Firms & Funds

Oncap sees strong demand for fourth mid-market fund

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OMERS Private Equity, Lisa Melchior, Don Morrison, private equity, venture capital
The moon rises over the Toronto city skyline as seen from Milton, Ontario, on Jan. 23, 2016. Photo courtesy Reuters/Mark Blinch
  • Fund IV targets at least $1 bln
  • Likely to be oversubscribed
  • Parent company Onex contributes big chunk of total

The fourth middle-market fund from Canada’s Oncap is in high demand and will likely be oversubscribed, according to a limited partner who has heard the pitch.

The LP said the fund has a billion-dollar target, but it isn’t clear if that figure is in Canadian or U.S. dollars.

Space in Oncap IV is limited because Oncap’s parent, Onex Corp, commits a big chunk of the fund, the LP said. “They might have a one-and-done [close] by the end of October,” the LP said.

Emma Thompson, a spokeswoman for Onex, declined to comment.

Oncap III in 2011 closed on C$800 million ($609 million at the current exchange rate). As of March, Fund III generated an internal rate of return of 30 percent and a net return of 20 percent, Buyouts previously reported, citing Onex’s first-quarter report. The fund produced a gross multiple of 2.1x invested capital and a net multiple of 1.6x as of the same date, the report said.

Onex, which is expected to launch its fifth flagship fund early next year, kicked in C$252 million for Fund III, or about 31 percent of total capital committed. It’s not clear how much Onex plans to commit to Fund IV.

Led by Managing Partner Michael Lay, Oncap has been Onex’s middle-market investing platform since 1999. The firm makes minority or control equity investments of C$50 million to C$100 million in companies in which it partners with management.

Action Item: Reach Oncap Managing Partner Michael Lay at mlay@oncap.com

The moon rises over the Toronto city skyline as seen from Milton, Ontario, on Jan. 23, 2016. Photo courtesy Reuters/Mark Blinch