Private market allocations grow
Canadian institutional investors are showing increased interest in private markets, with many planning proactive allocations in key sectors. Over the next two years, 55% plan to invest in energy transition and decarbonization projects, while 51% are targeting the technological revolution. Demographic changes are another significant area, with 36% aiming to capitalize on evolving population trends.
In terms of asset allocation within private markets, the survey found that 51% of respondents plan to increase investments in private debt over the next 12 months, 46% will boost infrastructure debt, and 42% will allocate more funds to private equity. The energy transition was highlighted as a strong driver for these investments, with 51% seeing diversification benefits and 44% recognizing the potential for strong returns.
Energy transition drives investment
More than half of Canadian investors view the energy transition as a key theme in their portfolios. Diversification opportunities were the main reason cited for investing in this area, followed closely by expectations for solid investment returns and alpha generation. The energy transition encompasses various emerging technologies and infrastructure investments, with Canadian investors keen to capitalize on growth in these sectors.
“As institutions search for diversification amid a set of increasingly volatile macroeconomic conditions, it is no surprise that investor momentum for private market strategies is continuing,” said Nick Thompson, head of private asset sales for North America. “We are seeing ample opportunity across the private markets spectrum to capitalize on the major themes impacting our world today, such as technology and the energy transition, as well as deglobalization, changing demographics and a changing interest rate and inflation landscape.”
The report’s findings are based on responses gathered from pension funds, insurance companies, family offices, endowments, foundations, and other official institutions.