BCI's PE Group Launches Capital Solutions Group to Finance Funds
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British Columbia Investment Management Corp. created a team within its private equity unit to provide financing to buyout firms that are increasingly looking for new ways to drum up cash amid a prolonged dealmaking drought. The new Capital Solutions Group will focus on preferred equity, recapitalizations and funding continuation vehicles, according to Jon Salon, the pension fund’s head of private equity.
“We can be a capital solutions provider to our general partners in the market at a time where liquidity is scarce,” he said in an interview.
Deal activity across the buyout industry has remained subdued for years, limiting firms’ ability to return capital to investors. In response, fund managers have increasingly turned to alternative liquidity tactics, including so-called continuation vehicles that allow them to hold investments for longer while generating distributions for existing investors.
“When you think about our pipeline, somewhere between 20% and 30% is single asset continuation vehicles, which is a huge amount,” Salon said, adding that it was roughly 5% two years ago. In some cases, BCI will extend liquidity to fund managers looking to raise continuation vehicles, and in others, it will invest in those funds itself, he said, adding that BCI also invests in structured equity funds.
The pension fund is also looking to invest in preferred equity tranches that typically generate returns of 12% to 15%, Salon added.
BCI’s private equity unit, which managed C$33.6 billion ($24.3 billion) at the end of March 2025, already invests in capital solutions, which account for less than 5% of the portfolio, and is targeting an allocation of about 15% over the next several years, Salon said.
“I want BCI to be a one-stop shop for those capital needs,” he said.
Earlier today BCI issued a press release stating it is launching a Capital Solutions strategy to expand flexible investing capabilities:
NEW YORK & VICTORIA, BC – British Columbia Investment Management Corporation (BCI) today announced the launch of its Capital Solutions strategy within BCI Private Equity, a dedicated investment group focused on opportunities to generate equity-like returns that extend beyond traditional buyouts. The Capital Solutions Group (CSG) provides flexible capital across structured equity, GP solutions and strategic opportunities, with a focus on preferred equity, continuation vehicles, recapitalizations, and strategic minority stakes. This proactive approach provides additional avenues for BCI Private Equity to strengthen relationships with the more than 1,000 companies it is connected to directly and indirectly through its ecosystem of GPs, funds, and institutional relationships, particularly those seeking capital and support for strategic objectives and growth initiatives.
The launch of Capital Solutions strengthens BCI Private Equity’s position as a strategic partner to high-quality companies by expanding its ability to deliver tailored capital across the investment spectrum, addressing complex partner and business needs while unlocking underserved opportunities. Operating in collaboration with BCI Private Equity’s sector teams, the group leverages deep domain expertise, established GP relationships, and dedicated investment capabilities to originate and execute transactions that support companies’ growth, liquidity, and capital structure objectives.
“Capital Solutions directly supports our strategy of being a flexible solutions-oriented investor that can proactively adapt to changing market dynamics,” said Jon Salon, Executive Vice President and Global Head, Private Equity, BCI. “This strategy supports the continued evolution of our platform and reinforces BCI’s role as a differentiated partner for GPs and companies seeking tailored capital solutions, empowering us to provide creative investment structures unique to each opportunity.”
“The strategy expands our private equity investment toolkit, allowing us to engage more strategically and bring institutional scale and capabilities to opportunities beyond traditional buyout parameters,” said Dean Qu, Director, Capital Solutions Group, BCI Private Equity. “By leveraging flexible capital with deep sponsor relationships and sector expertise, we can deploy solutions that align interests, navigate complexity, and support companies at critical points in their growth.”
The launch responds to a changing private equity landscape marked by liquidity constraints, elevated valuations, higher cost of capital, shifting capital structures and a maturing competitive landscape, which are driving demand for differentiated capital beyond traditional buyouts. Backed by long-duration, flexible capital and a strong network of strategic partners, the Capital Solutions strategy can invest creatively and at scale in situations where other investors may be constrained. This positions BCI as a partner of choice for sponsors and management teams seeking a sophisticated, solutions-oriented capital provider. It also enables the team to continue supporting companies they have high conviction in, even as conventional fund limitations or investment horizons are reached.
Building on a series of successful capital solutions investments in the past 18 months, the strategy is now being formalized with dedicated resources to scale origination and execution. Managing these investments directly enables BCI Private Equity to broaden its investable universe and deepen relationships with sponsors and portfolio companies, reflecting BCI’s continued evolution as a solutions‑driven investor in private markets.
Alright, I read about this earlier today and found it interesting given the environment in private equity.
Before I share my thoughts, some context is in order here.
Karl Angelo Vidal of S&P Global reports muted exits push private equity continuation funds to 8-year high:
Capital raised by private equity continuation funds surged in 2025 as private equity managers sought to extend their ownership stakes in portfolio companies and provide liquidity for investors.
