Weekly Private Equity Edition
Volume 14
SEQH CAPITAL RESEARCH
Private Equity Edition – Weekly Brief
Week Ending February 20, 2026
Top Takeaways
The AI disruption scare is now the dominant narrative across private capital: PE‑heavy public GP stocks have sold off 6–36% YTD as investors reprice software portfolio exposure, despite strong underlying fundamentals and management reassurances.
Blackstone acquired Champions Group for ~$2.5 billion through its perpetual BXPE vehicle at roughly 18.5x EBITDA, a textbook flight into “AI‑proof” essential services and a signal of where mega‑cap conviction is heading.
McKinsey’s webinar this week provided additional color on its 2026 report: $2.6 trillion in global PE deal value in 2025 (+19% YoY), the second‑highest on record, anchored by mega‑deals including the reported ~$55 billion Electronic Arts take‑private.
CVC’s $1.2 billion+ acquisition of Marathon Asset Management continues the consolidation wave among credit platforms, with the combined entity targeting ~€61 billion in fee‑paying AUM and accelerating CVC’s push into wealth and insurance channels.
LP power continues to intensify: fundraising fell 11% in 2025 to ~$491 billion as limited partners demand realized cash returns before re‑upping, forcing GPs to prioritize exits over new commitments.
Theme of the Week: The Software Scare and Its Private‑Market Fallout
The single most important development for private equity this week isn’t a deal, it’s the repricing of software risk across every layer of the capital structure. A wave of agentic AI product launches in early 2026 demonstrated autonomous multi‑step workflow capabilities in legal research, financial analysis, and code generation, triggering a violent reassessment of traditional SaaS business models. The Tech‑Software Sector ETF has fallen roughly 22% year‑to‑date, with names like Salesforce, ServiceNow, and Adobe down 25–30%, even as many of these companies continue to report strong results.
The contagion into private markets is real and measurable:
KKR shares are down ~29% over the past six months despite record fundraising and $118 billion of dry powder; roughly 7% of KKR’s portfolio is in software.
Blue Owl has fallen over 36% in the same period with ~8% software exposure.
Apollo dropped nearly 6% in the week following its earnings beat, as investors struggled to separate strong credit fundamentals from software portfolio anxiety.
Blackstone has not been immune, even as its portfolio skews toward real assets and services.
Management teams pushed back hard. Apollo CEO Marc Rowan called software an “amazing” sector but acknowledged valuations had been stretched. KKR co‑CEO Scott Nuttall said the firm had “conducted an inventory of our portfolio over the last two years” to assess whether AI was “an opportunity, a threat, or a question mark,” emphasizing that KKR’s $118 billion in dry powder is “multiples of any exposure we have that raises AI‑related concerns.” Blue Owl co‑CEO Marc Lipschultz was blunt: “The book is strong. We do not observe significant losses. We do not see any deterioration in performance.”
Why this matters for allocators at every level: Bloomberg reported this week that private credit exposure to software is likely understated because fund managers apply inconsistent industry classifications, some companies that are effectively software sellers are categorized as retailers or even food producers. JPMorgan’s private markets team published a note highlighting that agentic AI tools now autonomously handle complex workflows that were the core value proposition of many PE‑owned vertical SaaS platforms. The implication is that underwriting discipline on software deals must now incorporate a genuine disruption discount, not just a growth premium.
Deal of the Week: Blackstone × Champions Group (~$2.5B)
Blackstone announced Monday that its perpetual private equity strategy, BXPE, will acquire Champions Group from Odyssey Investment Partners for approximately $2.5 billion. Champions Group is a leading residential home services platform specializing in HVAC, plumbing, and electrical services across the U.S. The deal valued the company at roughly 18.5x EBITDA on ~$140 million of annualized earnings, with William Blair, Piper Sandler, and Baird advising. Odyssey and management are retaining a significant minority stake, ensuring leadership continuity.
Three reasons this deal is a bellwether:
AI‑proof thesis in action: Bloomberg explicitly noted the acquisition “shows how private equity firms are seeking refuge in sectors less vulnerable to AI disruption.” Residential HVAC and plumbing require physical labor, local relationships, and recurring maintenance, none of which are disintermediatable by software agents.
BXPE as a distribution channel: The deal was executed through Blackstone’s retail‑facing perpetual vehicle, reinforcing the trend of wealth‑channel capital flowing into direct PE ownership, not just fund commitments. This structure gives individual investors effective exposure to a scaled essential‑services platform with predictable, membership‑driven revenue.
First major residential HVAC platform deal since May 2025: The transaction reopens a consolidation playbook in fragmented services that had gone quiet during the rate‑hiking cycle. Expect follow‑on bolt‑ons as Blackstone uses its balance sheet to roll up smaller operators under the Champions umbrella.
GP Consolidation Continues: CVC × Marathon Asset Management
