CPPIB’s John Graham says pension fund ‘open for business’ to invest in defence sector

The important second-order effect is not simply “more domestic capital,” but a marginally lower cost of capital for illiquid Canadian assets that have been structurally underfunded by public-market investors. If large pensions become consistent buyers of domestic infrastructure, defense-adjacent assets, and energy transition infrastructure, the valuation rerating will likely show up first in private markets and only later in listed proxies through takeout optionality and tighter financing spreads. That favors incumbents with scale, permitting, or contractual cash flows, while smaller competing projects may struggle to clear because large pensions can accept lower headline yields in exchange for long-duration inflation-linked assets.

Defense is the most underappreciated catalyst because Canadian institutional participation can normalize the sector domestically, reducing the political discount that has kept local capital cautious. The beneficiaries are not just primes; the real trade is in dual-use suppliers, sensors, communications, cybersecurity, and industrials that can absorb procurement ramp without the stigma of “pure-play weapons.” A multi-year spend cycle also tends to pull through higher utilization at shipyards, aerospace maintenance, and specialty manufacturing, which can create a squeeze in labor and subcontractor capacity before revenue is fully visible.

The AI comment is a useful tell: pensions are shifting from concentrated beta to picks-and-shovels, which is bullish for power, data-center infrastructure, and grid equipment rather than mega-cap software. That suggests the best public-market expression is in regulated utilities, power equipment, and colocation names with near-term capacity expansion pipelines. The risk is that this remains a narrative until procurement and capital deployment accelerate; if Ottawa fails to streamline tax, permitting, and procurement, domestic allocation targets can stay aspirational for years and the trade will fade.