Q4 2025 Onex Corp Earnings Call

February 20, 2026

Speaker #1: Welcome to ONEX 4th Quarter and Full Year 2025 Conference Call and Webcast. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session with pre-qualifying analysts.

Operator: Welcome to Onex's Q4 and full year 2025 conference call and webcast. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session with pre-qualifying analysts. At that time, if you have a question, please press star one one on your telephone keypad. As a reminder, this conference is being recorded. And now I'd like to turn the call over to Jill Homenuk, Managing Director, Shareholder Relations and Communications at Onex. Please go ahead.

Speaker #1: At that time, if you have a question, please press star 11 on your telephone keypad. As a reminder, this conference is being recorded. And now, I'd like to turn the call over to Jill Homenuk, Managing Director.

Speaker #1: Shareholder Relations and Communications at ONEX. Please go ahead.

Speaker #2: Thank you. Good morning, everyone, and thanks for joining us. We're broadcasting this call on our website. Hosting the call today are Bobby LeBlanc, ONEX's Chief Executive Officer, and Chris Govan, our Chief Financial Officer.

Jill Homenuk: Thank you. Good morning, everyone, and thanks for joining us. We're broadcasting this call on our website. Hosting the call today are Bobby Le Blanc, Onex's Chief Executive Officer, and Chris Govan, our Chief Financial Officer. Earlier this morning, we issued our Q4 and full year 2025 press release, MD&A, and consolidated financial statements, which are available on the shareholder section of our website and have also been filed on SEDAR. A supplemental information package is also available on our website. As a reminder, all references to dollar amounts on this call are in US unless otherwise stated. I must also point everyone to our webcast presentation for our usual disclaimer and cautionary factors relating to any forward-looking statements contained in today's presentation and remarks. With that, I'll now turn the call over to Bobby.

Speaker #2: Earlier this morning, we issued our fourth quarter and full year 2025 press release, MD&A, and Consolidated Financial Statements, which are available in the Shareholder section of our website and have also been filed on CDAR.

Speaker #2: A supplemental information package is also available on our website. As a reminder, all references to dollar amounts on this call are in US dollars unless otherwise stated.

Speaker #2: I must also point everyone to our webcast presentation for our usual disclaimer and cautionary factors relating to any forward-looking statements contained in today's presentation and remarks.

Speaker #2: With that, I'll now turn the call over to Bobby.

Speaker #3: Good morning, everyone. In 2025, ONEX delivered strong results and made meaningful progress on our business and capital allocation objectives. To set the stage for accelerated value creation and earnings growth going forward.

Bobby Le Blanc: Good morning, everyone. In 2025, Onex delivered strong results and made meaningful progress on our business and capital allocation objectives to set the stage for accelerated value creation and earnings growth going forward. Most notably, our recently completed acquisition of Convex and our new strategic relationship with AIG has significantly enhanced our growth prospects and earnings outlook. Across Onex, we are entering 2026 with momentum and confidence. We're able to do almost seven years of due diligence on Convex, given it was an Onex Partners V portfolio company. This is exactly the type of informational advantage that we look for as investors. Convex is expected to be Onex's largest contributor to value creation going forward, and the accelerated closing reflected a strong commitment and alignment across Convex, AIG, and Onex to complete the transaction on an expedited basis.

Speaker #3: Most notably, our recently completed acquisition of Convex and our new strategic relationship with AIG have significantly enhanced our growth prospects and earnings outlook. Across Onex, we are entering 2026 with momentum and confidence.

Speaker #3: We're able to do almost seven years of due diligence on Convex, given it was an ONEX Partners V portfolio company. This is exactly the type of informational advantage that we look for as investors.

Speaker #3: Convex is expected to be ONEX's largest contributor to value creation going forward. And the accelerated closing reflected a strong commitment and alignment across Convex, AIG, and ONEX to complete the transaction on an expedited basis.

Speaker #3: As a reminder, the transaction valued Convex at 7 billion with ONEX and AIG owning approximately 63% and 35% respectively. In addition, the Convex management team demonstrated their alignment and conviction by rolling approximately 500 million of equity and accrued incentives.

