Private equity professionals flock to pension plans as fundraising woes reshape career priorities
A wave of private equity professionals is seeking refuge at Canada’s largest pension funds, drawn by the stability and predictability that have become scarce in their own sector.
As fundraising challenges and a sharp drop in carried interest payments reshape the private equity landscape, recruiters at pension plans are seeing a surge of résumés—especially from mid-market buyout groups.
“We are finding it easier to attract talent — not super easy, but much easier than three or four years ago,” said Ralph Berg, chief investment officer at the Ontario pension fund Omers.
He added that he suspects many private equity firms are having difficulty retaining staff or may be looking to manage their headcounts as well.
Berg also observed that the once red-hot mergers and acquisitions market in 2021 made it difficult for pension funds to retain staff, but the subdued dealmaking environment since has changed the equation.
“People — especially juniors — have seen that there [have] been fewer deals to work on,” he said, adding that “they fundamentally worry that they are not . . . building up their CVs.” Now, “those employers that have their own capital and don’t depend on fundraising in order to make new investments and have more sustainable [compensation] structures with a higher level of predictability now look attractive.”
British Columbia Investment Management Corporation (BCI), which manages assets for public sector pensions, has hired about 20 people from buyout firms in the past two years, a move attributed to “fundraising issues” at those groups, according to a person familiar with the matter.
BCI’s private equity team now numbers 70, as stated on its website.
BCI declined to comment.
The broader context is a prolonged downturn in private equity, set in motion by interest rate increases in 2022. Higher borrowing costs have stifled dealmaking and left firms with less cash to return to institutional backers, reducing the funds available for new buyout investments.
According to Preqin, private equity groups raised just $592bn in the 12 months to June, the lowest figure in seven years.
This tougher fundraising climate has led to lower revenue from management fees, limiting buyout firms’ ability to hire and retain talent.
Smaller firms have struggled the most, as investors have gravitated towards larger, more reliable groups.
For many private equity professionals, the appeal of pension funds lies in their independence from fundraising cycles and their more predictable compensation structures—qualities that now stand out in a volatile market.
