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Private credit has dominated the headlines this week as concerns over investment quality reach a boiling point.

Recent product releases from AI research labs like Anthropic have reignited questions around the go-forward viability of legacy software products. That's an issue for private credit because of SaaS portfolio concentration after years of heavy lending to the sector.

Apollo President Jim Zelter said earlier this month that he estimated that roughly 40 percent of all sponsor-backed private credit went into the sector (and around 30 percent of private equity committed capital). Barclays estimates software is now the largest single exposure of all BDC loan holdings at around 20 percent, versus just 13 percent in the broadly syndicated leveraged loan market, per Morningstar.

True exposure could be even greater.

A Bloomberg News review of thousands of holdings across seven major BDCs found that at least 250 investments worth more than $9 billion were not labeled as software loans by one or more lenders, even though the borrowers describe themselves that way, their sponsors describe them that way, or other lenders in the same credit classify them that way.

Apollo categorizes Kaseya, a self-described "IT management software" company, as "specialty retail." Golub Capital categorizes Restaurant365, which calls itself a "back-office restaurant system software" provider, under "food products," alongside Louisiana Fish Fry and the maker of Bazooka Bubble Gum. Sixth Street Partners classifies Pricefx, whose homepage uses the word "software" more than a dozen times, as a "business services" company.

Investor jitters first hit Blue Owl last month with a wave of redemptions, eventually forcing the firm to halt exits from one of its funds and sell off assets to boost liquidity levels. That's led to fears of contagion, with Ares, Blackstone, and Apollo now all managing through a period of heightened withdrawals across their semi-liquid vehicles.

Blackstone's $82 billion Private Credit Fund faced a record redemption request of roughly $3.8 billion last quarter, or around 7.9 percent of net assets. To meet the request without altering the terms of its tender offer, Blackstone allocated $250 million of firm capital and collected $150 million of personal contributions from more than 25 senior leaders across the business, according to people familiar with the matter.

As BDCs prepare to meet the coming redemption requests, managers face decisions on how best to navigate the situation. Outside of Blue Owl, no other perpetual fund has formally gated withdrawals yet, and no one wants to be the first.

Adding more intrigue to the brewing mess, the escalating conflict in Iran could move things in either direction, depending on who you ask.

While geopolitical concerns likely mean a halt to dealmaking, some see a boost to the relative value of private credit. Volatile financial markets and borrower uncertainty could mean that relationship-based bespoke financing solutions offered by direct lenders are now more important than ever.

Either way, there seems to be growing consensus that the asset class is due for some level of reset.

"We're going to have a correction, but it's no different than the correction that's happening in banking," Rowan said at Bloomberg Invest. "There's always going to be fraud. There's always going to be underwriting mistakes. But the question is who's a good risk manager and who's not a good risk manager?"

.• Stonepeak Partners and Bernhard Capital Partners are in advanced talks to acquire Cleco, a Louisiana-based electric utility, from Macquarie Group for more than $5 billion, per Bloomberg.

• Norges Bank Investment Management, British Columbia Investment Management Corporation, and Brookfield Asset Management launched Northview Energy, a North American renewable energy platform with 2.3 GW of operating solar and wind capacity.

• NVIDIA (Nasdaq: NVDA) invested $2 billion each in photonics companies Lumentum (Nasdaq: LITE) and Coherent (NYSE: COHR) as part of separate multiyear strategic agreements that also include multibillion-dollar purchase commitments and future capacity access rights for data center optics development.

• Shanghai Moody Technology, a Chinese colored contact lens maker backed by Hillhouse, KKR, 5Y Capital, and GGV Capital, is exploring a sale that could value the company at around $1 billion, per Bloomberg.

• Blackstone Life Sciences agreed to invest $400 million over four years in Teva Pharmaceutical (NYSE: TEVA) to fund clinical development of duvakitug, a Phase III monoclonal antibody targeting TL1A for ulcerative colitis and Crohn's disease.

• Phusion Projects has hired JPMorgan to explore the sale of Four Loko, its canned alcoholic RTD brand, which could be valued at around $400 million, per Reuters.

