Onex Corp. doubled its profit in 2021 to US$1.4-billion by cashing in private-equity investments, including insurance, technology and kitchen-gadget businesses, and has announced it is launching a new flagship fund in 2022.
Toronto-based Onex earned a 32-per-cent return on its private-equity investments last year, up from 24 per cent in 2020, and received a total of US$3.3-billion from selling businesses, along with cash distributions from its holdings. The company also invested US$3-billion and ended the year with US$1.6-billion in cash available for acquisitions.
“Onex had a good year,” said chief executive Gerry Schwartz in a conference call with analysts Friday. Mr. Schwartz took a few minutes to reflect on the fact that when the company was founded in 1984, he had to explain how private equity and leveraged buyouts work; now, they are mainstream finance businesses. “I am really proud of how we’ve stayed true to our core values,” he said.
This year Onex plans to launch a new flagship private-equity fund, its sixth over the past four decades. President Bobby Le Blanc said the company plans to have a first close on the new Onex Partners fund by the third quarter of 2022. The last flagship fund closed in 2019 and raised US$7.15-billion.
A number of rival alternative-asset managers, including Blackstone Inc., have raised US$10-billion-plus flagship funds in recent years. Mr. Schwartz said that, in his experience, the key to success in private equity “is the quality of the investments, not the size of the fund.”
In 2021, a year that saw stock markets soar, Onex sold stakes in private-equity businesses that included insurer Ryan Specialty Group LLC, data services provider Clarivate PLC and kitchen-products manufacturer Bradshaw Home, which was acquired by another private-equity fund.
Last year, Onex’s fee-generating assets increased 8 per cent to US$33-billion. Over the past decade, the company has built a private-credit investment business to complement its private-equity operations. Fee-generating assets in its credit portfolio rose 12 per cent last year to US$23-billion. Onex earned US$157-million on its credit investments in 2021, compared with US$54-million the previous year.
Onex currently owns a portfolio of 38 businesses, including Calgary-based WestJet Airlines Ltd., which it acquired in 2019, just before the pandemic hit. While Onex does not disclose specific performance for any business it owns, the company’s results show its 10 industrial holdings, including WestJet, earned a 41-per-cent gross return in 2021.
Last year, Onex spent US$249-million buying back its own shares, at an average cost of US$70.63 a share. Onex stock traded midday Friday at US$86.62, up 2.5 per cent, on the New York Stock Exchange.
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Andrew Willis