Onex Corporation has sold a partial stake in its fourth flagship fund less than a month after acquiring a $354 million interest from one of the vehicle’s limited partners.
The Toronto-headquartered firm acquired the interest from an unnamed LP in Onex Partners IV in late September, chief financial officer Chris Govan said in a third-quarter earnings call on 10 November. Onex sold a portion of the stake to LPs for $198 million the following month, he added.
Onex reinvested $156 million of the proceeds in existing portfolio companies and allowed the firm to increase its participation in future Onex Partners IV investments to 33 percent from 29 percent, the results noted. Onex IV has $1.2 billion of uncalled capital available.
Onex IV is a $5.6 billion 2014-vintage fund which attracted commitments from California Public Employees’ Retirement System, California State Teachers’ Retirement System and Canada Pension Plan Investment Board. The vehicle had generated a 2 percent net internal rate of return as of 30 September.
Fund IV’s portfolio includes Parkdean Resorts, Jack’s Family Restaurants and US hospital solutions company Schumacher Clinical Partners, according to the results.
“This was a great opportunity for us to quickly and efficiently wrap a significant amount of capital,” Govan said. “Given that we bought a diversified portfolio made up of businesses and management teams that we know really well, we were attracted to this on a risk adjusted basis.”
Although the sale occurred after the firm’s third-quarter reporting period, Onex presented the investment on a pro forma basis as if it had occurred during that window, Govan added.
The sale comes ahead of a possible close for Onex Partners V at the end of 2017, founder and chief executive Gerry Schwartz said on the call. The firm has raised $6.7 billion so far and set a $7.15 billion hard-cap.
Founded in 1984, Onex has around $30 billion of assets under management. Its private equity portfolio grew 17 percent in value for the 12 months ended 30 September.