• Centurium Capital, the controlling shareholder of Luckin Coffee, agreed to acquire Blue Bottle Coffee, a specialty coffee chain, from Nestlé for less than $400 million, per Caixin.

• TPG's Rise Fund invested around $250 million in Findhelp, an Austin-based social care technology platform.

• J.C. Flowers & Co. committed up to $200 million to support the launch of Accelerated Wealth Partners, a New York-based RIA acquisition and operating platform.

• Royal Cup Coffee & Tea, backed by Braemont Capital, agreed to acquire Farmer Brothers Coffee Co. (Nasdaq: FARM), a roaster, wholesaler, and distributor of coffee, tea, and allied products, for around $28 million in cash.

• Bierman Autism Centers, a privately held ABA provider operating 20 clinics across seven states, is in the late stages of a sale process, per Axios.

• Precision Strategies, backed by Abry Partners, acquired Firehouse Strategies, a Washington, D.C.-based public affairs firm backed by Aldine Capital Partners.

• Blue Fire Equity invested in Jovian Concepts, a Hanover, Maryland-based provider of technical services to the U.S. defense and intelligence community.

• SeaFort Capital acquired a majority stake in Allmar, a Winnipeg-based door and hardware supplier, with Roynat Equity Partners co-investing.

• West Star Aviation, a portfolio company of Greenbriar Equity Group, acquired DCJet, a Sterling, Virginia-based provider of field maintenance and AOG services for business aviation operators.

• Goldman Sachs Alternatives acquired a majority stake in Schellman, a Tampa-based cybersecurity compliance and attestation services provider, from Lightyear Capital, which will retain a minority position.

• Trinity Hunt Partners invested in Berger Consulting Group, a Los Angeles-based provider of economic consulting and damages analysis for labor and employment disputes.

• Roots Corp. (TSX: ROOT), a Canadian clothing retailer, is exploring strategic alternatives, including a potential sale, with J.P. Morgan advising, per Bloomberg.

• Lee Equity Partners acquired KCIC, a Washington, D.C.-based consulting firm specializing in tort liability management and insurance risk analysis.

• Riveron, a national business advisory firm backed by Kohlberg, invested in Cuesta Partners, a Chicago-based AI and data technology firm focused on finance transformation for middle market companies.

• Southern Home Services, a portfolio company of Gryphon Investors, acquired Dunn's HVAC, Plumbing & Electrical, an Anniston, Alabama-based residential home services provider.

• Trive Capital invested in Adrianna Papell, a New York City-based designer of women's special-occasion apparel.

• Enverus, a Blackstone-backed energy data analytics platform, agreed to acquire Spatial Business Systems, a design automation platform for electric and gas utilities and critical infrastructure, from Peak Rock Capital.

• All Seas Capital invested in Sereni, a funeral services platform operating across Belgium, Germany, and Poland.

• Gemspring Capital made a minority investment in Aeromed Group, a Charlotte, North Carolina-based aerospace and defense supply chain provider, to support the company's recent acquisitions of HITEK Electronic Materials, NorcaTec, and Kit Pack Company.

• Virtual Technologies Group, a portfolio company of Jacmel Partners, acquired Vector Tech Group, a Michigan-based provider of customized IT solutions.

• Gryphon Investors acquired a majority stake in HRSoft, a Denver-based enterprise compensation management software provider, from Bow River Capital, which retained a minority stake.

• Arcline Investment Management submitted a preliminary all-cash takeover offer for Senior Plc (LSE: SNR), a UK aerospace supplier, joining Advent and the Tinicum-Blackstone consortium in a three-way contest for the company, per Bloomberg.

• Cloudpermit, a portfolio company of The Riverside Co., acquired CityReporter, a Canadian provider of municipal asset management and inspections software.

• Vista Equity Partners increased its investment in Portside, a cloud-based aviation software provider, to a majority stake.

• Quantum Health, a portfolio company of Warburg Pincus and Great Hill Partners, acquired CirrusMD, a Denver-based on-demand virtual care provider.

