Welcome back!

As I wrote earlier today, private equity firms are sitting on a backlog of software companies they bought during the buyout frenzy of 2021 and 2022 that they hope to take public or sell. 

One reason they can't cash out is that the initial public offering market has not been receptive to new PE-backed software listings. The value of all PE-backed software companies totaled just $17 billion from 2022 to 2024, less than one-fifth of the deals in 2021, according to PitchBook. 

That lukewarm appetite may extend into this year, thanks to the distraction of the planned  blockbuster IPO of SpaceX and expectations that OpenAI, Anthropic and Databricks could follow.

"Generally speaking, I think the environment for PE-backed IPOs is going to be more difficult than [that for] VC-backed ones, with the exception of certain vertical software and security companies," said Jonathan Cofsky, a technology portfolio manager at mutual fund manager Janus Henderson. 

One of the reasons PE-owned software listings are getting little interest is that investors fancy high-growth stories rather than PE-backed companies, which are often older with slower growth rates, say investors in IPOs and investment bankers that underwrite new listings. Plus, investors are worried these companies won't be able to adapt to AI quickly. 

Companies that were taken private a few years ago would be returning to the public market after massive sell-offs of software-related stocks, driven by the fear that AI tools and applications would replace demand for the enterprise software companies' products. 

"That was just a very different time for software when the growth rates were much higher and the investors were willing to pay a lot more for software. Most importantly, generative AI wasn't a thing," Cofsky said. "It's not that PE had the wrong thesis, it's just the world changed." 

And the few that went public have met with a chilly reception. Shares of Thoma Bravo–backed SailPoint Technologies, the only PE-backed software IPO last year, have fallen 20% since its listing in February. 

The successful IPO of Medline last December gave PE investors hope that listings outside generic corporate software would succeed. The medical supply firm owned by Blackstone raised $6 billion, the most money raised in any offering last year, and the stock has soared more than 50% since its debut.

Possible IPO contenders this year among PE-backed companies include Liftoff, a mobile app ​marketing company owned by Blackstone, which filed IPO paperwork publicly two weeks ago. Genesys, a customer experience software maker backed by Permira and Hellman & Friedman, which delayed a listing last year, could eye an IPO in the coming months as well, according to a person familiar with the discussion. 

Thoma Bravo has explored in recent months taking at least two of its cybersecurity companies this year—Ping Identity and Proofpoint—public this year, according to people with knowledge of the matter. 

How these PE-backed companies perform in the public market will likely determine whether PE firms can manage to chip away at a bigger chunk of their private holdings. 

If they are looking for lessons from last year, they would lower their price expectations. Over two-thirds of 2025 tech IPOs trade below their listing price. Some investors in those small and midsize deals blame the weak performance on companies and their bankers for pricing the stocks too high.

Today on TITV

David Levy of Porch Capital speaks about Nvidia's deepening ties to CoreWeave and the future of edge inference.

New From Our Reporters

AI Infrastructure Five Takeaways From 'Data Center Davos' By Anissa Gardizy

Exclusive OpenAI Aims to Lure Businesses From Anthropic By Kevin McLaughlin and Sri Muppidi

The Big Read How Greg and Anna Brockman Became MAGA Megadonors By Jemima McEvoy, Stephanie Palazzolo and Sylvia Varnham O'Regan

Recommended Newsletter

Upcoming Events

Wednesday, January 28 — Inside Davos With Jessica Lessin: What Global Leaders Are Focused on Now

Join The Information Founder and Editor-in-Chief Jessica Lessin for a subscriber-only live session drawing on her reporting from the World Economic Forum in Davos.

More details

Tuesday, March 3 – Wednesday, March 4 — Off the Racquet: An Exclusive Retreat at Indian Wells

Join The Information for an intimate, two-day experience at Indian Wells, where tech leaders, investors, and innovators come together around a shared love of tennis. Request an invite today.

More details