Onex Corporation has an eye on more European investments, but to rake them in it needs a new office and a leader who knows the landscape.
The company announced Monday that it will soon open a London office, after 28 years of growing the business from Toronto and New York.
In an accompanying statement, Gerry Schwartz, the company's chief executive officer, called the move a "natural progression" for the firm. This is true from two strategic angles. First, Onex plans to use its recent experience to access new markets. "Several of the companies we've acquired in the last few years, if we look at Jeld-Wen Holding Inc., Tomkins Plc, Allison Transmission, they all have a great deal of their business in Europe, so we've become quite accustomed to owning businesses that have a significant presence there," says Seth Mersky, a managing director at Onex in Toronto.
From this foundation, Mr. Mersky said thinking about buying businesses that are headquartered in Europe was a fairly easy extension. "To use a simple example, an aerospace company--whether its in Kansas or Germany--is producing for the same marketplace under the same kind of market conditions," he said.
And that's linked to the second key strategy for the new European office: to take advantage of potentially beneficial market instability in Europe. "On the opportunities side, yes, we believe that maybe within the Euro-situation there will be more opportunities here than there might otherwise be if there wasn't the pressure on the European banks," said Mr. Mersky.
For seamless integration into the London landscape, Onex looks to British national Tony Morgan who has been hired in the position of managing director at the new office. Mr. Morgan joins the firm from the Canada Pension Plan Investment Board where he was a vice president of the Principal Investing Group. Mr. Morgan was part of team that worked with Onex on the $5-billion acquisition of Tomkins, the industrial holding company, back in 2010.
"We know to Tony really well from working with him on Tomkins, and of course we know CPP really well--they're one of our most important and significant partners in the transaction work that we do," Mr. Mersky said. "It would have been very difficult to hire a stranger, so to speak."
Mr. Morgan also spent years working in London as a partner at a PE firm called Alchemy Partners, and as an investment manager for Permira.
It's still early days to be clear on exactly how fast this office will grow, but initially Mr. Mersky says Onex is looking at fairly small start. "less than ten people would be my guess," he said.