Onex Q1 2025 slides: Investing capital grows 3%, financial services leads with 22% LTM return

Onex Corporation (TSX:ONEX) released its Q1 2025 supplemental information package on May 9, 2025, revealing a 3% quarterly growth in investing capital per share, with financial services emerging as the standout performer. The company’s stock rose 2.98% to $104.85 following the presentation, recovering some ground after a dip in the previous quarter.

Quarterly Performance Highlights

Onex reported investing capital per share of $116.97 (C$168.28), representing a 3% increase for the quarter and 9% growth over the last twelve months. The company achieved net earnings of $168 million for Q1 2025, translating to $2.36 per diluted share, while maintaining strong liquidity of $1.6 billion.

As shown in the following table of key financial metrics, Onex delivered solid performance across multiple indicators:

The company’s investing capital composition remained well-diversified, with private equity representing the largest component. Onex has maintained consistent growth in investing capital per share, achieving a five-year compound annual growth rate of 17%.

As illustrated in this chart showing the progression of investing capital per share:

Bobby LeBlanc, CEO of Onex, commented during the previous quarter’s earnings call about the company’s commitment to transparency, stating, "Our objective is to be transparent and responsive in our engagement with you." This quarter’s results demonstrate continued execution of the company’s strategic priorities.

Segment Performance Analysis

Onex’s portfolio performance varied significantly across industry verticals, with financial services emerging as the clear leader. The financial services segment, which represents 37% of gross private equity capital, delivered a 7% return in Q1 and an impressive 22% return over the last twelve months.

In contrast, the healthcare segment continued to struggle, posting a 3% decline for the quarter and a concerning 20% loss over the last twelve months. Consumer investments also faced challenges with a 3% quarterly gain but a 10% decline over the LTM period.

The following breakdown illustrates the performance across all industry segments:

Overall, Onex’s private equity portfolio delivered a 2% gross return in Q1 2025 and a 6% return over the last twelve months, while the credit portfolio achieved a 1% quarterly return and a 9% LTM return.

When compared to market benchmarks, Onex’s investment performance has shown resilience:

Asset Management Growth

Onex continued to expand its asset management business in Q1 2025, raising $2.5 billion in fee-generating assets under management (FGAUM) across its private equity and credit platforms. The credit segment was particularly active, raising or extending $5.3 billion of FGAUM year-to-date across tactical allocation and structured credit strategies.

Fee-generating assets under management reached $36.9 billion, representing a 5% increase over the last twelve months and a five-year CAGR of 9%. The growth has been primarily driven by the structured credit business.

As shown in the following chart of fee-generating AUM:

The asset management segment generated earnings of $25 million in Q1 2025, with fee-related earnings (FRE) of $2 million. Run-rate management fees increased to $202 million, while unrealized carried interest grew to $308 million from $286 million at the end of 2024.

The company’s carried interest position continues to strengthen, as illustrated in this breakdown:

Capital Management Strategy

Onex maintained its commitment to returning capital to shareholders, repurchasing approximately 1.4 million subordinated voting shares in Q1 for $98 million, with an additional 767,000 shares repurchased in April. The company also renewed its Normal Course Issuer Bid (NCIB) for another 12 months, permitting the repurchase for cancellation of up to 10% of the public float.

The detailed breakdown of investing capital shows the company’s strategic allocation:

First quarter changes in investing capital reflect Onex’s active portfolio management approach:

Onex’s investing segment generated earnings of $123 million in Q1 2025, with private equity contributing $96 million and credit strategies adding $11 million:

Forward Outlook

Onex enters the remainder of 2025 with a strong foundation for continued growth. The successful final close of ONCAP V with $1.3 billion in total commitments (a 54% increase in third-party capital) and the OP Opportunities Fund with $1.2 billion demonstrate investor confidence in Onex’s investment capabilities.

The company’s structured credit platform continues to expand, with 10 CLO transactions priced through April, including five new issues. This growth aligns with the previous quarter’s guidance targeting a $55 million run-rate FRE for the credit platform by year-end.

With 81% of capital invested at quarter-end and strong liquidity of $1.6 billion, Onex is well-positioned to support continued share buybacks and investments in priority areas. However, the persistent challenges in healthcare and consumer segments will require careful management to improve overall portfolio performance.

The company’s diversified approach across industry verticals and asset classes provides resilience against market volatility, while its disciplined capital management strategy continues to enhance shareholder value through consistent share repurchases and strategic investments.

Full presentation:

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