Apollo CEO warns: The private equity market is about to face a "major cleanse"

Mark Rowan, CEO of Apollo Global Management, warns that the private credit industry is about to face a "great cleansing" due to rising concerns about default rates on loans to software companies. Rowan states that this cleansing will not be a short-term action, and it is foreseeable and predictable; he emphasizes the importance of being an excellent underwriter and risk manager. Rowan believes that investors should be more inclined to let risks exist in private market institutions rather than on the balance sheets of banks, as banks may use government-insured deposits to make such loans. In recent weeks, private credit executives have been facing questioning from investors about whether this $1.8 trillion industry can withstand sustained pressure if the software industry is disrupted by artificial intelligence in the coming years. Rowan's remarks come at a time when business development companies have faced redemptions from investors due to these widespread concerns.