Onex debuts direct lending platform

The Canadian firm is targeting $500m for Credit Lending Partners I fund. 

Onex’s credit platform has raised $288.52 million for its new direct lending vehicle, a filing with the US Securities and Exchange Commission showed.

Onex Credit Lending Partners I is targeting a total of $500 million in capital commitments and made its first sale 31 May, the filing showed. 

The firm was not immediately available to comment.

Onex expects the direct lending strategy to deliver a significant increase in fee growth, similar to the rise in fees income related to collateralised loan obligations, Christopher Govan, Onex’s chief financial officer, said in his opening remarks on the latest earnings call, according to a transcript.

The firm earned a total of $135 million in management and transaction fees in 2016 and has run-rate fees of $146 million for the next 12 months, earnings results showed.

An executive on the call declined an analyst’s request to comment further about the fund itself.

Onex had announced in April last year that the company was forming a direct lending platform, as Private Debt Investor reported. That month the firm brought on board former Goldman Sachs executive Walt Jackson to lead the strategy.

“Direct lending is a natural extension of our business and further leverages our credit team and established infrastructure,” Michael Gelblat, chief executive officer and chief investment officer at Onex Credit, in a statement announcing Jackson’s hire.

Before the new fund’s first sale this May, the Toronto-based firm managed $8 billion in assets across its credit platform, first quarter earnings results showed.

Onex Credit had a net investment of $326 million across its other credit funds and $427 million invested in its CLOs, as of 31 March. For the first quarter, the firm’s credit funds had showed a total gross revenue of $1 million earned on investments, the same amount that the platform earned on investments during the same period last year.

This launch comes as several firms have raised hundreds of millions for either new or repeat direct lending vehicles. Crescent Capital is raising a new $1 billion direct lending fund, as PDI reported in May. KKR brought in more than $400 million for its third senior debt direct lending vehicle in April.