Onex Launches Fund IV With $4.5B Target

Onex announced Thursday that it is targeting $4.5 billion for Onex Partners IV. The Toronto-based Onex said that it will provide a commitment of $1.2 billion to the fund, making the sponsor the largest limited partner in the pool, leaving $3.3 billion to raise from others.

Known investors in Onex’s past vehicles include Alaska Permanent Fund Corp, California Public Employees’ Retirement System, California State Teachers’ Retirement System, Canada Pension Plan Investment Board, Illinois Municipal Retirement Fund, Iowa Public Employees’ Retirement System, Los Angeles County Employees Retirement Association, Massachusetts Pension Reserves Investment Management Board, Ontario Municipal Employees Retirement System, New Jersey Division of Investment, Teacher Retirement System of Texas, and Teachers’ Retirement System of the State of Illinois, according to the Thomson One private equity database.

At $4.5 billion, Fund IV would be slightly smaller than the $4.7 billion Onex Partners III, a 2008 vintage vehicle that the sponsor said is now almost 90 percent invested. Fund III is returning a 1.1x investment multiple and an IRR of 6.6 percent as of Sept. 30, 2012, according to investor Teachers Retirement System of the City of New York.

Onex made the disclosure of the new fund in conjunction with a second-quarter update for its public shareholders. It did not, however, report financial results, saying that a subsidiary, Spirit AeroSystems Holdings Inc, had not yet filed its quarterly results.

During the second quarter, Onex said, it took out $300 million as part of a $750 million distribution from Carestream Health, part of a $2.4 billion debt issue that also refinanced existing debt. Onex acquired Carestream, a provider of digital medical and dental diagnostic technology, in a 2007 carveout from Eastman Kodak Co. Onex said it has received several distributions from Carestream, collectively providing a 265 percent return on its initial investment, and it still owns its entire original equity stake in a business generating almost $200 million of free cash flow.

In June, Onex said, it completed the acquisition of Nielsen Expositions, now operating as Emerald Expositions, investing approximately $350 million of equity, of which Onex’s share was about $85 million as an LP in Onex Partners III.

Nielsen Holdings NV, best known in the United States for its TV ratings business, announced the $950 million transaction in May, saying that it wanted to free up cash for its planned push into the radio measurement business. Nielsen was bought in 2006 by a group of private equity firms including The Blackstone Group, The Carlyle Group and Kohlberg Kravis Roberts & Co. The company went public in 2011.

On the exit front, Onex said that its mid-cap private equity arm, ONCAP Management Partners, sold in June its investment in BSN Sports after a three-year hold. BSN Sports, an online and catalog retailer of sporting goods, team uniforms and the like, generated, a 4.2x return on capital invested and net proceeds of $103 million to Onex.