By Anson Lee
Software has become the dominant sector in U.S. private credit portfolios — and nowhere is that concentration more visible than at Blue Owl Capital. The firm disclosed that software loans account for 8% of its total AUM, and the composition of that portfolio reflects deliberate choices about company size, collateral coverage, and the type of software businesses worth lending to.
After more than $800 billion was wiped from the S&P 500 software and services index’s market cap beginning in late January 2026 — as investors weighed whether AI had shifted from a tailwind for software companies to a potential disruption — Blue Owl co-CEO Marc Lipschultz appeared on CNBC’s Squawk Box on Feb. 6 to explain the firm’s position. “Two things can be true at once,” he said. “AI can be massively disruptive and it can certainly hurt some of these software companies. But does it hurt so many of the right ones down to 30% of their value? It doesn’t. And it doesn’t in the average three-year duration of the loans we have.”
What Blue Owl Actually Lends To
The firm’s software lending portfolio is not a collection of early-stage SaaS startups. Portfolio companies average more than $280 million in EBITDA, as detailed in the firm’s direct lending portfolio overview and are predominantly embedded in Fortune 500 business processes — mission-critical systems running payroll, compliance, inventory management, and regulated industry workflows. “Our software companies have hundreds of millions of dollars of average EBITDA,” Lipschultz said during the same interview.
Approximately 80% of the portfolio consists of senior secured loans at loan-to-value ratios below 35%, according to Blue Owl’s investment-grade BDC portfolio. More than 90% are backed by private equity sponsors. Portfolio construction at those LTV levels provides substantial cushion before a lender would face a realized loss, even if a borrower’s enterprise value declined significantly.
How Q4 2025 Performance Read Out
Fourth-quarter results offered a data point for assessing actual portfolio health. “The fourth quarter revenues and EBITDA growth on average in the portfolio accelerated. 11% revenue, 17% growth in software, as detailed in the firm’s Q4 2025 earnings data,” Lipschultz said. That acceleration came despite the public market turbulence affecting software-sector equities throughout the quarter.
Industrywide, private credit’s exposure to software stands at approximately $226 billion, according to analysis by Voya Investment Management, which identified software as “the most levered sector in all of core and upper middle market (annualreports.com/Company/blue-owl-capital-inc) direct lending” (https://www.cnbc.com/2026/02/23/blue-owl-software-private-credit-cockroaches-saba-boaz-weinstein-liquidity-crunch.html). Blue Owl’s portfolio concentration in the sector, combined with its underwriting focus on large-EBITDA, PE-backed companies, sits at the center of a market-wide conversation about how private credit managers manage technology sector risk.
