Monday Market Minute | Jan 6, 2020
Private markets enter 2020 with record capital reserves and strong institutional demand across Canadian alternative asset classes.
What Moved
Canadian private equity and private credit funds entered 2020 with unprecedented levels of committed but undeployed capital. CVCA data confirmed that Canadian PE dry powder exceeded $20 billion heading into the new year, while private credit managers reported robust pipelines fuelled by tightening bank lending standards. Institutional allocators across the country signalled plans to increase alternatives exposure, with several major pension funds targeting 50%+ allocation to private markets.
Why It Matters
Record dry powder creates both opportunity and risk for private market investors. Deployment pressure can lead to compressed returns and looser underwriting standards — dynamics that sophisticated allocators needed to monitor closely. For Canadian HNW investors, the institutional shift toward alternatives validated the asset class but also meant increased competition for quality deal flow.
Signal to Watch
Watch mid-market deal multiples through Q1. If purchase price multiples expanded further from 2019 levels, it would signal that deployment pressure was outpacing deal supply — a classic late-cycle indicator.