Onex Fund III hits halfway mark in $4.5bn fundraise

The publicly traded Canadian buyout firm expects to hold a final close on its third mega-fund in early 2009. CEO Gerald Schwartz has said despite having done no deals in the second quarter, Onex sees attractive opportunities and is not discouraged by credit conditions.

Canadian alternative asset manager Onex Corporation has raised more than $2.4 billion (€1.6 billion) for its third buyout fund, targeting $4.5 billion.

The firm’s private equity division, Onex Partners, expects to hold a final close in early 2009, chairman and chief executive Gerald Schwartz said. His remarks were made in a statement related to the publicly listed firm’s second quarter results.

In May, Chris Govan, an Onex managing partner, had told Canada’s National Post the firm thought it would hold Fund III’s final close in 2008.

Being placed by Credit Suisse, Fund III includes a $1 billion contribution from the private equity firm.

Gerald Schwartz

Among its limited partners are US public pensions The Massachusetts Pension Reserves Investment Management Board, which approved a $150 million commitment, and The New Mexico Public Employees Retirement Association, which agreed to commit $25 million.

Onex revealed plans to raise the fund in November 2007, as its second fund had been 75 percent committed. Fund II raised $3.5 billion in 2005, while the firm’s first fund closed on $1.7 billion in 2004.

Onex’s last mega-deal was agreed in mid-2007, when it signed up to split a $1.5 billion equity cheque with The Carlyle Group to purchase General Motors’ Allison Transmission in a $5.6 billion deal. In October, it agreed a $622 million deal for TSE-listed Husky Injection Molding Systems, which required a $225 million equity cheque.

“While there were no Onex acquisitions in the second quarter, our focus on certain industries is beginning to surface attractive opportunities,” Schwartz said. “The current credit environment is not deterring us from actively seeking those unique opportunities to acquire great businesses.”

Last year, Onex raised a $350 million credit fund; affiliated mid-market firm Oncap closed its second mid-market fund on C$574 million in 2006; and in 2005, its first real estate fund completed a $325 million fundraise.