Pandemic? What pandemic? Asset manager Onex Corp.’s annual profit rose last year to US$860-million, despite a significant first-quarter loss due to the impact of COVID-19 on consumer-facing investments such as WestJet Airlines Ltd.
Toronto-based Onex made US$773-million on its private-equity and credit holdings and US$87-million from its wealth-management unit in 2020, a 3-per-cent increase year over year. The company bounced back after posting a US$1.1-billion loss in the first quarter, when the pandemic shut down many Onex-owned businesses.
“Our disciplined approach to investing was tested and, once again, proved resilient against a challenging economic backdrop,” said Gerry Schwartz, Onex’s founder and chief executive officer. He said that, as the pandemic played out, Onex found numerous opportunities to buy into new businesses at attractive valuations, committing a total of US$2.5-billion to new investments last year.
Onex, a pioneer in private equity that opened its doors in 1984, supports a number of businesses with operations that are currently curtailed by government-imposed shutdowns. Mr. Schwartz said these investments continue to have a “strong value proposition.”
After the pandemic hit North American businesses last March, Onex began breaking out results for the seven businesses it owns that have been directly affected by the outbreak, such as companies in the events and leisure sectors, along with WestJet. The company said the value of these seven holdings increased by US$246-million, or 40 per cent, in the fourth quarter of 2020 and declined by just US$26-million over the course of the entire year.
Onex acquired Calgary-based WestJet for $5-billion, including assumed debt, in December, 2019, putting $345-million of its own capital into the transaction.
The value of Onex’s private-equity holdings increased 24 per cent over the year, while total assets under management increased 14 per cent, to US$44-billion. The company’s US$2.5-billion in new investments last year focused on business services and financial services companies. In recent months, Onex put capital into online teaching platform Weld North Education, employee benefits provider OneDigital and insurer Ryan Specialty Group.
As stock markets sank early in 2020, then rebounded later in the year, Onex raised a total of US$2.7-billion by selling investments. It currently holds US$1.4-billion in cash earmarked for new investments.
In addition to buying new businesses, it used its cash to buy back 9.8 million of its own subordinated voting shares for US$444-million, an average of $60.86 each. Onex stock traded Friday at $71.48 on the Toronto Stock Exchange.
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Andrew Willis