Onex Corp. has walked away from a strategy of expanding in private wealth as it refocuses on its core business of managing private equity and credit funds. 

Toronto-based Onex will transfer its Gluskin Sheff private wealth teams to Royal Bank of Canada and wind down the rest of its wealth management operations, unraveling a 2019 deal Onex made to try to gain more business from rich individuals. 

RBC’s wealth management unit will offer jobs to about 40 Gluskin advisers, according to a person familiar with the matter. The bank will also allow the distribution of Onex-managed funds to its customers, according to a statement. Gluskin has about 160 employees, according to data provider PitchBook. 

Onex was down 2.9 per cent as of 1 p.m. in Toronto. 

“This represents an exciting step forward for our business, allowing us to focus on investing, asset management and product development while leveraging the scale and strength of one of the country’s largest wealth management platforms,” Onex President Bobby Le Blanc said in a statement.

The move is “slightly net negative to Onex” because it affects the company’s target of increasing fee-generating assets under management to $65 billion by 2026, Canaccord Genuity analyst Scott Chan said in a note Friday. 

Onex bought Gluskin Sheff, a Canadian money manager for the wealthy, for about US$330 million as part of an effort to broaden the reach of its private equity and private credit products beyond institutions. “Since the purchase, Onex has experienced a hard time growing its asset base,” Chan said. 

The buyout industry is contending with the toughest environment since the 2008 global financial crisis, as rising interest rates makes financing deals costlier. Onex started fundraising for its sixth flagship fund last year and has gathered US$2 billion for it, of which US$500 million came from third parties.

Among Onex’s investments are UK holiday park operator Parkdean Resorts, auto accessories maker Hopkins Manufacturing and Canada’s WestJet Airlines Ltd.

Le Blanc is in line to take the helm of Onex, replacing Gerry Schwartz, who has been in charge of the US$51 billion private equity firm since he founded it in the 1980s.