(Bloomberg) -- Raising money for deals will become more challenging because the market is crowded with rivals seeking investors, Onex Corp. President Bobby Le Blanc said.
Onex will likely close fundraising for its sixth private equity vehicle in the first half of next year, he said. The effort started earlier this year. A previous fund closed in seven months.
“I do expect it to be a longer process,” Le Blanc said Friday on a conference call after Onex reported first-quarter earnings. “I do expect it to be more difficult than prior fund raisers.”
After gathering record sums in recent years, the industry is now facing headwinds driven in part by soaring inflation, rising interest rates and geopolitical risks. Another challenge: Many institutional investors are over-allocated to the asset class. All of that has led some firms to offer sales incentives to win clients.
“It’s a crowded fundraising environment,” said Le Blanc, whose Toronto-based firm has almost $50 billion in assets under management.
While Onex plans to exit some investments in the second quarter, the new deal pipeline will likely be slower given concerns about valuations, he said.
“When you have near-term volatility like we’ve seen since the beginning of the year, people who were sellers had price expectations in their minds in December,” he said. But “bidders may not be willing to pay today what they were willing to pay” then, he added.
Onex plans to launch a new platform focused on investing in transportation-related assets later this year. The firm hired a former senior executive from aircraft leasing firm BBAM to lead the strategy.
The investment firm also has more than a dozen equity investments in the industrials sector. They include Canada’s WestJet Airlines Ltd., which earlier this year agreed to buy low-cost rival Sunwing Airlines and Sunwing Vacations tour operations.
Highlights from earnings:
- Onex’s corporate investments generated a net gain of $82 million
- Firm deployed approximately $230 million of capital through its private equity platforms
- Investing capital increased to $8.2 billion
©2022 Bloomberg L.P.