Onex to reduce commitment to large-cap buyout fund

Canadian private equity firm Onex Corporation has completed the latest closing for its third large-cap private equity fund, Onex Partners III, with a total of USD3bn in third-party capital.

This represents an increase of more than 50 from the prior fund, and Onex expects the final tally of third-party commitments to be up to USD3.5bn.

Onex began drawing management fees from Onex Partners III late in 2008. The current run rate of annual management fees from the Onex Partners family of funds is now over USD75m.

At the same time, Onex has reduced its commitment to Onex Partners III, on a temporary basis, from USD1bn to about USD500m, or from 22 to 12 per cent of total expected capital commitments. The company will invest at the higher percentage for transactions entered into on or before 30 June 2009, and subsequently at the reduced percentage.

Onex says its decision to reduce its commitment to OPIII reflects its conservative approach to managing its capital base. However, the firm has the right to increase its commitment to future transactions, on six months' advance notice to its limited partners, and anticipates doing so when appropriate.