to a nearly 6% decline, and a cumulative decline of 11% in the past six months. KKR has about 7% of its investment portfolio in the software industry, but its stock price has fallen by 29% in the past six months. Investment firm Blue Owl, focused on credit, has 8% of its portfolio in software stocks; meanwhile, the company's stock price has plummeted by over 36%. "Strong Performance on Paper" Marc Lipschultz, Co-CEO of Blue Owl, said last week when the company released its earnings, "We have strong performance on paper. We do not expect any major losses, and performance is not expected to worsen." Scott Nuttall, Co-CEO of KKR, told investors that they see opportunities arising from market fluctuations. Rowan of Apollo stated that the software industry is an "amazing" field, even though current valuations are not ideal. Nuttall said that KKR "has taken stock of our investment portfolio over the past two years" and has identified whether artificial intelligence is an "opportunity, a threat, or an unknown". He stated that the company has $118 billion of "dry powder" (funds that investors have committed but not yet allocated), adding, "Our concerns about artificial intelligence-related risks are much lower than any risk exposure we currently hold." Even the world's largest alternative asset management company, Blackstone Inc., has not been spared from the current sell-off. Their stock price has dropped by 24% in the past six months. CFO Michael Chae stated at a conference in Florida on Tuesday that the software business accounts for 7% of the company's total assets, and credit holdings account for 10%. Analyst Karim Laib of T. Rowe Price said that last summer, investors were concerned that alternative asset management firms had put too much money into artificial intelligence, believing that "once artificial intelligence collapses, they will be the losers." Laib said, "Now, the view is that alternative asset management firms will suffer losses due to the disruptive impact of artificial intelligence. While this view has changed, the result remains the same, which may indicate that the view itself is wrong."