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After recording USD 290 bn in buyouts last year — the highest total in 11 years — software dealmaking has slowed down significantly this year. Activity fell to USD 50 bn in the first five months of 2026, down from USD 88 bn a year earlier and the lowest level for the period since the pandemic, the Financial Times reports.
The retreat isn’t limited to M&A: In the US’s leveraged loan market, software’s share of new issuance has fallen to just 9%, roughly half last year’s level and its lowest share since 2013, according to PitchBook.
What’s changed? Fears that AI agents could replace parts of traditional software workflows have left investors struggling to separate winners from losers in the industry. Monthly software transaction value fell from USD 24 bn in January to just USD 5 bn in May after Anthropic’s launch of new AI productivity tools rattled the sector.
That uncertainty is weighing not just on acquisitions, but also on the financing that supports them. Software's share of LBO-related issuance has also fallen, to 17.5% from 34.5% last year — another sign that lenders and sponsors are becoming more cautious about backing the sector.
The core problem is valuation: “Until an investor knows what a business may be worth post-AI adoption, it’s impossible for them to make a case to their investment committee,” Arma Partners’ Paul-Noël Guély told the salmon-colored paper.
That is leaving software as one of the market’s “have-nots,” in the words of PGIM Credit's Engin Okaya, as investors grow more selective about where they deploy capital. Healthcare, by contrast, has overtaken software as the largest source of institutional loan issuance for the first time since 2015, accounting for 14% of volume this year. Investors are showing much more confidence in sectors seen as less exposed to AI disruption, Latham & Watkins' David Walker told the newspaper.
MARKETS THIS MORNING-
Asia-Pacific markets rebounded in early trading after Iran and Israel said they would press pause on launching any further attacks against each other. South Korea’s Kospi is up 3.4%, while Japan’s Nikkei is up a more modest 0.8%. The Shanghai Composite is up as well, while the Hang Seng is in the red.
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TASI |
10,973 |
+0.4% (YTD: +4.6%) |
|
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MSCI Tadawul 30 |
1,462 |
+0.6% (YTD: +5.4%) |
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|
NomuC |
22,750 |
-1.0% (YTD: -2.3%) |
|
|
USD : SAR (SAMA) |
USD 3.75 Sell |
USD 3.75 Buy |
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Interest rates |
4.25% repo |
3.75% reverse repo |
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EGX30 |
51,883 |
-0.5% (YTD: +24.0%) |
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ADX |
9,484 |
-1.4% (YTD: -5.1%) |
|
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DFM |
5,735 |
-0.6% (YTD: -5.2%) |
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S&P 500 |
7,406 |
+0.3% (YTD: +8.2%) |
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FTSE 100 |
10,373 |
+0.1% (YTD: +4.5%) |
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Euro Stoxx 50 |
6,062 |
0.0% (YTD: +4.6%) |
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Brent crude |
USD 93.74 |
-0.5% |
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Natural gas (Nymex) |
USD 3.15 |
0.0% |
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Gold |
USD 4,361 |
-0.1% |
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BTC |
USD 63,127 |
-0.3% (YTD: -27.9%) |
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Sukuk/bond market index |
909.48 |
-0.2% (YTD: -1.1%) |
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S&P MENA Bond & Sukuk |
151.25 |
-0.2% (YTD: -0.4%) |
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VIX (Volatility Index) |
18.92 |
-12.0% (YTD: +26.6%) |
THE CLOSING BELL: TADAWUL-
The TASI rose 0.4% on Monday on turnover of SAR 5.7 bn. The index is up 4.6% YTD.
In the green: CGS (+7.8%), National Company for Learning and Education (+6.7%), and Amana Ins. (+4.3%).
In the red: Kingdom Holding (-4.3%), Aldawaa Medical Services (-4.1%), and Saico (-3.0%).
THE CLOSING BELL: NOMU-
The NomuC fell 1.0% on Monday on turnover of SAR 15.7 mn. The index is down 2.3% YTD.
In the green: Al Modawat Specialized Medical Co. (+10.1%), Quara Finance (+7.0%), and Dkhoun National Trading (+4.9%).
In the red: Al Mohafaza for Education (-10.0%), Paper Home (-10.0%), and Meyar (-8.8%).
