Fund leaders lean on partners and funds to manage risk, costs and complex exits
Canada’s biggest pension plans are quietly rewiring their private equity playbooks, shifting away from some of the direct buyout strategies that once defined their edge and funnelling more capital through external managers and co‑investments, Bloomberg reports.
Canada’s “Maple Eight” have built more than $400bn of private equity holdings, roughly one‑fifth of their assets, but muted deal activity and tougher exits are making it harder to justify the resources and risk that come with controlling stakes.
The backdrop has changed sharply from the era of cheap leverage, soaring valuations and easy exits that encouraged Canadian plans to build large internal buyout teams and compete head‑to‑head with global private equity firms.
According to Bloomberg, Canada Pension Plan Investment Board (CPPIB) has moved some private equity holdings into an “integrated strategies group.”
It is also considering more passive co‑investments and a higher allocation to funds, after finding that fund investments have delivered stronger returns than control stakes once fees are factored in.
The integrated group houses longer‑held businesses that do not fit cleanly into existing departmental strategies and includes two reinsurance companies and a large minority stake in Bunge Global SA.
Omers, a $141bn fund long known for direct investing, has overhauled its private equity approach by shutting its European direct‑investment arm, cutting its Asia direct buyout team effective December 31, and launching a global funds strategy.
It has completed only one direct buyout — the acquisition of IT‑services firm Integris — in the past two years, according to its website cited by Bloomberg.
Omers has also invested in Thoma Bravo’s buyout strategy and is in talks to work with several fund managers, including Warburg Pincus, Bloomberg adds.
Despite these moves, senior leaders stress that they are recalibrating, not abandoning, direct ownership.
“Direct investing continues to be core to Omers Private Equity’s strategy,” Chief Investment Officer Ralph Berg said in a statement, adding that an expanded funds program will complement that core and support diversification.
La Caisse told Bloomberg that partnerships are a long‑standing part of its model but that it remains primarily a direct investor in private equity.
Ontario Teachers’ Pension Plan told Bloomberg that direct investments account for about 75 percent of its private equity capital, with the remaining 25 percent committed to external funds.
Executive managing director of equities Dale Burgess said OTPP will keep investing directly in businesses “particularly in areas where we have a deep track record and in‑house capabilities.”
He added that it will also invest “strategically with leading general partners” that can provide performance, insights and co‑investment opportunities, according to Bloomberg.
Ontario Teachers’ has also reshaped its private equity leadership, with at least five senior managers leaving or stepping down, including unit head Romeo Leemrijse, before the fund promoted Burgess from an infrastructure‑focused role.
The operating environment is a central driver of these changes.
When central banks began raising rates in 2022, private equity returns weakened and liquidity dried up, Bloomberg notes.
Although recent US Federal Reserve cuts have raised hopes of a rebound, Apollo’s Scott Kleinman expects sales to remain slower for several years.
PricewaterhouseCoopers recently said “deal volume remains anemic,” even as some larger US‑based transactions proceed.
For Canadian pensions, that has made it harder to sell companies acquired with cheap financing at target valuations, with Bloomberg reporting that Omers’ attempt to sell US health‑care provider Premise Health Holding Corp. fell short of its pricing expectations.
Bloomberg also reports that Omers transferred ownership of UK‑based Lifeways Community Care — acquired in 2012 with an eye to scaling the business — to lenders in 2023 after the company stumbled, and wrote down its US$325m investment in Swedish battery‑maker Northvolt AB, which sought US bankruptcy protection last year.
Other plans, including La Caisse, also took losses on Northvolt.
Even so, there are signs of activity.
According to Bloomberg, CBI Health, a long‑standing Omers portfolio company, agreed this month to sell its home‑care unit to Extendicare Inc.
Ontario Teachers’ has announced deals to sell stakes in at least three companies since the start of the year and in July agreed to buy a Spanish dental clinic chain.
Earlier this month, CPPIB committed US$600m alongside General Atlantic to invest in Boats Group, with both investors retaining control of the company.
Industry advisers frame the strategic shift as an adaptation to a more demanding market rather than a retreat from private equity.
“Private equity investing is resource intensive and very, very complex,” said David Scopelliti, global head of private equity and private credit at Mercer, who added that partnering can help funds “access more deal flow, and really leverage the deeper relationships and networks, maybe even some specialized expertise,” according to Bloomberg.
Sunaina Sinha Haldea, global head of private capital advisory at Raymond James Financial Inc., described private equity as “a very core and strategic asset class” for Canadian pensions and said they are willing to adjust as markets evolve.
Former University of Toronto Asset Management chair Ira Gluskin told Bloomberg that funds can no longer repeat the same playbook every year and expect success in “this very competitive environment.”
He characterized the change in approach as a rational response to a new investing landscape: their previous model was built for a different era, and “the game has changed.”
