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2026 Global Investment Conference: Canadian institutional investors adjusting to new private equity exit limitations

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Indeed, institutional investors are contending with shifting expected holding periods, distribution timing, portfolio liquidity modelling, the role of secondary markets and structured liquidity solutions.

Read: Institutional investors paying up to 2% in private equity management fees: report

“Sponsors are holding assets longer, driving deeper operational improvements and exiting when buyer alignment and valuation conditions justify it, [instead of] simply timing exits around end-of-fund life expirations and end-of-life schedules.”

Instead of the traditional exit paths, most exits in 2025 were through sales to strategic acquirers or sponsor-to-sponsor transactions. Exits declined to 65 transactions in 2025 compared to 117 in 2024, according to data from McCarthy Tétrault, with a total recorded exit value of $25.7 billion.

“While exit volume declined, exit value remained comparatively resilient,” said Shea. “In practical terms, this means fewer exits occurred but those exits tended to be larger and more deliberate.”

Read: Canadian private equity deal-making expected to remain healthy in 2026: expert

Under this new market reality, institutional investors are absorbing a longer during timeframe for exposure across private equity portfolios’ deferred distributions, he said, noting it’s also causing an extended net asset value dependence, as well as putting a greater emphasis on cash-flow forecasting and liquidity management.

“Exit pathways are evolving. Liquidity is increasingly private market-based and asset holding periods are being extended.”

At the beginning of 2025, said Shea, it was fair to expect the Canadian private equity market to take a hit and see a slowdown in activity due to interest rates, lingering inflation, geopolitical instability and tighter financing conditions globally.

Read: Head to head: What’s riskier right now: investments in private equity or public equity?

“In prior cycles, those factors would typically translate into a noticeable or even a sharp decline in transaction activity. Instead, deal value in 2025 finished broadly in line with 2024, which itself was one of the strongest years ever.”

Instead of capital pulling back in the face of uncertainty, Shea found it ended up repositioning itself, with investors becoming more selective about the amount of the capital and scale of the deployment. The final deal count for 2025 was 488 with a total deal value of $46 billion.

“Deal count moderated relative to prior years, but aggregate deal value held up because capital flowed disproportionately into larger, higher conviction transactions.”

Deals across leading Canadian sectors — business products and services, energy and power, infrastructure, technology, materials and resources and health care — attracted the attention of investors in 2025, he said.

Read more coverage of the 2026 Global Investment Conference.



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