Key Takeaways

  • Northleaf Capital Partners grew from a five-person team spinning out of TD Bank in 2009 to a multi-asset manager overseeing $31 billion across private equity, private credit, and infrastructure.
  • The firm expanded its strategy footprint by co-creating bespoke investment vehicles with cornerstone institutions like CPP Investments rather than raising speculative blind pools.
  • Waugh enforces an open recruiting filter to expose operational culture early, allowing ill-fitting candidates to self-select out before hiring mistakes compound.
  • Investment pace in private markets cannot be forced against LP timelines or market conditions, anchored by the principle that missing a deal beats owning a bad asset.

Building Mandates with Anchor LPs

Most private market firms launch new asset classes backwards. They assemble a team, draft a private placement memorandum, and launch a roadshow to sell a pre-packaged strategy to institutional allocators. Northleaf took the opposite path after its 2009 spinout from TD Bank.

Instead of guessing what allocators wanted, Waugh built new strategies directly alongside large institutional partners. When expanding into adjacent private markets asset classes, the firm worked with foundational institutions like CPP Investments to structure tailored mandates. As Waugh notes, “you stay close to your investors, stay close to what they're looking for you to provide for them. And you can co-create opportunities and co-create partnerships.”

This co-creation model de-risks product expansion. The manager secures committed capital from day one, while the LP gains a customized portfolio designed around its exact risk profile and return hurdles. Rather than accumulating assets for headline growth, scaling becomes a natural response to specific client demand.

The Cost of Cultural Drift

Scaling an investment team from 5 people to more than 300 across 10 global offices introduces severe organizational friction. In mid-market private equity and infrastructure, where deal teams require tight underwriting consensus, a single misaligned partner can poison decision-making across an entire strategy.

Waugh views culture as an active operational choice rather than an abstract HR initiative. “One of my partners and co-founders always reminds us that you're going to end up with a culture. It's either going to be the culture that you want to have or the culture that you allow to happen,” Waugh explains.

To protect that standard across regional offices, Northleaf deliberately stresses its operational norms during hiring. “Part of the exercise and part of the success is putting the culture on display during the recruiting process so that people have a very clear sense of what they're getting and they can opt in or in a small number of cases opt out.” When candidates see the actual pace, governance, and debate culture upfront, the wrong candidates leave the pipeline before making bad investment decisions.

Patience Over Capital Deployment

The pressure to deploy capital accelerates as assets under management climb. Management fees generate cash flow, creating an incentive for managers to accelerate deployment cycles, raise successor funds faster, and loosen underwriting criteria.

Waugh rejects artificial deployment timelines. “You have to recognize that especially in the private markets. You build success one step at a time. And you can't push investors to a timeline that they're not on. You have to be patient and react. You can't force investment outcomes.”

To reinforce that patience among deal leads, Waugh adapts a classic line: “There's a terrific quote that was attributed to Churchill, which I've adopted for the use in the private markets. It says, 'I'd far rather go through life wanting what I don't have than having what I don't want.'” In private market underwriting, holding dry powder always beats wrestling with an unfixable balance sheet.

Why It Matters

Northleaf's trajectory signals a shift away from standard blind-pool syndication toward joint venture and managed account structures between mid-market sponsors and mega-LPs. As large pensions concentrate their manager rosters, GPs who build flexible, co-created mandates will capture disproportionate market share from rigid fund managers.