Monday Market Minute | Dec 27, 2021
A comprehensive review of 2021 — record PE deals, housing mania, Bridging Finance's collapse, inflation's return, and the end of QE.
What Moved
The year 2021 was defined by excess across every dimension of Canadian private markets. Housing prices surged 26% nationally. PE deal activity shattered records. VC investment more than doubled. Bitcoin reached $69,000 before retreating. Inflation closed the year near 5%, demolishing the transitory thesis. The BoC completed its QE taper and signalled rate hikes for early 2022. And Bridging Finance's receivership — the largest private credit failure in Canadian history — forced a reckoning with transparency, governance, and the true cost of illiquidity.
Why It Matters
For private market investors, 2021 was simultaneously a banner year for returns and a cautionary tale about what comes next. Portfolios were marked at historically elevated valuations, buoyed by cheap leverage and abundant capital. The Bridging collapse and Romspen redemption pressures demonstrated that the sector's structural risks were not merely academic. As the year closed, the critical question facing every allocator was the same: were 2021's returns sustainable, or had the year of excess set the stage for a painful normalization in 2022?
Signal to Watch
The BoC's first rate hike — now expected in March 2022 — would mark the definitive end of the pandemic-era monetary regime. How private market valuations, deal structures, and credit quality responded to rising rates would determine whether 2021 was remembered as a golden vintage or the peak of an unsustainable cycle.