Why Canadian Pension Funds Are Shifting Private Equity Strategy Toward Partnerships & Co-Investments

In recent disclosures and reporting through late 2025, Canada’s leading pension funds—known as the “Maple Eight”—are moving away from the longstanding model of predominantly direct private equity investments. This shift reflects concerns over elevated deal risk, difficult exit conditions, higher operational burden, and competition for talent. Alongside these pressures, co-investment and external fund partnerships are seen as lower cost and lower risk means to retain exposure to the asset class.

The Caisse de dépôt et placement du Québec (CDPQ) is among the most explicit in its change plan, aiming over a five-year horizon to reduce the share of its private equity portfolio that is direct—from about 75% down to 65%—while increasing allocations via buyout funds and co-investments. OMERS has also made pronounced adjustments: it has shut its European direct investment practice and is shifting to work more through external fund managers outside core geographies. [3][4]

CPP Investments, with total assets surpassing C$700 billion, has around 23%–24% of its portfolio in private equity. In the year ended March 2025 it committed over C$5 billion into private equity, mostly through co-investments and external fund mandates, rather than direct acquisition. Its private equity allocation has dragged performance vs. listed equities in recent years, prompting closer attention. [1][6][10]

This revamp—covering exposures amounting to multiple hundreds of billions of Canadian dollars—has strategic consequences. First, it creates space for third-party private equity funds and general partners (GPs) to capture more allocation, especially for established buyout firms able to provide co-investment access. Second, it aligns institutional investors with concerns over risk concentration, sectoral exposure, and geopolitical risk (e.g. rising scrutiny over U.S., Europe, Asia investments). Third, domestic political pressures are rising: federal regulatory changes are proposed to remove caps on domestic investment by pensions, and business groups are urging more “Buy Canada” deployment of pension capital. [5][7][11]

Open questions include: (a) how performance will compare over the mid-term under this strategy: will shifting toward partnerships offset the operational losses from giving up control? (b) what structural arrangements will GPs demand in co-investments (governance, fees, liquidity)? (c) how much more Canadian exposure will Maple Eight funds accept without compromising risk-return profiles, especially amid pressure and proposed regulatory changes? (d) what impact this has on the PE ecosystem, including smaller funds and talent markets?