The new head of private equity in British Columbia Investment Management Corporation It’s a bet that spending habits, like continuation funds, are here to stay.
BCI’s PE unit, which oversees at least C$36 billion ($25.7 billion), announced on May 28 the launch of an independent capital solutions group.
Under the leadership of Jon Salon, this new group will finance the issuance of preferred equity and renewals, invest in sustainable vehicles and take minority stakes in companies, as part of a strategic response to the lack of long-term capital in the private markets.
“There’s this perfect storm of challenge and opportunity,” Salon told PitchBook.
Jon Salon
The capital solutions group is Salon’s first major initiative as head of PE since he was appointed in January, when he replaced Jim Pittman. Pittman led the program for ten years, growing it from C$7 billion of AUM.
“We said, what do doctors do? What does Leonard Green and Warburg and New Mountain do? [continuation vehicle] groups. Why should we be different?” Salon said.
Amidst a multi-year shortage of PE funds, many outflows have been caused by large transactions, leaving middle market players holding their assets longer and longer and leading to a growing need for funding from LPs.
The secondary market has grown significantly in response to LPs’ liquidity needs. The second transaction total reached a record $226 billion by 2025, $106 billion from transactions led by GP, according to secondary advisor Evercore.
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BCI was the lead investor in the fund’s supporting funds Painswick Capital Managementpartnership between the purchasing company AEA Investors and AEA chairman and partner John Garcia to invest in sustainable vehicles focused on middle market portfolio companies.
The pension fund manager also injects new money into the continuation funds collected by its doctors, where it can withdraw or move into a new car, as well as doctors outside its portfolio.
The PE team at BCI has seen an increase in the number of structured equity deals and single-asset continuation vehicles coming their way, Salon said. Historically, middle and large market purchases comprised approximately 90% to 95% of a pension fund manager’s pipeline. Today, 20% to 25% of that is taken up by regular and continuous vehicles.
For the year ending December 2024, BCI’s PE scheme underperformed its benchmark by 10 per cent, its latest fund performance report shows.
