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Onex Partners gets $2 bln from parent for flagship fund

  • Onex will likely be largest investor in Fund V
  • Commitments from investment-team members also seen
  • Onex Funds I-IV grossing 20 pct IRR in aggregate

Onex Corp will commit $2 billion to Onex Partners’ flagship buyout fund, which is targeting $6.5 billion, investment memos released by New Jersey State Investment Council show.

Individual members of Onex Partners V’s investment team are also expected to make personal commitments totaling at least 2 percent of the fund’s total capital, the memos say. Onex Corp is Onex Partners’s parent.

Onex Corp has consistently been the largest investor in each of the firm’s previous flagship funds, the memos say. The publicly traded firm has allocated $4.7 billion across four previous funds, the most recent of which closed on $5.15 billion in 2014.

“In aggregate, Onex is a top-performing manager,” New Jersey staff wrote in one memo. “Onex’s strength and differentiation often lies in complex transactions, where the firm frequently emerges as the preferred buyer.”

Onex, Toronto, typically invests in industrial, financial and healthcare companies. The firm acquired a U.K. operator of holiday parks, Parkdean Resorts, for $1.65 billion in March. In December, Onex purchased U.S. grocery chain Save-A-Lot for $1.37 billion.

Onex Partners’ previous fund has yet to generate meaningful returns. But its $4.7 billion third fund was netting a 13.7 percent internal rate of return and 1.73x multiple as of Dec. 31, New Jersey documents show. In aggregate, Onex Partners’ four previous buyout funds grossed 20 percent through year-end.

The firm did not respond to a request for comment.

Onex V is led by Gerry Schwartz, the firm’s chairman and CEO, along with Senior Managing Directors Robert Le Blanc, Seth Mersky and Anthony Munk.

New Jersey State Investment Council, which oversees the investments of the state’s $72.9 billion pension fund, is considering a commitment of as much as $100 million to Onex Partners V at its March 24 meeting. Should the commitment get approved, New Jersey’s actual investment in Fund V would depend on the outcome of final negotiations of fund terms.

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Onex Chairman, President and Chief Executive Gerald Schwartz speaks at the annual meeting in Toronto on May 6, 2010. Photo courtesy Reuters/Mark Blinch