Onex targets $6.5bn for Fund V

The Toronto-based firm will contribute nearly a third of the capital, making it the largest investor in the fund.

Onex Corporation has launched fundraising for its latest private equity fund, the Toronto-based asset management firm said during its first-quarter earnings conference call on Friday.

The firm began fundraising for Onex Partners V during the first quarter, targeting a fund size of $6.5 billion, up 14 percent from the predecessor vehicle, Onex Partners IV, which closed on $5.7 billion in 2014.

Onex plans to increase its GP commitment to the fund as well. It plans to commit $2 billion for OP V, up from $1.7 billion for OP IV, making Onex the largest limited partner in the fund.

OP III closed on $4.7 billion in 2009, which included $1.2 billion in GP commitment. That fund recognised an internal rate of return of 13.12 percent and a 1.55x multiple as of 30 September, according to data from Teachers' Retirement System of the City of New York. It's not clear whether the IRR is net or gross.

Onex also made strides in credit this past quarter, closing its first European collateralised loan obligation on €361 million and launching a direct lending fund, which is currently in market. Executives on the call did not provide additional details about the new vehicle.  Onex's credit platform now manages about $8 billion.

Onex posted a net loss of $937 million for the first quarter, down from a loss of $175 million in the same period a year ago. The firm attributed it to two accounting charges. One is a $519 million LPs' interest charge, primarily reflecting the fair value increase of Onex's portfolio companies, which will ultimately be attributable to LPs. The other one is a $104 million loss from discontinued operations from a fair value increase related to USI Insurance Services.

The company noted that both of these charges are expected to reverse once the relevant companies are ultimately sold.

During the first quarter, Onex sold USI to KKR and the Caisse de dépôt et placement du Québec for $4.3 billion. Onex said it resulted in a gross multiple of capital invested of 3.4x and a gross IRR of about 34 percent. Onex' s portion of the sale proceeds will be about $563 million including carried interest of $65 million.

Onex had 67 percent of its assets in private equity and 9 percent in credit as of 31 March.