Onex’s Attractive Credit Unit and Strategic Positioning in Structured Credit Markets

Onex Corporation’s structured credit unit has emerged as a standout performer in private asset management, leveraging its expertise in collateralized loan obligations (CLOs) and tactical capital deployment to unlock value from undervalued fee-generating assets. As the firm approaches $30 billion in total assets under management (AUM), its credit platform has demonstrated a unique ability to compound net asset value while generating consistent fee-related earnings, even amid macroeconomic volatility [2].

Performance and Fee-Generating Momentum

According to a report by the Investment Company (Form N-CSR), Onex’s structured credit strategies delivered net total returns of 19.95%, 19.53%, and 18.91% for the fiscal year ending March 31, 2025, underscoring its resilience in a challenging credit environment [1]. This performance has directly translated into fee-generating growth: in Q1 2025 alone, the credit unit added $2.5 billion in new assets, driven by the successful closure of two major funds. Year-over-year, structured credit AUM surged 34%, reflecting strong investor demand for Onex’s risk-adjusted return profile [3].

The firm’s fee structure further amplifies this growth. In Q2 2025, management and advisory fees from structured credit totaled $47 million, supplemented by $1 million in performance fees, resulting in $48 million in total fee-related revenues [2]. With a run-rate fee-related earnings estimate of $44 million for the credit segment, Onex’s ability to monetize its AUM is both scalable and predictable [2].

Strategic Initiatives and Market Positioning

Onex’s strategic initiatives in 2025 have reinforced its leadership in structured credit. The Credit team executed 10 CLO transactions in the first half of the year, raising or extending $8.3 billion in fee-generating AUM—a testament to its execution prowess [3]. These initiatives are part of a broader strategy to capitalize on low-yield environments by deploying capital into collateralized loan portfolios that offer higher yields and downside protection.

Notably, Onex’s recent partial sale of its equity stake in WestJet at a 25% premium to net asset value (NAV) highlights its disciplined approach to capital recycling [1]. By converting non-core holdings into liquidity, the firm can reinvest in higher-conviction opportunities within its credit platform, compounding long-term value. Additionally, plans for opportunistic CLO issuances and share buybacks signal a commitment to enhancing shareholder returns while maintaining flexibility in volatile markets [1].

Unlocking Value Through Diversification and Innovation

Onex’s structured credit strategies are designed to exploit inefficiencies in the credit markets. By diversifying across collateral types and leveraging its deep origination capabilities, the firm targets undervalued assets that offer attractive risk-adjusted returns. For instance, its tactical allocation strategies have extended $1.8 billion in existing AUM, ensuring steady fee streams while minimizing duration risk [3].

The firm’s focus on innovation is equally critical. With 17 CLO transactions priced or extended in H1 2025, Onex has demonstrated agility in structuring deals that align with evolving regulatory and investor preferences [2]. This adaptability positions it to capture market share as demand for structured credit products remains robust.

Conclusion: A Compelling Case for Long-Term Investors

Onex’s credit unit exemplifies how private asset managers can unlock value by combining operational excellence with strategic foresight. Its disciplined fee structure, coupled with a track record of generating double-digit returns and compounding AUM, creates a virtuous cycle of growth. As the firm continues to execute on its CLO pipeline and optimize capital deployment, investors are well-positioned to benefit from its ability to transform undervalued credit assets into sustainable earnings.

For those seeking exposure to a private credit platform with a proven model and strong tailwinds, Onex’s structured credit unit represents a compelling opportunity.

Source:
[1] Annual Report by Investment Company (Form N-CSR), https://www.publicnow.com/view/1CDAFC6C4890D6C52AD629CF2A368AC4E4691136
[2] Onex Reports Second Quarter 2025 Results, https://www.globenewswire.com/news-release/2025/08/07/3129103/0/en/Onex-Reports-Second-Quarter-2025-Results.html
[3] Onex Reports First Quarter 2025 Results - TMX Money, https://money.tmx.com/quote/ONEX:AQN/news/4920335153471300