Onex Seeks $1B Fund for OneDigital Stake Extension

Onex Targets $1 Billion for OneDigital Continuation Fund

Onex Partners is seeking to raise $1 billion for a single-asset continuation fund to extend its minority ownership in the insurance brokerage firm, OneDigital. According to reports, Evercore Inc. is advising Onex on the transaction, which underscores a strategic move to retain a valuable asset.

Overview of the Situation

This initiative reflects a broader trend in private equity where firms leverage the secondaries market to hold onto promising portfolio companies beyond traditional fund timelines. Continuation funds offer liquidity to existing investors while allowing the private equity firm to continue managing the asset. Onex acquired a majority stake in OneDigital in 2020 but sold most of its position last year in a deal that valued OneDigital at over $7 billion.

Market Implications

The move by Onex signals strong confidence in OneDigital's continued growth potential. The success of this $1 billion fundraise will serve as a barometer for investor appetite in single-asset secondary transactions, especially in the current economic environment. This type of transaction allows for continued value creation without forcing a premature exit.

Summary

Onex aims to secure its remaining minority stake in OneDigital through a $1 billion continuation fund, a strategy becoming more common in private equity. The outcome will be watched closely as an indicator of market sentiment towards specialized secondary market vehicles and the long-term value of high-performing assets like OneDigital.

FAQ

Q: What is a single-asset continuation fund?
A: It is a vehicle used by private equity firms to move one specific company from an older fund into a new one, allowing them to continue managing the asset for a longer period.

Q: How much is Onex aiming to raise?
A: Onex is seeking to raise $1 billion for the continuation fund.

Source: Investing.com