Navigating Shifting Investment Tides
A New Direction for Canadian Pension Funds
Caitlin Gubbels, who leads private equity for the Canadian Pension Plan Investment Board, is spearheading a significant shift in investment strategy. The board is redirecting capital from direct buyouts toward collaborations with external managers and joint investment ventures, as reported by Pension Pulse. This move signals a cautious yet adaptive approach in response to recent market complexities.
Evaluating Past Investment Behaviors
Gubbels highlighted a discernible 'lack of discipline' in deal-making during 2020 and 2021. The subsequent surge in interest rates significantly eroded business valuations, complicating capital allocation efforts. Consequently, private equity portfolios have largely remained stagnant over the past five years, prompting a reevaluation of traditional strategies.
Market Volatility and Emerging Opportunities
Last year saw additional market pressure from increased tariffs. However, the burgeoning popularity of artificial intelligence tools has introduced fresh avenues for growth. Simultaneously, private markets have attracted considerable interest from individual investors seeking alternative investment opportunities, further diversifying the financial landscape.
Uncertainty in the Investment Climate
Reflecting on recent market experiences, Gubbels remarked, "Nothing is certain anymore." She elaborated that the private equity market has become increasingly complex for investors, necessitating adaptable strategies to navigate its intricacies effectively.
Strategic Adjustments Across Major Funds
Following this trend, the Ontario Municipal Employees Retirement System (OMERS) ceased direct private equity investments in Europe in 2024. Instead, OMERS now prefers to invest alongside established partners and third-party managers. Similarly, in April 2025, Pension Pulse documented that Caisse de dépôt et placement du Québec (CDPQ) reduced its stakes in private companies, while the Ontario Teachers' Pension Plan explored expanding its strategic partnerships.
The Role of Private Equity in Public Pensions
According to global think tank New Financial, 22% of public pension fund assets are allocated to private equity. As of September 30, 2025, approximately one-fifth of CPPIB's substantial C$777.5 billion (roughly $559.3 billion USD) in assets was invested in private equity. This portfolio achieved an 8.7% return in the last fiscal year and an impressive five-year average annual return of 14.7%.
Optimizing Fund Performance Through Integration
To enhance overall fund performance, the pension board has transferred some of its private holdings into The Integrated Strategies Group (ISG). CPPIB's website explains that ISG improves the fund's capabilities by enabling investments and management beyond traditional investment departmental strategies. The board is also increasingly exploring passive co-investment opportunities.
Key Holdings of the Integrated Strategies Group
The ISG portfolio includes significant stakes in two reinsurance companies, Ascot and Wilton Re, alongside a substantial minority holding in Bunge, a prominent agribusiness solutions provider.
New Commitments to Canadian Market Growth
In a related development, CPPIB recently announced a further commitment of C$750 million (approximately $539.9 million USD) to its Canadian mid-market program. This program, managed by Northleaf Capital Partners, a global private markets investment firm, will focus on small and mid-market Canadian buyout funds, secondary investments, and direct co-investments within the domestic market.
Reinforcing Long-Term Partnerships
Bruce Hogg, CPPIB's managing director and head of integrated strategies, affirmed the strong potential in the Canadian market. He emphasized that the two-decade-long partnership with Northleaf has provided an effective and scalable platform for investing patient, long-term capital into homegrown Canadian businesses. Additionally, CPPIB and Northleaf have completed a global secondary expansion, with CPPIB investing approximately C$160 million (about $115.2 million USD) to diversify its exposure across Northleaf's global private equity program.