Onex raising new CLO warehouses

The firm is already at work on its second European vehicle shortly after finishing its first.

Onex Corporation has begun raising its next set of collateralised loan obligations, which comes just after the firm wrapped up two other CLOs and held an initial close on its debut direct lending fund.

The Toronto-based asset manager has already launched warehouse facilities for its next US and European CLO vehicles, purchasing $40 million in subordinated notes slated for US CLO-14 and $8 million in corporate loans and notes for EURO CLO-2.  Last month, the firm closed US CLO-13 on $610 million, which came shortly after the May close of its first European-focused vehicle, EURO CLO-1, on $363 million.

“We expect Europe to be an area of growth, although likely not as fast-paced as a US CLO platform,” Anthony Munk, senior managing director at Onex, said on an earnings call.

The realisations of the two CLOs the first half of 2017 generated a net internal rate of return of 15 percent, according to the earnings results.

Onex had net investments of $485 million in CLOs after dispositions and distributions, including $121 million for three warehouse facilities, by the end of last quarter. The firm received $32 million of distributions from its CLO investments during the first six months of 2017.

On top of closing the two CLOs, the firm launched its direct lending platform this year, Onex Credit Lending Partners I, with a $500 million fundraising target, holding a first close on $288.52 million in May. The firm committed $100 million of its own capital into the fund, the results showed.

Onex targets blended returns from private equity and credit in the high-teens, Chris Govan, chief financial officer at the firm, added on the call.

Of the $17.3 billion of invested and committed capital, 40 percent, or $6.92 billion, was in credit. The credit platform accounted for 9 percent of the capital Onex committed to its vehicles, which topped $6.62 billion at the end of the second quarter.