Private equity takeovers of software groups are at a turning point as investors hunt for bargains among companies at risk of being disrupted by AI, said Dipanjan “DJ” Deb, co‑founder of Francisco Partners, a tech‑focused PE firm with $75bn in capital raised. Valuations collapsed earlier this year amid fears about AI disruption, but Deb argues markets have underestimated AI’s potential to boost efficiency and growth.

The San Francisco‑based firm completed the first large software‑focused fundraise since the February “SaaS‑pocalypse,” raising $21bn—exceeding its $18bn target. Kirkland & Ellis advised on the raise. Its portfolio includes cyber security firms Barracuda Networks and Jamf, and its 2011 and 2015 funds returned more than three times capital, while the 2018 fund has returned nearly 100% with an 18.4% net IRR. Deb noted that while some portfolio companies will face issues, the low valuations create “great opportunities.” He warned that 2021‑2022 vintage funds may struggle, but newer funds could be strong performers.

Deb also cautioned that AI company valuations have soared, creating a massive AI bubble reminiscent of the 2000 dot‑com era, citing the rise of Anthropic’s Claude Code tool as a catalyst. Credit markets remain open but financing costs have risen.