Onex Corp. ONEX-T is trying to strike one more deal through its flagship private equity fund this month while it hunts for chances to sell assets and return money to investors as the company works through the early stages of a turnaround plan.
Chief executive officer Bobby Le Blanc said Friday that Onex has room to make one more investment through its fifth Onex Partners private equity fund before its multiyear investing period expires later this month. In late October, Onex reached a deal to acquire specialty insurance company Accredited from R&Q Insurance Holdings Ltd., and is now looking to beat the deadline to deploy the remaining capital from its Onex Partners V fund, which made its first investments in 2018.
“We’re pretty far along on an opportunity that we hope to have done, per our [limited partner] agreement rules, by the end of this month,” Mr. Le Blanc said on a conference call after Onex released third-quarter earnings.
Onex paused fundraising for its next large private equity fund, Onex Partners VI, earlier this year, and Mr. Le Blanc signalled that it could be 12 to 18 months before it restarts. Mr. Le Blanc expects to share plans early next year for how the Onex Partners team will deploy capital over that span.
In the meantime, Onex is looking at ways to sell all or part of some assets as investors clamour for some capital to be returned to them, freeing up money to make new investments and proving Onex can deliver a good rate of return. Earlier this week, Onex and the Anschutz Entertainment Group agreed to sell venue and event management company ASM Global to sports and entertainment company Legends, with Onex reaping proceeds of US$270-million.
Mr. Le Blanc said Onex tries to keep a balance between deploying capital and returning it to its fund partners, “and I would expect you to see a few other monetizations over the coming quarter or quarters.”
Onex reported a 4-per-cent increase in the value of its private equity portfolio in the third quarter, which ended Sept. 30. The portfolio is now up 15 per cent over the past 12 months. And the value of Onex’s credit portfolio increased 6 per cent in the quarter.
Onex reported profit of US$256-million, or US$3.23 per share, compared with a US$180-million loss, or US$2.12 per share, in the same period last year.
Distributable earnings, which are a metric used to show the share of company profits that could be paid out to shareholders, were US$223-million, up 15.5 per cent year over year. Assets under management that generate fees were roughly unchanged from the second quarter at US$34.2-billion.
Onex also said it will wind down the Onex Blair Franklin Global Credit Strategy, a fund with about $1-billion of assets under management, as part of a broader exit from its private wealth business. The fund was a holdover from Onex’s ill-fated acquisition of Gluskin Sheff and Associates Inc. for $445-million in 2019.
“We no longer see a viable future for this fund,” Mr. Le Blanc said. But he added that Onex is making progress on a transition plan that will allow it to market some of the funds that were sold through Gluskin Sheff to clients of the Royal Bank of Canada’s wealth management division, which he expects will start in the new year.
Onex is continuing to cut costs after reducing its staff headcount earlier this year. And it has been aggressively buying back stock, repurchasing 2.6 million shares between July and October.