Preqin’s Investor Intelligence online service tracks 5,711 LPs currently active in the private equity asset class, of which 160 are based in Canada. These LPs currently manage aggregate assets under management of CAD 7.8tn. The size of this capital pool, as well as Canada’s proximity to the largest and most mature private equity market in the world, the US, accounts for the country’s sizeable footprint on the private equity landscape.
The average current allocation to private equity funds by Canada-based LPs (excluding fund of funds managers) is 10% of total assets, which is close to the average for the investor population tracked by Preqin (10.3%) and below the average target allocation to private equity of Canada-based LPs (11.5%).
Public sector pension funds account for 20% of Canada-based private equity investors, while private pension funds represent 16%. Family offices make up an unusually large proportion of investors based in the country, accounting for 12% of LPs. Other LPs based in Canada include foundations (8%), asset managers (8%) and insurance companies (5%).
In terms of fund type preferences, buyout and venture capital vehicles remain the most favoured private equity routes to market for Canada-based LPs. Forty percent of LPs show a preference for, or have previously invested in, buyout vehicles, and 35% for venture capital vehicles. More than three quarters of investors (76%) have shown a preference for North America-based private equity investments, more than both Europe (54%) and Asia (38%). This regional bias is perhaps unsurprising given Canada’s proximity to the world’s largest private equity market.
A number of Canada-based institutional investors have already revealed their intentions to commit capital to private equity in the coming year. Alberta Teachers’ Retirement Fund, for example, is looking to commit $500mn across six funds in the next 12 months. The CAD 10.7bn public pension fund intends mostly to re-up with existing managers in its portfolio and typically commits between CAD 50mn and CAD 100mn per fund.