ONEX Corporation’s Earnings Call Highlights Positive Momentum

ONEX Corporation ((TSE:ONEX)) has held its Q1 earnings call. Read on for the main highlights of the call.

The latest earnings call for ONEX Corporation painted a largely positive picture, underscored by notable achievements in fundraising and a profitable transaction involving WestJet. Despite the challenges posed by a slowdown in M&A activity and market volatility due to global trade concerns, the overall sentiment was optimistic, with the highlights outweighing the lowlights.

Successful Fundraising Achievements

ONEX Corporation reported impressive fundraising results, with Onex Partners closing its Opportunities Fund at $1.2 billion in commitments, surpassing its initial target. Additionally, ONCAP V achieved a successful final closing with $1.3 billion in commitments, marking a 54% increase in third-party capital. These achievements underscore the company’s strong position in attracting investor capital.

WestJet Transaction

In a strategic move, Onex announced the sale of 25% of its equity investment in WestJet to Delta, Korean Air, and Air France KLM. This transaction was executed at more than a 25% premium to the current NAV, allowing Onex to fully realize the original cost, showcasing the company’s ability to capitalize on its investments.

Growth in Fee-Generating Assets Under Management (AUM)

The Credit team at Onex executed 10 CLO transactions, raising $2.5 billion in new fee-generating AUM and resetting $1.8 billion of AUM. This resulted in a 5% increase in total fee-generating AUM, reaching $37 billion, highlighting the company’s growth in this area.

Strong Credit Performance

Onex’s credit investments delivered an $11 million net gain, representing a 1% return in Q1. Structured credit strategies played a significant role in this performance, demonstrating the strength of Onex’s credit portfolio.

Share Buyback Program

Capitalizing on market volatility, Onex repurchased 1.4 million shares in Q1 and an additional 800,000 shares in April. This strategic move allowed the company to buy shares below NAV, reflecting Onex’s commitment to returning capital to shareholders.

M&A Activity Slowdown

The earnings call highlighted a slowdown in the M&A environment over the past two months, which has made it more challenging to return capital to LPs and impacted realizations at OP and ONCAP.

Market Volatility and Trade Concerns

Global trade developments have exerted pressure on financial markets, affecting publicly-traded investments and potentially causing second and third order impacts. This volatility remains a concern for Onex moving forward.

Asset Management Earnings

The Asset Management segment generated $25 million in earnings in Q1, with fee-related earnings being relatively low at $2 million. This was after managing costs and investments, indicating a need for strategic adjustments to enhance profitability.

Forward-Looking Guidance

Looking ahead, Onex Corporation has set a solid foundation for 2025, focusing on long-term value creation and strategic initiatives. Key financial metrics include a 3% increase in investing capital per share to $116.97 and a 9% increase over the past year. The private equity portfolio outperformed the MSCI World MidCap Index with a 2% return. The company remains committed to compounding NAV, increasing fee-related earnings, and returning capital to shareholders through share buybacks.

In summary, ONEX Corporation’s earnings call highlighted a positive trajectory with strong fundraising achievements and strategic transactions. Despite challenges from market volatility and a slowdown in M&A activity, the company’s forward-looking guidance remains optimistic, focusing on long-term growth and shareholder value.