News Digest: Private Capital Pivots to ‘Real Assets’ as Software Enthusiasm Cools
April 2, 2026
Global buyout giants are rotating capital away from software toward industrial and asset-heavy sectors, driven by rapid AI advances that have forced a fundamental reassessment of risk and long-term value across private markets.
The shift, dubbed the “HALO” trade, reflects growing investor appetite for tangible, resilient businesses with durable cash flows and lower exposure to technological disruption. Target sectors include industrials, energy, real estate, infrastructure, data centres, defense and essential services. European deal activity already reflects this trend, with PE firms competing aggressively for manufacturing, heavy equipment and aerospace assets.
The catalyst is AI’s disruptive impact on traditional software models, particularly SaaS. After absorbing over $1 trillion in private equity investment in recent years, the software sector now faces valuation pressure as AI-driven tools erode conventional business models. Several planned exits have been delayed or reconsidered, and firms are bracing for valuation writedowns during quarterly portfolio reviews. The concern is acute given that a significant share of buyout assets remains software-exposed.
The ripple effect has reached private credit markets, where lenders are pulling back on software-backed loans, with some financing transactions postponed or restructured. Conversely, debt packages supporting infrastructure and industrial deals continue to attract strong demand.
Executives argue AI will ultimately enhance, rather than displace, manufacturing processes, making industrial technology a compelling long-term bet. Supply chain resilience is also cited as a strategic priority in an uncertain geopolitical environment.
Despite the rotation, market participants stress that software remains relevant to private capital, but selectivity is the new watchword, as investors grapple with how to value businesses in a rapidly evolving AI landscape.
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