If you're managing nearly $560 billion in pension assets, sometimes the smartest move is admitting when the game has changed. That's essentially what Caitlin Gubbels, Global Head of Private Equity at the Canadian Pension Plan Investment Board, is doing right now.
According to a report from Pension Pulse, Gubbels is steering the massive fund away from direct buyout strategies and instead funneling capital through external managers and co-investments. The reason? The private equity landscape has gotten messy, and it's not getting any cleaner.
Gubbels points to what she calls a "lack of discipline" during the deal frenzy of 2020 and 2021. Then came the interest rate shock, which hammered business valuations and made deploying capital feel like navigating a minefield. The result, as Gubbels puts it, is that private equity portfolios have been "treading water" for the past five years.
Throw in President Donald Trump's tariff policies from last year, and you've got a market downturn that made things even trickier. Sure, artificial intelligence has opened some new doors, and retail investors have suddenly found private markets appealing, but the overall environment remains challenging.
"If 2025 has taught us anything, it's that nothing is certain anymore," Gubbels said. For private-equity investors, "the market has been tricky and it's getting trickier," she added.
CPP isn't alone in rethinking its approach. In 2024, the Ontario Municipal Employees Retirement System (OMERS) pulled back from direct private equity investments in Europe, opting instead to work alongside partners and third-party managers. Meanwhile, in April 2025, Pension Pulse reported that Caisse de dépôt et placement du Québec (CDPQ) was scaling back its ownership positions in private companies, and the Ontario Teachers' Pension Plan was exploring more strategic partnerships.
The stakes here are enormous. Public pension funds globally allocate roughly 22 percent of their assets to private equity, according to global think-tank New Financial. For CPP specifically, that means about one-fifth of its C$777.5 billion (approximately $559.3 billion) sits in private equity as of September 30, 2025. Despite the challenges, the portfolio earned 8.7 percent last fiscal year, with a five-year average annual return of 14.7 percent.
To optimize its approach, CPP has moved some private holdings into The Integrated Strategies Group (ISG). As the board's website explains, "ISG enhances our ability to improve the Fund's performance by allowing CPP Investments to hold, manage and make investments beyond the strategies of traditional investment departments." The Pension Pulse article notes that CPP is particularly interested in taking on more passive co-investments through this structure.
ISG currently holds significant ownership stakes in two reinsurance companies, Ascot and Wilton Re, plus a substantial minority position in Bunge, an agribusiness solutions provider.
Doubling Down on a Proven Partnership
Even as CPP rethinks its overall strategy, it's betting big on relationships that have already proven successful. The fund announced today that it's committing an additional C$750 million (roughly $539.9 million) through its Canadian mid-market program managed by Northleaf Capital Partners, a global private markets investment firm.
This mandate will target small and mid-market Canadian buyout funds, secondary investments, and direct co-investments focused on the domestic market.
"There are compelling investment opportunities in the Canadian market, and our two-decade-long partnership with Northleaf has proven to be an effective and scalable way to invest in homegrown businesses with patient, long-term capital," said Bruce Hogg, CPP managing director and head of integrated strategies.
CPP and Northleaf have also completed a global secondary expansion, with CPP investing approximately C$160 million (around $115.2 million) to gain exposure to a diversified portfolio of mid-market funds and companies across Northleaf's global private equity program.
The message seems clear: when the market gets complicated, stick with what works and let experienced partners help navigate the chaos.