Pascal Tremblay, president and CEO of Novacap, at the company office in Brossard, Que.Andrej Ivanov/The Globe and Mail
Pascal Tremblay is ready to capitalize on climbing defence-related spending and a deflating tech stock rally.
Novacap, the Montreal-based private equity investment firm where Mr. Tremblay is chief executive officer, said Wednesday it has raised nearly US$3.8-billion for its latest technology fund. The new fund represents the largest fundraising effort Novacap has completed since being founded in 1981 and was more than US$1-billion above the company’s US$2.75-billion target.
The S&P/TSX Capped Information Technology Index has fallen by more than 20 per cent since the start of 2026, which analysts attribute to AI starting to lose its lustre among investors. At the same time, experts predict Canada’s new defence industrial strategy will jump-start private investment in security-related businesses.
Those two developments are happening at an ideal time for Novacap to start deploying what will be the seventh iteration of its technology fund, Mr. Tremblay said in an interview.
“Raising this fund at the moment where we are right now is a very strong positive for us given all the opportunities that will be created,” he said. “The fact that our country finally wants to invest in defence is going to be a very big opportunity for this fund.”
AI is “a massive opportunity” that will prove to be “as big as when the internet first came in,” he said, adding that many companies have seen their valuations decline as part of the broader sell-off and not for more fundamental reasons.
That has made tech-sector valuations over all much more attractive to longer-term private equity investment than they have been in years.
“There are companies that are so strong, when you think of mission-critical, deeply embedded platforms that sit in complex workflows, AI cannot bring them down,” Mr. Tremblay said. “When their founders might want to sit down and say it is time to secure some capital and find a partner, because they don’t want to live through these ups and downs alone, we can be a strong partner.”
The new fund represents the largest fundraising effort Novacap has completed since being founded in 1981 and was more than US$1-billion above the company’s US$2.75-billion target.Andrej Ivanov/The Globe and Mail
Roughly 40 per cent of the money raised for the new fund came from investors who are new to Novacap and contributions arrived from 26 different countries, Mr. Tremblay said. Most of the international investments – about one-third of the total fund or nearly US$1.3-billion – came from the United States.
Many of the fund’s American investors had questions about the tariff situation, Mr. Tremblay said, but he stressed the precarious state of Canada-U.S. relations over all was not a factor for the investors. The borderless nature of the global technology industry has allowed merger and acquisition activity in the sector to be largely insulated from Donald Trump’s continuing trade war.
Novacap agreed to pay US$1.9-billion to take New York-based Integral Ad Science private in September, 2025, as the final investment in its last technology fund. That fund put money into nine companies in total, Mr. Tremblay said, with the new fund expected to follow a similar cadence.
“If we do 12 companies in this fund, I will have invested US$3.2-billion with a little wiggle room to invest a bit more,” he said. “To be boring, the definition of success is three deals a year for four years.”
Novacap has invested in more than 250 companies since its inception. Some of them have straddled the line between technology and defence, with perhaps the best and most recent example being Eddyfi Technologies Inc.
Quebec City-based Eddyfi, which was sold to American welding equipment maker ESAB Corp. for roughly $2-billion in cash earlier this month, specializes in what is known as non-destructive testing (NDT) instrumentation and operates in more than a dozen countries. NDT uses both software and hardware to monitor critical infrastructure such as pipelines, power plants, railways and aerospace equipment.
While he declined to say how much of the new fund would be invested in other Canadian companies, Mr. Tremblay cited Novacap’s backing of Eddyfi as an example of what his company can do for domestic businesses.
“When we are done with it, like with Eddyfi, it is a global company,” he said. “We have invested in Europe for them, in the U.S. for them, in Asia, but Canada is our home.”
“The way I tell it to investors is Canada is our fortress and we are at par in any other North American market,” Mr. Tremblay said.