In 2025, global private equity continuation funds raised a total of $62.67 billion, the highest annual amount since at least 2017, according to Preqin Pro data. Through May 8, 2026, continuation funds have raised $11.86 billion across 20 vehicles.
The number of closed continuation funds also climbed to an eight-year high of 105 in 2025.
The growth of continuation fund transactions reflects several parallel issues converging on the market over the past three years, including extended asset hold periods exacerbated by ongoing muted M&A and IPO markets, record levels of unrealized value in private funds and the mounting liquidity needs of limited partners, said Tara Walsh, senior consultant for industry affairs at the Institutional Limited Partners Association, an organization representing institutional limited partners that invest in private equity.
"The market has come to accept [continuation funds] not simply as a cyclical response to liquidity pressures in recent years but as a recurring structural feature used by sponsors to deliver exits and to fundraise," Walsh said.
The exit environment has created a backlog of companies held for more than four years that are potential candidates for continuation fund transactions, said Gerald Cooper, partner and global co-head of secondaries at Campbell Lutyens & Co. Inc.
The challenging exit environment has also bifurcated continuation vehicle strategies into those used to hold genuinely high-quality assets that private equity firms believe can achieve further value creation and those that serve to delay recognizing losses on assets with structurally impaired competitive positions, said Adam Reilly, national managing partner for mergers, acquisitions and restructuring services at Deloitte & Touche LLP.
"We expect continuation fund activity to remain elevated, but the quality and credibility of the underlying thesis will matter more than ever," Reilly said.
Fairness concerns
The Institutional Limited Partners Association warned of risks related to continuation fund transactions, as these are "inherently conflicted," with general partners acting as both buyers and sellers.
"Sponsors must balance competing obligations to existing fund [limited partners] and new continuation vehicle investors. This requires a clear, well-articulated commercial rationale for pursuing a continuation vehicle in the first place," Walsh said.
Deloitte's Reilly said that general partners have introduced third-party minority investors whose pricing and underwriting standards can provide an additional market-based reference point when assessing fairness.
Per region
North America-based continuation funds secured the largest amount of capital since the start of 2025 through May 8, 2026, with $45.87 billion raised, according to Preqin Pro data. During this period, 70 funds closed.
Europe came in second, with $27.04 billion of capital raised across 41 funds, while eight Asia-based funds brought in $1.12 billion.
Clearly, there is a need to finance funds that want to set up continuation funds and as you can read above, these funds are at an eight-year high given the muted exit environment.
The only real risk is this:
The challenging exit environment has also bifurcated continuation vehicle strategies into those used to hold genuinely high-quality assets that private equity firms believe can achieve further value creation and those that serve to delay recognizing losses on assets with structurally impaired competitive positions, said Adam Reilly, national managing partner for mergers, acquisitions and restructuring services at Deloitte & Touche LLP.
But John Salon and his team at BCI know this and have to identify high-quality assets that private equity firms believe can achieve further value creation.
BCI's press release also states the following:
The launch responds to a changing private equity landscape marked by liquidity constraints, elevated valuations, higher cost of capital, shifting capital structures and a maturing competitive landscape, which are driving demand for differentiated capital beyond traditional buyouts. Backed by long-duration, flexible capital and a strong network of strategic partners, the Capital Solutions strategy can invest creatively and at scale in situations where other investors may be constrained. This positions BCI as a partner of choice for sponsors and management teams seeking a sophisticated, solutions-oriented capital provider. It also enables the team to continue supporting companies they have high conviction in, even as conventional fund limitations or investment horizons are reached.
And from the Bloomberg article above:
“When you think about our pipeline, somewhere between 20% and 30% is single asset continuation vehicles, which is a huge amount,” Salon said, adding that it was roughly 5% two years ago. In some cases, BCI will extend liquidity to fund managers looking to raise continuation vehicles, and in others, it will invest in those funds itself, he said, adding that BCI also invests in structured equity funds.
The pension fund is also looking to invest in preferred equity tranches that typically generate returns of 12% to 15%, Salon added.
Are there potential conflicts of interest? Will people accuse BCI of financing these continuation funds to put off marking down these assets?
The potential is there but the truth is if these assets need more time to realize their full value, isn't it in the best interest of members to finance these private equity sponsors?
We shall see how this all plays out and how successful this new venture is, maybe BCI can arrange an interview with John Salon or Dean Qu featured above so I can ask them a lot more questions.
Below, Miriam Gottfried, reporter at The Wall Street Journal, says continuation funds now account for about 20% of PE exits, highlighting liquidity pressures as firms struggle to sell assets bought during the 2021 boom (Dec 31, 2025).
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