Tech, Vertical SaaS, & Misc. Enterprise

• Cart, a Houston-based commerce and logistics platform, raised $180 million in growth equity funding led by Springcoast Capital Partners, with participation from PayPal Ventures, Arsenal Growth Equity, Mercury Fund, and Oak HC/FT.

• Cylake, a cybersecurity platform for regulated institutions requiring on-premises data sovereignty, raised $45 million in seed funding led by Greylock.

• Fig Security, an Israeli cybersecurity company that monitors enterprise security stacks to detect and fix broken detection and response workflows, raised $38 million in combined Seed and Series A funding co-led by Team8 and Ten Eleven Ventures, with participation from Crosspoint Capital Partners, U&I Ventures, and Cyber Club London.

• Unleash, an Oslo-based open-source FeatureOps platform for managing software feature rollouts, raised $35 million in Series B funding led by One Peak, with participation from Spark Capital, Frontline Ventures, and Firstminute Capital.

• JetStream Security, an enterprise AI governance platform, raised $34 million in seed funding led by Redpoint Ventures, with participation from CrowdStrike Falcon Fund.

• Lio, an AI platform for enterprise procurement, raised $30 million in Series A funding led by Andreessen Horowitz, with participation from Y Combinator.

• Validio, a Stockholm-based data management platform, raised $30 million in Series A funding led by Plural, with participation from Lakestar and J12 Ventures.

• Evervault, a platform for encrypting and managing sensitive data, raised $25 million in Series B funding led by Ribbit Capital, with participation from Index Ventures, Sequoia Capital, Kleiner Perkins, and Operator Partners.

• Reclaim Security, a threat exposure remediation platform, raised $20 million in Series A funding led by Acrew Capital, with participation from QP Ventures and Ibex Investors.

• ArmorCode, a Palo Alto-based exposure management platform, raised $16 million in new strategic funding led by Cheyenne Ventures, with participation from Ballistic Ventures, Highland Capital, Sierra Ventures, NGP Capital, Harmonic Growth Partners, Tau Ventures, and Cervin.

Fintech

• Crossover Markets, operator of CROSSx, an execution-only cryptocurrency ECN for institutional traders, raised $31 million in Series B funding at a $200 million valuation led by Tradeweb Markets, with participation from DRW Venture Capital, Ripple, Virtu Financial, Wintermute Ventures, XTX Markets, and Illuminate Financial.

• OKX, a cryptocurrency exchange, received a minority strategic investment from Intercontinental Exchange, the parent company of the New York Stock Exchange, at a $25 billion valuation, with ICE securing a board seat as part of the deal.

• RenoFi, a Philadelphia-based home renovation financing platform, raised $22 million in Series B funding led by Fifth Wall, with participation from Progressive Insurance, HighSage Ventures, Alumni Ventures, Flintlock Capital, Gaingels, Canaan, First Round Capital, Curql, and TruStage Ventures.

• Confido, a financial infrastructure platform for law firms and legal technology providers, raised $9 million in financing across two rounds led by Aquiline Capital Partners, with participation from The LegalTech Fund, Breakwater Ventures, Live Oak Bank, and Context Ventures.

Consumer & Media

• Starface, a New York-based skincare brand known for its star-shaped pimple patches, raised $105 million in minority funding co-led by Astō Consumer Partners and Align Ventures.

• Eight Sleep, a New York-based sleep technology company, raised $50 million in strategic funding led by Tether Investments at a $1.5 billion valuation.

Healthcare

• Sage, a New York-based care platform for senior living and skilled nursing facilities, raised $65 million in Series C funding led by Growth Equity at Goldman Sachs Alternatives, with participation from IVP and Goldcrest.

• Prolium Bioscience, a New York-based biotech developing PRO-203, a CD20xCD3 T-cell engager for autoimmune diseases, raised $50 million in Series A funding led by RTW Investments.

• Poplar Therapeutics, a clinical-stage company developing anti-IgE therapies for food allergy and atopic conditions, raised $45 million in Series A extension funding co-led by Janus Henderson Investors and RA Capital, with participation from SR One, Vida Ventures, and ArrowMark Partners.

