Onex chairman Gerald Schwartz on May 11, 2000.peter Tym/The Globe and Mail
Asset manager Onex Corp. ONEX-T built on its history of investments in the aerospace industry on Thursday by acquiring aircraft logistics company Farsound Aviation Ltd. from a Hong Kong private equity fund.
Toronto-based Onex, which owns WestJet Airlines Ltd., partnered with Farsound executives in the deal. They’ve acquired a British business that specializes in supplying parts for engine maintenance and repairs to airlines and aircraft owners around the world.
Founded in 1986, Farsound runs facilities in Britain, Spain, Japan, the United States and Canada. The company supports a range of engine makers, including General Electric Co., Pratt & Whitney Co. Inc. and Rolls-Royce PLC.
Onex and Farsound did not release financial terms of the deal. Onex made the investment from its Opportunities Fund, which has raised US$820-million and plans to make four or five investments, which translates into a commitment of between US$160-million to US$200-million in equity to each business it buys.
Onex is the third private equity fund to own Farsound. The founding family sold the company to British venture capital fund manager Rubicon Partners in 2011. In 2019, Hong Kong-based fund manager AGIC Capital bought Farsound for an enterprise value – equity plus debt – of £115-million, or about US$150-million. Under AGIC’s ownership, the company expanded its business in Asia, including building ties to airlines based in China.
“We are excited to partner with Onex for Farsound’s next phase of growth,” Farsound chief executive officer Chris Knott said in a press release. “We have been impressed by both Onex’s experience and track record of helping businesses realize their growth ambitions.”
Financier Gerry Schwartz founded Onex in 1984 – he is now the company’s chairman – and pioneered leveraged buyouts of industrial companies. That approach has become commonplace in the US$4-trillion global private equity industry. Onex used its capital and money from clients such as insurers and pension plans to buy the equity in businesses and leveraged the investments with significant amounts of debt supplied by banks and bond funds.
Along with its WestJet stake, acquired in 2019 in a transaction with a $5-billion enterprise value, Onex’s aerospace holdings include successful investments in parts maker Spirit AeroSystems Holdings, Inc., sold in 2014, and caterer LSG SkyChefs, which Onex sold in 2001. Onex also made one money-losing aerospace deal, teaming up with the private equity arm of Goldman Sachs Group Inc. to buy private plane maker Hawker Beechcraft Inc., which went bankrupt in 2012.
Onex has now made two investments with its Opportunity Fund. Earlier in August, the fund manager acquired German manufacturer Fischbach KG, the world’s largest suppliers of tubes used to package sealants and glues used in building construction and renovation. Onex and Fischbach did not release the financial terms of the buyout.
Onex’s advisers on the Farsound acquisition were investment banks Barclays PLC and Solomon Partners as financial advisers and Latham & Watkins LLP as legal counsel.
Onex has US$49-billion in assets under management, including US$8.5-billion of the company’s capital, and invests in private equity, venture capital and credit markets.