2025 Guide

Private Equity Investing for Canadians 2025

Private equity has historically outperformed public markets over long time horizons. Here's how Canadians can access it.

What Is Private Equity?

Private equity (PE) refers to investments in companies that are not publicly listed on stock exchanges. PE firms raise capital from investors, acquire private companies or take public companies private, improve operations, and sell them years later at a profit. The investment horizon is typically 5–10 years.

Historically, private equity has delivered higher returns than public equity over long periods — the Cambridge Associates Private Equity Index has outperformed the S&P 500 over most 10-year periods. The trade-off is illiquidity, higher minimums, and complexity.

How Canadians Can Access Private Equity

1. Direct PE Funds (Accredited Investors Only)

Traditional private equity funds are available only to accredited investors — individuals with $1M+ in financial assets (excluding primary residence) or $200K+ annual income. Minimum investments are typically $250,000–$1M+. These are offered by Canadian PE firms like Onex Corporation, OMERS Private Equity, and international firms like KKR, Blackstone, and Apollo.

2. PE-Focused Public Companies

The simplest way for retail Canadians to access private equity is through publicly listed companies that invest in private businesses:

3. Business Development Companies (BDCs) — US Access

US-listed Business Development Companies (BDCs) provide private credit and equity to mid-market companies. Canadian investors can buy BDC shares through US brokerage accounts. Examples: Ares Capital (ARCC), Blue Owl Capital (OBDC). Note: US withholding tax applies to BDC dividends.

4. Private Markets ETFs

A newer category of ETFs provides exposure to private markets through listed vehicles:

Accredited Investor Thresholds in Canada

CriteriaThreshold
Net financial assets (individual)$1,000,000+
Net assets (individual)$5,000,000+
Annual income (individual)$200,000+ (last 2 years)
Annual income (with spouse)$300,000+ (last 2 years)
Illiquidity Risk: Private equity is illiquid. Capital can be locked up for 7–10 years. Unlike stocks, you cannot sell your PE fund interests on a whim. Ensure any PE investment represents capital you genuinely do not need for a decade.

Tax Treatment of Private Equity in Canada

Returns from PE investments are typically treated as capital gains (50% inclusion) when investments are sold. Income distributions from PE funds may include dividends, interest, or return of capital — each taxed differently. LP partnership interests generate T5013 slips which require professional tax preparation. PE investments inside a corporate structure have different tax implications than personal investments.

CPP and PE: Canada's largest institutional investors — CPP Investments, OMERS, Ontario Teachers' Pension Plan — have all significantly increased PE allocations over the past two decades, driving outperformance versus traditional 60/40 portfolios. Individual Canadians can replicate this indirectly through Brookfield or Onex shares.

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Bottom Line

Direct PE fund access requires accredited investor status and high minimums, but retail Canadians can gain PE-like exposure through listed vehicles like Onex, Brookfield Asset Management, and PE ETFs. The liquidity trade-off is real — only allocate to PE what you can lock away for years. For most Canadians, the indirect route through TSX-listed PE companies is the most practical starting point.