As the private equity industry is frequently facing defaults, Canada's top pension fund plans to sell $1.5 billion worth of Asian private equity assets.

According to sources familiar with the matter, the Canada Pension Plan Investment Board (CPPIB) is seeking to reduce its investments in Asian private equity by selling fund shares. The country's largest pension fund began earlier this year to look for advisors to help sell some of the stocks it invested in during the mid-2010s. The shares being sold have a total value of around $1.5 billion, including investments in Hillhouse Capital, Bain Capital, and PAG. CPPIB is selling some of its early Asian investment projects entrusted to these fund managers. According to CPPIB's official website, between 2014 and 2016, CPPIB invested around $1 billion in Asian investment strategies managed by Hillhouse Capital, Bain Capital, and PAG. The transactions are still ongoing, and plans could change. By the end of 2025, the pension fund's private equity investments amount to $224 billion Canadian dollars ($164 billion USD), representing more than a quarter of its $780.8 billion Canadian dollar net assets. Institutional investors are increasingly turning to so-called secondary market trading to gain liquidity and rebalance their portfolios. Sources revealed in February that another Canadian pension fund, Caisse de Depot et Placement du Quebec, is seeking to sell about $1.5 billion worth of private equity fund shares it holds. Currently, the private equity market is facing a crisis. Private equity giants are in the center of a "redemption defense battle." BlackRock has had to strictly enforce a 5% quarterly redemption limit due to a surge in requests for redemptions from its flagship fund, HLEND, mainly processing over half of the withdrawal applications. Blue Owl has taken a more aggressive deleveraging approach, raising cash by selling $1.4 billion in assets at a discount to institutions and permanently cancelling quarterly redemption options for some retail funds. While Blackstone barely maintained the appearance of "full redemption" by adding $400 million in proprietary funds and temporarily raising the redemption limit to 7%, the pressure of $3.7 billion in massive redemptions has become evident. Furthermore, JPMorgan Chase's CEO not only warned about the "cockroach effect" of private credit in public, but recently also actively lowered the valuations of software industry loans provided to private credit funds, directly reducing the funds' leverage. The "active withdrawal of credit" from the bank and the "redemption restrictions" from the fund side resonate, indicating that the private credit industry has bid farewell to the era of high leverage and high premiums, formally entering a phase of asset price correction and liquidity tightening. At the same time, PIMCO has recently issued warnings about the private credit industry. The institution pointed out the underlying structural risks of the private credit industry: its core view is that due to the significant decline in underwriting standards in the low interest environment of the past few years, the industry is inevitably entering a systemic default cycle. PIMCO harshly criticized the widespread "lagging valuation" and "false stability" in the private credit industry, pointing out that lagging net asset values (NAV) are masking severe discounts of underlying assets in the secondary market. PIMCO also warned of the structural defects of "liquidity mismatch" in semi-liquid fund products, believing that the design of promising regular redemptions in locked-in underlying assets is prone to triggering a vicious cycle of asset selling and redemption restrictions in panic, replaying a structural crisis reminiscent of 2008.