Onex is seeking $1.5 billion for a fifth offering earmarked for mid-market and small-cap investing.
ONCAP V’s target was disclosed in the firm’s year-end earnings call. The vehicle was launched in December, raising an initial $360 million, including a $250 million commitment from Onex, president Bobby Le Blanc said.
Onex anticipates ONCAP V will hold a second close “next quarter,” Le Blanc said. “While LPs are generally taking more time to confirm commitments,” he added, the fund is seeing “strong client engagement” and is expected to reach its target later this year.
Onex created the mid-market platform in 1999 and, a year later, hired Michael Lay, the former head of private equity at Ontario Teachers’ Pension Plan, as managing partner. A debut fund was wrapped up shortly thereafter.
ONCAP focuses on making control or minority investments, typically ranging from $20 million to $250 million, in North American businesses with EBITDA of $5 million to $50 million and values of $50 million to $500 million. Target companies operate in three verticals: consumer, industrials and services.
As such, the strategy acts as a complement to the flagship platform, Onex Partners, which emphasizes mid-market and large-cap investing.
Onex closed ONCAP IV in 2016 at $1.1 billion. The fund has so far made 12 investments, among them Ideal Dental Management Partners, a specialty dental service organization, and Merrithew International, a maker of Pilates equipment, accessories and content, both announced last year.
Confidence about ONCAP V achieving a final close in 2023 owes to the platform’s “formidable track record,” Le Blanc said. As of December, ONCAP IV was earning a 23 percent gross IRR and a 15 percent net IRR, while ONCAP III was earning a 25 percent gross IRR and an 18 percent net IRR.
Lay oversees an ONCAP team of 30-plus professionals based in Toronto and New York. They include senior managing director Ryan Mashinter and managing directors Aly Hadibhai, Wole James, Edmund Kim, Stephen Marshall and Adam Shantz.
Onex is also in the market with Onex Partners VI, which secured an initial $2 billion in last year’s final months. The vehicle is expected to continue raising capital over 2023 and to “likely go into the beginning of calendar year 24,” Le Blanc said.
Because LPs have been, and in some cases remain, overallocated to private equity, “it’s taking longer to get commitments in this market,” he said.
The firm has not disclosed the flagship’s target. Last September, Unquote reported the goal to be about $8 billion, citing senior managing director Nigel Wright as the source.
Onex was established in 1984 by Gerry Schwartz. Last year, Schwartz said he would step down as CEO following the 2023 annual general meeting, retaining the roles of founder and chairman. His proposed replacement is Le Blanc, who joined in 1999 from Berkshire Hathaway.