Canada’s $421 billion state pension fund has shifted its attention toward public equities from private deals after a sell-off in the first half boosted valuations, according to its top executive.

Canada Pension Plan Investment Board is one of the world’s largest institutional investors in private equity, with more than $100 billion invested directly in private companies and through funds. But in recent months, “we’ve been active in the public equity space, even in places like infrastructure and real estate,” CEO John Graham said in an interview. “We’ve been doing more public than private because we just see more value right now.”

Global equity markets have been battered this year as rampant inflation, rising interest rates and high energy prices create a climate of uncertainty for the economy. BlackRock’s Larry Fink said this is the most challenging environment for investors in decades, though others see it in less dramatic terms, such as Pacific Investment Management Co.’s Anthony Crescenzi, who likened it to a “light rain” rather than a hurricane.

In private equity, deal-making slowed toward the end of the first half, thanks to choppy credit markets and a decision by some banks to pull back on lending for large transactions. The changing economic tides haven’t been fully reflected in the valuation of private firms and, until they are, transaction activity is likely to remain slow, Mr. Graham said.

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