Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
New AI models pose a long-term threat to enterprise software companies, according to Franklin Templeton chief executive Jenny Johnson, who joins a growing chorus of investors worried that artificial intelligence challenges the business of many tech groups.
Johnson, who runs the $1.7tn asset manager, told the FT that advances in AI threatened technology businesses, which have helped power the market rally over the past decade and have been a crucial investment for private investment groups.
“It is a legitimate concern [when] you look at the capabilities with coding with, say, a Claude and what Anthropic’s done . . . and you really have to question if enterprise software companies can thrive,” she said. Johnson added that she had spent a weekend in February “trying to figure out” how to code with Anthropic’s latest Opus 4.6 model of Claude.
Johnson said that while these businesses still made “tons of money” and were likely “oversold in the short run”, there was a “threat to their long-term business model”.
Johnson’s comments come as a sell-off ripples through the private investment industry, with shares tumbling in the buyout shops and private credit lenders that had wagered heavily on software businesses.
The slide in public markets has raised the pressure on buyout titans who had hoped to exit ageing portfolio companies this year. Some are now considering delaying asset sales that would have otherwise allowed them to earn long-awaited performance fees.
It is also threatening the giant private credit lenders who have financed those acquisitions, with top executives warning that these businesses may struggle to refinance their debts in three or four years’ time when they mature.
Johnson pointed to the decision by many private equity groups to turn to continuation vehicles — where an investment group sells a business it owns to a separate fund it manages — as a sign of the difficulty alternative asset managers were having returning money to their investors.
“It will be interesting to see whether [alternative asset managers] can maintain the same growth that they’ve had historically,” Johnson said.
“You are not hearing the institutional clients, the sovereign wealth funds and the pension funds, saying: ‘Oh, I’m going to dramatically increase my allocation of private markets.’”
Franklin, like its rivals BlackRock and T Rowe Price, has charged into private markets as investors have shifted out of legacy mutual funds and into low-fee passive funds. Over the past seven years, the company has bought the credit investment shops Benefit Street Partners, Alcentra and Apera, the secondary private equity stakes investor Lexington Partners and real estate group Clarion.
Johnson last year hired Daniel Gamba as a co-president to lead the firm’s marketing and sales efforts as Franklin’s first chief commercial officer. Gamba has been given the task of accelerating sales of Franklin’s private funds and helping turn the tide on investor redemptions from the company’s traditional funds business, which was hard hit by a scandal at its Western Asset Management fixed-income division.
The unit has suffered nearly $150bn of outflows since the US Securities and Exchange Commission in 2024 charged Western’s former co-chief investment officer with criminal fraud for allegedly cherry-picking which clients received more favourable trades.
Gamba, who had spent more than two decades at BlackRock, said one of his priorities was to improve how Franklin covered its large institutional clients to better pitch products from the company’s individual investment divisions.
“We are accelerating our public and private markets conversations with clients,” he said. “And you can see that in the last quarter, the great results that we had in terms of fundraising on privates.”
As part of his overhaul, Gamba this week restructured Franklin’s corporate sales teams, merging its unit in the Middle East and Africa with its group that manages its sales efforts in Europe, Latin America and Canada. Gamba elevated Franklin executive Matthew Harrison to lead the combined division.
He also appointed Lyenda Delp, a longtime BlackRock and Goldman Sachs executive, to a new role heading Franklin’s sales to insurers.
Gamba said he saw Delp as crucial in boosting Franklin’s business managing the general accounts of insurance companies, pools of trillions of dollars’ worth of investments that giants such as Apollo, Blackstone and KKR are also competing to manage.
Tariq Ahmad, who ran the company’s business in Asia, plans to leave Franklin. Gamba told staff that he would run the Asian division on an interim basis as Franklin searches for a new head.
