Onex Corp.’s credit investment group aims to triple assets under management to $10 billion by the end of 2017, from $3.3 billion in 2013.
Onex Credit Partners LLC is planning a European collateralized loan obligation platform by the end of 2014 and will continue to expand its CLO business in the U.S., Onex Credit Partners CEO Michael Gelblat said at an investor presentation today. The company said in 2012 it was targeting $5 billion by the end of 2017.
Onex Credit Partners will leverage the success of its U.S. CLOs, which raised $1 billion in the largest U.S. CLO this year, the Toronto-based company said. Onex, Canada’s biggest buyout firm, estimates credit assets under management for 2014 of $4.7 billion.
“AUM growth means that credit is continuing to become a larger and larger part of Onex,” Gelblat said. “This trend is expected to continue despite the growth of our private equity business.”
Onex rose 0.5 percent to C$67.63 at 4:35 p.m. in Toronto and have gained 18 percent this year compared with an 8 percent advance for the benchmark Standard & Poors/TSX Composite Index.
Gelblat didn’t disclose the size of the CLO platform in Europe, but said he expected it to be smaller than in the U.S., which has a larger loan market. As a result, the U.S. CLO platform will probably be about three times the size of the European one when realized, Gelblat said.
CLOs pool high-yield corporate loans and slice them into securities of varying risk and return, typically from AAA ratings down to BB. The lowest portion, known as the equity tranche, offers the highest potential returns and the greatest risk because investors are the first to see their interest payouts reduced when loans backing the CLO default.