Written By Mia Bacic, Tamara Mitterer, Sarah Harper, James Beeby and Vanessa Trépanier

The clouds of uncertainty that rapidly formed in early 2025 continue to drift over the private equity landscape in Canada and globally. Tariffs and geopolitics are subduing deal making and investment opportunities, particularly in duty-exposed industries. Deeper and sharper due diligence means deals are taking longer to be done.

Despite a challenging environment for private equity, there are opportunities for those shrewd enough to not stay in waiting mode. In certain sectors and markets there is activity and reasons for optimism.

In this edition of Bennett Jones PE Briefing, we look at:

• the evolving secondary market
• drivers and some headwinds in clean energy
• the importance of staying current, being agile and adapting in tumultuous times
• Q2 2025 Canadian PE activity

The Evolving Secondary Market

The momentum from last year's record-breaking activity in the global secondary market has continued into 2025. There was an all-time high of US$160 billion in secondary transactions in 2024, according to Evercore. In its June 2025 private equity mid-year report, Bain & Company highlights secondaries as one of the few areas of strength for fundraising.

Growth and innovation in the secondary market is being driven by delayed exits, more expensive debt and a growing demand for general liquidity from both general partners (GPs) and limited partners (LPs). Key market trends include an acceleration of GP-led and LP-led deals, an expanding investor base with evergreen funds, strength in the credit and infrastructure segments and growth in venture capital (VC) secondaries.

Secondaries are not immune to macroeconomic uncertainty and are adapting to market forces and disruption. Looking ahead, we may see an increase in due diligence and tailored deal terms, leading to longer transaction timelines. Parties will also want to remain mindful of the potential conflicts of interest among GPs, rolling LPs, selling LPs and new investors. Volatility in public markets may also lead to valuation challenges since PE secondaries are priced based on a percentage of the reported net asset value, which is typically reported quarterly. Demand for resilient asset classes as well as tariff-resilient portfolio companies, is expected to continue in the secondary market.

A more detailed look from Bennett Jones on opportunities in PE secondaries and how the private market is responding is available in our blog, Private Equity Secondaries: Adapting to Illiquidity and Risk. 

Long-Term Drivers and Near-Term Headwinds in Clean Energy

Most of the forces shaping the clean energy sector right now are positive and promising over the long-term. But there are some new obstacles that companies and private equity investors need to consider.

The demand for clean energy remains high, driven by the electrification of transportation, manufacturing, commercial real estate and data center expansion. Bloomberg NEF says the costs for low-carbon energy are falling and global investment in the sector hit a record US$2.1 trillion in 2024.

Globally, private equity firms continue to make significant investments in clean energy. TPG called the energy transition a "generational investing opportunity" during its earnings call in May. In early June, private equity firm EQT announced that it had agreed to acquire a majority stake in biomethane producer Waga Energy in a transaction that values Waga Energy at over €534.2 million.

Preqin data shows that private equity investment in clean technology in Q1 2025 amounted to US$16.6 billion globally, up from recent quarters and due to some large deals. So far in Q2, activity in Canada, the United States and globally has declined from the first quarter.

Near-term headwinds for clean energy are primarily political with US energy and trade policy creating challenges and uncertainty. PitchBook says tariffs are affecting clean energy supply chains—by increasing costs and limiting access to key components for the energy sector, including critical minerals, which may impact on investment and valuations. However, Bloomberg reported that one of the outcomes of US tariffs could be a new wave of take-private opportunities in the clean energy sector. There may also be new investment opportunities outside of the United States.

Looking ahead, the clean energy sector is expected to continue to have momentum. However, investors should anticipate policy shifts due to the evolving and uncertain political landscape.

Progressing Through Market Uncertainty

The 13^th Annual Private Equity New York Forum, hosted by Markets Group on May 14^th, brought together senior executives from GPs and leading investors for in-depth discussions on recent trends and opportunities in PE. One crystal clear message that the Bennett Jones team noted as a participant of the event—was that for private equity actors, staying current on shifting market dynamics, being agile and adapting through uncertain market conditions will be key to remaining active in tumultuous times. Below are some of the highlights of the conference.

The search for resilience: Funds are focusing on sectors that are more resilient during geopolitical upheaval, including businesses in the services industries, IT and AI, or others focused on local operations. Discretionary consumer products companies and other consumer-facing businesses are facing greater challenges attracting investment. In all areas, due diligence processes are now significantly more comprehensive, resulting in longer deal timelines.

Continued growth of private debt: Investor interest for private debt remains strong and is projected to continue to grow. Partly due to the slowdown in deal activity, private debt is an attractive solution for sponsors looking to secure liquidity. The lower impact of volatility on private debt and the higher number of companies facing debt maturities are also contributing to the interest in private debt.

ESG remains relevant: ESG is evolving into a business consideration that needs to be part of the regular due diligence process. The approach towards ESG appears to have matured to a pragmatic one focused on robust data collection and analysis to pursue financial returns. Despite recent changes in ESG policies, it remains a relevant topic of discussion among PE actors.

Inescapable Artificial Intelligence: There was unanimity that generative AI provides a meaningful opportunity to reduce costs and improve productivity in all spheres of PE. From efficiency and innovation across the deal lifecycle to value creation and risk assessment, AI is expected to reshape private capital markets. A strategic and thoughtful approach is needed, however, to ensure that AI is providing accurate and valuable insights.

Q2 2025 Canadian PE Activity

Private equity deal activity in Canada slowed in Q2 in both aggregate value and the number of deals, according to Preqin. Activity also declined globally and in the United States.

Canadian Private Equity Deals 

Preqin data as of June 19, 2025

Software was the busiest industry in Canada with 19 transactions in the first half of this year. Business support services were next with 18 deals and insurance had 11. Financial services (9), food (7) and logistics & distribution (7) rounded out the top five.

An area that is seeing more activity is corporate carve-outs. Preqin reports that globally, private equity firms are buying non-core assets from large corporates at record levels. Data shows that nearly 500 corporate carve-outs were announced or completed in 2024. That is up dramatically from 2023, and almost five times the total in 2022.

Corporate Carve-Outs: Global

Preqin data as of June 19, 2025

S&P Global Market Intelligence also shows that carve-outs have increased globally, as corporations focus on balance sheets in an environment of shifting taxes, regulations and tariffs.

In Canada, there were 10 corporate carve-outs in 2023, 12 in 2024 and six so far in 2025, according to Preqin data.

Looking Ahead

Certainty remains a sought-after commodity in the private equity world as we wind up the first half of 2025. While activity slowed in Q2, PE firms continue to invest in industries and geographic markets that offer opportunities, and new areas may emerge as the year moves on. Staying current, agile and adaptive will be as crucial as ever, and an acceptance of the "new stable" will be required, as macroeconomic and geopolitical uncertainty persist.