Caitlin Gubbels has experience stepping into a new role during market turmoil: She began her career in investment banking at CIBC in 2007, shortly before a global financial crisis.Sammy Kogan/The Globe and Mail
It wasn’t supposed to be Caitlin Gubbels’s job to make big changes when she took charge of the $146-billion private-equity business at Canada’s largest pension fund manager. But the market for deals is changing in ways that make it impossible to stand still.
In October last year, Canada Pension Plan Investment Board promoted Ms. Gubbels to global head of private equity at a moment when that industry’s deals, and the outsized returns they were known for, had largely dried up.
A frenzied period of deal-making in 2020 and 2021 led to a “lack of discipline” on the part of some investors, she recalled in an interview. That frothy market soon collided with a quick rise in interest rates, which put pressure on company valuations and made it harder to recycle cash that was tied up in investments. As a result, the performance of private-equity portfolios has largely been “treading water” for five years.
Then, U.S. President Donald Trump’s aggressive campaign to raise tariffs plunged markets into uncertainty just as two major trends that could reshape the private equity sector picked up steam. Artificial-intelligence tools emerged that could decide which companies in investors’ portfolios are winners or losers, and retail investors gained increasing access to private markets in a development that could pour a flood of new capital into the system.
“If 2025 has taught us anything, it’s that nothing is certain any more,” Ms. Gubbels said. For private-equity investors, “the market has been tricky and it’s getting trickier.”
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Ms. Gubbels has experience stepping into a new role during market turmoil: She started her career in investment banking at Canadian Imperial Bank of Commerce in 2007, on the cusp of a global financial crisis. “Great timing, nailed the timing,” she said, dryly.
Less than four years later, eager to switch to the “buy-side” of the investing world, she joined CPPIB. Within a decade she was leading the fund-investing side of the organization’s private-equity arm.
Since becoming the unit’s global head, she has worked to sharpen the focus of CPPIB’s roster of investments and partnerships, aiming to make sure it doesn’t get caught out by a changing market, and to boost its returns back to a level that private-equity investors expect.
CPPIB’s private-equity portfolio, which makes up about one-fifth of its $777.5-billion in assets, earned an 8.7-per-cent return last fiscal year, bringing its five-year average to 14.7 per cent annually. Even that five-year performance missed CPPIB’s internal benchmark of 20 per cent, as the public stock portfolios that private equity is measured against outperformed.
From the outset, Ms. Gubbels asked her team to “look in the mirror” and question whether they were focusing CPPIB’s capital on deals and partnerships where the fund has a competitive advantage, taking a more top-down view instead of evaluating each transaction on its own terms.
CPPIB commits about half the money in its private-equity portfolio to third-party funds, and co-invests the other half in deals led by a few dozen core private-equity partners, including about 35 firms focused on buyouts in the U.S. and Europe.
“I did ask the team: Really map the market. Let’s make sure that we are in the right number of partners for our strategy,” Ms. Gubbels said.
As the private-equity market has shifted, so have the internal discussions that CPPIB convenes to assess potential deals and construct its portfolio.
For one thing, “you can’t get through an investment committee meeting without talking about AI, nor should you,” she said.
Her team is working on developing new screening tools to flag companies in sectors that are likely to be disrupted, so CPPIB can make “no-regrets decisions to pass” on some deals, she said. And they hope AI will help the fund see which of its investment partners are doing lots of deals, or who need liquidity, so they can seize investment opportunities more quickly.
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They have also taken a hard look at companies in CPPIB’s existing portfolio, especially software providers, to gauge which ones could benefit from AI and which might lose out. In the past, private-equity investors have been stung when the valuations attached to companies in certain sectors suddenly reset at lower levels, making it near impossible to sell at the prices they anticipated.
So far, however, “I don’t see distress and I don’t see friction, necessarily, from AI,” she said.
But with political tensions over trade and social-media posts that can change policy, investment committee discussions are also spending more time on “stroke-of-pen risk, regulatory risk, disruption risk,” she added.
The recent boom in the secondaries market – where investors buy and sell stakes in private-equity funds – could also challenge the dominance of big institutional funds and change the way they invest. CPPIB has been a regular participant in secondaries deals for years, long before they entered the mainstream. But new funds tailored to wealthy retail investors could ramp up competition for deals and create a more fluid market.
“I do believe institutional capital is still a very compelling proposition to the private-equity market. It is sticky, it is consistent and it has been through cycle,” Ms. Gubbels said. “And we have yet to see how retail performs through cycle.”
For now, the private-equity market is “still digesting that peak” from five years ago, she said.
“I don’t think there’s a silver bullet to the 2020, 2021 vintages,” she added. “It’s just going to take a long time to work through.”
As that happens, Ms. Gubbels expects private equity will bounce back and is confident that new investments made today will pay off. “I would say I’m actually quite optimistic,” she said.