Onex Said to Seek $4.5 Billion for Large-Cap Buyout Fund

Onex Corp., Canada’s biggest buyout firm, is seeking $4.5 billion for its next fund that will make large-capitalization investments in North America, three people with knowledge of the matter said.

The firm is targeting almost the same size for Onex Partners IV LP as it got for the predecessor vehicle, which ultimately raised $4.7 billion. The third fund initially closed on $4 billion in 2009 with a $500 million commitment from Onex, which the firm later boosted to $1.2 billion.

Onex, based in Toronto, is vying with other private-equity firms for capital in a competitive fundraising market in which investors are becoming more selective. About 1,958 private-equity funds are seeking a total of $770 billion, according to London-based research provider Preqin Ltd.

Emma Thompson, a vice president in investor relations at Onex, declined to comment on fundraising plans.

The firm’s fourth fund will typically make equity investments of $125 million to $750 million, according to one of the people, who asked not to be identified because the information isn’t public.

Onex, which also has offices in New York and London, manages two private-equity units: the large-cap Onex Partners funds and the Oncap funds focusing on small to mid-market companies. The firm participates in carve-outs of subsidiaries and supply divisions from multinational corporations, operational restructurings and the consolidation of businesses, according to its website.

Nielsen, RSI

In May, Onex Partners agreed to purchase Nielsen Expositions, an operator of business-to-business tradeshows in the U.S., from its parent, an affiliate of Nielsen Holdings NV, for $950 million. In February, it sold a 50 percent stake in RSI Home Products Inc., a manufacturer of bath cabinetry for homes, which produced a 1.5 times multiple of invested capital.

Onex Partners III LP was generating 1.1 times invested capital and a 4 percent net internal rate of return as of March 31, according to Onex’s website. The firm’s second fund, which invested from 2006 to 2008, was producing a 1.7 multiple and 13 percent net IRR as of the same date.

Chief Executive Officer Gerald Schwartz founded Onex in 1984. About 15 years later, the firm raised its first fund, Oncap LP, followed by its first Onex Partners fund in 2003.

Onex manages $5.1 billion in proprietary capital mostly through Onex Partners and Oncap. It also manages $10.8 billion of invested and committed capital for investors and partners, 79 percent through its private-equity businesses and the rest via Onex Credit Partners, according to the firm’s website.

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