Onex Corp. is a financial company that manages and invests capital in its private equity, credit and asset management platforms. It is a leading private equity firm with $ 45 billion in assets under management. Onex makes investments on behalf of shareholders, institutional investors and wealthy clients worldwide. The reportable segments are investments and asset and asset management. Around 90% of the segment income comes from the investment segment.
Onex practices value investing with bottom-up, fundamental and structural analysis in its credit platform. The company operates through two private equity platforms – Onex Partners and ONCAP private equity funds, as well as Onex Credit and Gluskin Sheff. Onex Partners is focused on investing in small and medium-sized businesses in North America and Western Europe, while ONCAP focuses on the mid-market and smaller opportunities in North America.
Gluskin Sheff is one of Canada’s leading wealth management firms. Approximately 60% of Onex’s AUM is made up of private equity, with the remainder made up of cash and cash equivalents (28%), loans (10%), and real estate and other investments (1%). The company has offices in Toronto, New York, New Jersey, Boston and London.
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Sales growth & market presence
Over the past 36 years, Onex has built more than 105 operational businesses across a variety of industrial sectors including consumer and retail, financial services, healthcare, industrial, etc. It invests in a diversified portfolio of loans across different sectors and parts of the capital structure. She manages fund investor capital (~ $ 31 billion) on behalf of investors from around the world.
On December 31, 2020, essentially all of Onex’s shareholder capital was invested / committed in its private equity and credit platforms. These include public and private pension funds (27%), banks & insurance companies (22%), family offices (22%) and asset managers (21%). This diversification helps generate regular annual management fees and offers the opportunity to share the profits of fund investors.
Over the past five years, fee-generating capital under management has increased 16% CAGR per year. The company’s investment capital per share also rose 7% to $ 7.2 billion in the most recent quarter. Gluskin Sheff’s client capital increased 4% for the quarter, driven by higher client inflows and better investment performance. Total assets under management also increased 14%, including the acquisition of Falcon Investment Advisors last year.
Through Onex Partners, the company is targeting investment opportunities in the US, Canada and Europe. Onex also invests primarily in non-investment grade debt through ONEX Credit. The acquisition of Gluskin Sheff + Associates resulted in the creation of a comprehensive platform capable of fully meeting market demand, expanding its sales channels and increasing its fee-generating AUM.
Onex deployed more than $ 290 million and received ~ $ 70 million in sales and distributions through its private equity investment activities. The company’s operations were not affected by the pandemic, as nearly 60% of its private equity exposure was in companies that had little or no impact from the pandemic. New strategies through credit platforms and private equity investing should continue to generate strong value. Onex is focused on acquiring and building high quality companies with strong free cash flow characteristics.
The company is focused on acquiring and building high quality companies with strong free cash flow properties. Sales have increased 8% CAGR over the past five years. With 35 years of experience, Onex has developed strategic investment philosophies, talent and financial resources that have helped the company maintain a leading position in the industry.
Onex is a Canadian dividend aristocrat who has paid constant dividends every quarter for more than 30 years. Although the average annual return is low at 0.45%, the dividend growth rate has been impressive. The company last increased its quarterly dividend by 14% to $ 0.10 in 2019, and has posted impressive dividend growth of over 15% over the past decade.
The company pays quarterly dividends and also has a share buyback policy. It returned $ 29 million to shareholders through dividends and repurchases of $ 444 million in 2020 and more than $ 3.3 billion since 1997. Its financial strength is based both on its own capital and on the committed capital of its fund investors.
It has been successful in generating higher returns over the long term than the broader private equity market. The lending platform is focused on generating strong risk-adjusted returns. The company has a solid track record of 27% annual return on its private equity investments. Onex’s policy of maintaining a financially strong parent company provides funding for capital commitments and growth.
The company identifies companies with strong skills and solid free cash flow characteristics. The company has completed 680 acquisitions valued at $ 95 billion as of December 2020. Gluskin Sheff is one of the biggest growth drivers with increasing customer access and good investment performance.
Onex sees good synergies between the investment teams managing its private strategies and Gluskin Sheff’s public strategies. The company owns large global funds operating across multiple asset classes and offers the best in class investor service. In addition, Real Assets offer an attractive solution for institutional and private investors. The company has nearly $ 1.4 billion in cash and equivalents on its books and has no external debt. The private equity industry is worth trillions of dollars and Onex, as a leading asset manager, should continue to benefit from this growth trend.
The company competes with other investment funds as well as with institutional and strategic investors. Brookfield Asset Management, CI Financial Corp, IGM Financial Inc, Fiera Capital Corp., Fairfax India Holdings are some of its competitors. Onex’s extensive capital gives the company an enormous competitive advantage over its competitors. In addition, any business an Onex fund invests in is also exposed to inherent risks.
As one of the oldest private equity firms, the company has earned investor trust and has grown rapidly with a disciplined investment approach and a focus on capital preservation. In total, the Onex Group returned $ 2.7 billion to investors last year. Onex has significant financial resources to support its investment strategy and is growing every year with significant investments.
She continues to invest in asset and wealth management platforms for sustainable profit growth. Given the tremendous growth potential in the form of increased capital, fee-generating assets, strong financial support, and a long dividend history, Onex should continue its dividend growth trajectory well into the future.
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