- World’s top performing buyout fund managers
- A dozen firms added to Preqin’s league table
- New inductees also included four U.S. firms
The mid-market investment platform of Onex Corp, ONCAP was one of a dozen firms added in to a league table of the world’s top performing buyout fund managers. The table, which comprises 35 firms in total, was assembled from fund data contained in the forthcoming 2014 Preqin Private Equity Performance Monitor.
Along with ONCAP, new inductees included U.S. firms Monitor Clipper Partners, Odyssey Investment Partners, Rhône Capital and Trilantic Capital Partners. Sixty percent of the 35 fund managers are U.S.-based, with most of the rest residing in Europe and Asia. ONCAP is the lone Canadian representative on the buyout list.
Preqin determines league tables only for groups for which it has performance data—in the case of buyout investors, the information is drawn from a universe of 196 firms and 812 funds.
Eligible fund managers are active, meaning that they have raised at least three funds of a similar strategy, and have either raised a fund in the past six years or are currently raising one. Partnerships from the 2012, 2013 and 2014 vintages are excluded because they are too early in their fund lives to generate a meaningful IRR.
Preqin assigns quartile rankings to funds based on both the return multiple and IRR, taking into account the fund vintage, strategy and geographic focus. ONCAP funds scored 1.67 (the best possible score is 1.00), putting the firm in a lower middle spot among the top 35 performers.
A pair of ONCAP exits completed last year likely contributed to its obtaining alpha status. For example, after a three-year investment, ONCAP in June 2013 sold Dallas-based sporting goods manufacturer and distributor BSN Sports to Herff Jones. That transaction gave the firm a return of about 4.4x its invested capital and a gross IRR of 66 percent.
ONCAP did just as well with another Texas company, Caliber Collision Centers, which it acquired in 2008. Last November, the automotive repair services provider was sold to OMERS Private Equity, generating an investment multiple of about 7.5x and a gross IRR of 49 percent.
An upcoming realization might help keep ONCAP on Preqin’s league table. In August, peHUB reported the expected sale of ONCAP portfolio company Mister Car Wash to U.S. private equity firm Leonard Green & Partners. Sources said the Tucson, Arizona-based car wash company could fetch as much as $500 million.
If and when Mister Car Wash is sold, it will be ONCAP’s 10th liquidity event since inception.
Viewed in aggregate, ONCAP’s track record also looks impressive. Data supplied by Onex show that ONCAP’s fully realized first fund had a 43 percent gross IRR and 33 percent net IRR, while its second fund has generated a 30 percent gross IRR and a 21 percent net IRR (as of March 31).
ONCAP’s current partnership, ONCAP LP III, closed in 2011 at $800 million, is so far generating a 25 percent gross IRR and a 12 percent net IRR (as of March 31).
Based in Toronto, ONCAP is led by managing partner Michael Lay, who before joining the firm in 2000 served as senior vice president in the private equity division of Ontario Teachers’ Pension Plan. Its managing directors are Gregory Baylin, Mark Gordon, Mark MacTavish and Evan Hershberg. The firm’s portfolio currently comprises eight companies located in Canada and the United States.
Preqin also publishes league tables for most consistent performing venture capital fund managers and fund-of-funds managers.
Kirk Falconer is director of private equity research at Thomson Reuters in Ottawa.