The new head of private equity at British Columbia Investment Management Corporation is betting that liquidity maneuvers, such as continuation funds, are here to stay.
BCI’s PE unit, which oversaw C$33.6 billion ($24 billion) as of the end of March 2025, announced on May 28 the launch of a private capital solutions group.
Under the leadership of Jon Salon, the new group will fund preferred equity issuance and recapitalizations, invest in continuation vehicles and take minority stakes in companies, as part of a strategic response to the prolonged liquidity shortage in private markets.
“There’s this perfect storm of challenges and opportunity,” Salon told PitchBook.
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Jon Salon
The capital solutions group is Salon’s first major initiative as PE head since his appointment in January, when he replaced Jim Pittman. Pittman led the program for a decade, growing it from C$7 billion to C$33.6 billion.
“We said, what are the GPs doing? What is Leonard Green doing and Warburg and New Mountain? They’re setting up captive structured equity groups and structured [continuation vehicle] groups. Why should we be any different?” Salon said.
Amid PE’s multiyear liquidity crunch, most exits have been driven by large transactions, leaving middle-market players holding onto their assets for longer and longer and leading to a growing need for liquidity from LPs.
The secondary market has grown exponentially in response to LPs’ liquidity demands. Total secondary transaction volume reached a record $226 billion in 2025, $106 billion of which came from GP-led transactions, according to secondary adviser Evercore.
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BCI was the anchor investor in the debut secondaries fund of Painswick Capital Management, a partnership between buyout firm AEA Investors and AEA partner John Garcia to invest in continuation vehicles centered on middle-market portfolio companies.
The pension fund manager also puts new money into continuation funds raised by its own GPs, where it can cash out or roll into the new vehicle, along with GPs outside its portfolio.
The PE team at BCI has seen an increase in the number of structured equity deals and single-asset continuation vehicles in its own pipeline, Salon said. Historically, traditional middle-market and large-cap buyouts comprised about 90% to 95% of the pension fund manager’s pipeline. Today, 20% to 25% of that has been taken over by structured equity and continuation vehicles.
For the one-year period ending in December 2024, BCI’s PE program underperformed its custom benchmark by 10 percentage points, its most recent fund performance report shows.
The total pension plan returned 10% for the period, missing its 12.3% benchmark.
In his fiscal year 2025 letter, CEO and CIO Gordon Fyfe attributed the underperformance to a steep benchmark driven up by strong public equity returns from the Magnificent Seven technology stocks.
PE benchmarks compare returns to comparable public companies.
This was true across the “Maple 8,” Canada’s largest pension funds, most of which underperformed their PE benchmarks for the fiscal year.
Still, the operating cash flow of BCI’s private equity program was in the green for the period, suggesting it is returning capital from somewhere—either through fund distributions or secondary sales. This means BCI brought in more cash from the program than it deployed last year.
This article originally appeared on PitchBook News