Ontario Teachers’ Pension Plan is reassessing its private equity strategy, moving away from full ownership of companies and focusing more on partnerships. The shift aims to mitigate risk and address the growing complexities of managing portfolio companies, Bloomberg reported.
The fund, which oversees around $266.3 billion, has historically acquired companies outright through its private equity division while co-investing alongside partners and external managers.
Moving forward, Ontario Teachers’ will increase its reliance on partnerships rather than direct ownership, CEO Jo Taylor said in an interview. With ongoing economic and geopolitical uncertainty, Taylor said working with partners helps reduce risk.
“You dial back the risk by doing it with a partner rather than doing it on your own,” he said.
Ontario Teachers’ shift comes as Canada’s largest pension funds, known as the Maple Eight, are reconsidering their investment strategies. These funds collectively manage about $2.3 trillion and have traditionally focused on long-term, direct investments, often taking full ownership of companies they back.
However, a prolonged slowdown in deal-making, high interest rates, and global trade uncertainties have prompted a reassessment of these models.
The shift away from full ownership reflects broader industry trends. In private equity, institutional investors are increasingly favouring co-investments and partnerships with external fund managers to spread risk and improve operational efficiency. This is especially relevant as high interest rates make leveraged buyouts more expensive and economic uncertainty affects valuations, Bloomberg said.
“Assets are taking more time, resources and effort to get to their full potential,” Taylor said. “Having partners who can help with that journey and actually that work is often a way of sharing the load.”
While the fund is reducing direct investments in new companies, it is still pursuing expansion through acquisitions within its existing portfolio. Insurance broker BroadStreet Partners, for example, has continued to grow by acquiring other firms.
Taylor did not rule out buying controlling stakes in companies but indicated that full ownership will be less common going forward.
Ontario Teachers’ is also restructuring its private equity leadership. Dale Burgess, the new interim executive managing director for equities, has taken on responsibility for private equity along with infrastructure and natural resources. The fund is evaluating leadership needs in private equity before making further appointments, Taylor said.
Former senior managing director Jean-Charles Douin, who led direct private equity investing from the London office, left last year and will not be replaced. Iñaki Echave, who previously co-led the private capital team for Europe, the Middle East, and Africa, now oversees the fund’s private capital efforts in that region, Bloomberg reported.