• Atavistik Bio, a Cambridge, Massachusetts-based biotech focused on allosteric therapeutics for blood cancer and bleeding disorders, raised $40 million in Series B extension funding led by RA Capital Management, with participation from Nextech Invest, The Column Group, Lux Capital, and Regeneron Ventures, bringing total Series B proceeds to $160 million.

• Greater Good Health, an El Segundo-based value-based primary care company, raised $20.5 million in Series B funding led by Allumia Ventures, along with up to $12.5 million in venture debt from HSBC Innovation Banking, with participation from DaVita Venture Group, Granite Financial Holdings, Flare Capital Partners, Optum Ventures, LRVHealth, Health Velocity, Martin Ventures, and Epsilon Ventures.

• NexCure, a company that builds and operates community-based outpatient CAR-T and T-cell engager treatment centers with health systems, raised $19 million in Series A funding led by RA Capital Management, with participation from Cencora Ventures and Oncology Ventures.

Industrials, Greentech, & Other

• Neura Robotics, a German humanoid robotics company, raised €1 billion in new funding led by Tether Holdings, with participation from Lingotto Investment Management, at a post-money valuation of €4 billion.

• Sierra Space, a defense and space company spun out of Sierra Nevada Corporation, raised $550 million in Series C funding at a post-money valuation of $8 billion led by LuminArx Capital Management, with participation from General Atlantic, Coatue, Moore Strategic Ventures, and Andalusian Private Capital.

• PLD Space, a Spanish developer of reusable rockets for small satellite launches, raised €180 million in Series C funding led by Mitsubishi Electric, with participation from CDTI, COFIDES, and Nazca Capital.

• Oxa, an Oxford-based autonomous vehicle software company for industrial environments, raised $103 million in Series D funding led by the UK National Wealth Fund, with participation from NVentures, IP Group, Hostplus, and bp Ventures.

• RIFT, a Dutch developer of iron fuel technology for industrial heat decarbonization, raised €83.1 million in Series B funding led by PGGM, with participation from Invest-NL, Oost NL, Rubio Impact Ventures, Brabantse Ontwikkelings Maatschappij, and Energietransitiefonds Rotterdam.

• UFORCE, a London-based defense company developing autonomous drones and unmanned systems for multi-domain operations, raised $50 million in seed funding co-led by Shield Capital and Lakestar, with participation from Ballistic Ventures.

• PlasmaLeap Technologies, an Australian company producing zero-emissions ammonia and nitric acid using plasma technology, raised A$30 million (US$20 million) in Series A funding co-led by the Gates Foundation, Investible, and Yara Growth Ventures, with participation from Twynam, GrainCorp Ventures, and Uniseed/UniSuper.

• Frankenburg Technologies, a Tallinn-based developer of mass-manufacturable interceptor missile systems, raised €30 million in Series A funding led by Plural, with participation from SmartCap.

• Zeno, an electric mobility and distributed energy company, raised $25 million in a combined Series A equity and debt financing round led by Congruent Ventures, with participation from Active Impact Investments and Lowercarbon Capital, alongside debt facilities provided by Trifecta Capital and Camber Road.

• HawkEye 360, a Herndon, Virginia-based company that uses satellite constellations to detect and geolocate radio frequency emissions, raised $23 million in Series E extension funding from Ghisallo, Principia Growth, Sixty Degree Capital, and existing investor Strategic Development Fund.

• Photoncycle, a Norwegian solid-state hydrogen storage company that converts surplus solar energy into heat and electricity for winter use, raised €15 million in Series A funding co-led by NordicNinja and Voima Ventures, with participation from Lifeline Ventures, Eviny Ventures, Luminar Ventures, and Momentum.

• Sound Point Capital Management raised $1.5 billion for its third Strategic Capital Fund, targeting asset-based loans to U.S. corporate borrowers.

• Galvanize raised $370 million for its debut real estate fund targeting the decarbonization of commercial real estate.

• HighBrook Investors raised $266 million for its inaugural data center fund targeting 300 MW of data center capacity in Northern Virginia.

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