Bobby Le Blanc: As a reminder, the transaction valued Convex at $7 billion, with Onex and AIG owning approximately 63% and 35% respectively. In addition, the Convex management team demonstrated their alignment and conviction by rolling approximately $500 million of equity and accrued incentives, which is a major vote of confidence in our partnership and go-forward strategy. This morning, we released our year-end financial information for Convex. In 2025, the team delivered another outstanding year, continuing to demonstrate their ability to deliver industry-leading growth and profitability. You will find more information in our Q4 supplemental information package, but here are some of the highlights. For the year, Convex delivered $711 million in net income and an overall return on equity of 20%.

Speaker #3: Which is a major vote of confidence in our partnership and go forward strategy. This morning, we released our year-end financial information for Convex. In 2025, the team delivered another outstanding year continuing to demonstrate their ability to deliver industry-leading growth and profitability.

Speaker #3: You will find more information in our Q4 supplemental information package but here are some of the highlights. For the year, Convex delivered 711 million in net income and an overall return on equity of 20%.

Speaker #3: Net income increased 25% versus a $566 million Q3 latest 12-month figure we announced at the time of the acquisition, and grew 40% from the $506 million delivered in 2024.

Bobby Le Blanc: Net income increased 25% versus the $566 million Q3 latest twelve months figure we announced at the time of the acquisition, and grew 40% from the $506 million delivered in 2024. This 2025 net income figure equates to $423 million for Onex, based upon our 63% ownership position, and is updated for Convex's pro forma interest cost on the $600 million of debt raised as part of the transaction. The team achieved $5.9 billion of gross premium written in 2025, growing 14% year-over-year. Convex's ability to scale to this level of gross premium written in less than 7 years, demonstrates the impressive business the Convex team has built and the value they provide to their customers.

Speaker #3: This 2025 net income figure equates to $423 million for ONEX based upon our 63% ownership position, and is updated for Convex's pro forma interest cost on the $600 million of debt raised as part of the transaction.

Speaker #3: The team achieved 5.9 billion of gross premium written in 2025 growing 14% year over year. Convex's ability to scale to this level of gross premium written in less than seven years demonstrates the impressive business that Convex team has built and the value they provide to their customers.

Speaker #3: Despite the significant growth, Convex has still only captured about 2% of its addressable market, which highlights a significant opportunity we in management continue to see for the business.

Bobby Le Blanc: Despite the significant growth, Convex has still only captured about 2% of its addressable market, which highlights the significant opportunity we and management continue to see for the business. Convex also delivered consistent and strong underwriting performance in 2025, with an 89% combined ratio, the third consecutive year of combined ratios under 90%. Management expects to continue growing earnings through cycle by utilizing several structural levers, including, one, capturing further operating leverage as Convex continues to scale into its expense base. Two, growth in asset leverage. Three, growth in net underwriting profitability. And lastly, yield improvement on Convex's growing investment portfolio. This strong financial performance increased Convex's tangible book value to $3.8 billion at year-end, resulting in a reduction of Onex's effective acquisition multiple to 1.8x tangible book value and 10x 2025 net income.

Speaker #3: Convex also delivered consistent and strong underwriting performance in 2025, with an 89% combined ratio—the third consecutive year of combined ratios under 90%. Management expects to continue growing earnings through cycle by utilizing several structural levers, including: 1.

Speaker #3: Capturing further operating leverage as Convex continues to scale into its expense base. Two, growth in asset leverage; three, growth in net underwriting profitability; and lastly, yield improvement on Convex's growing investment portfolio.

Speaker #3: This strong financial performance increased Convex's tangible book value to $3.8 billion at year-end, resulting in a reduction of ONEX's effective acquisition multiple to 1.8 times tangible book value and 10 times 2025 net income.

Speaker #3: In our supplemental information package, we outline more information, including Convex's structural competitive advantages, how management plans to continue to grow through the cycle, and how Convex should deliver significant value to ONEX shareholders.

Bobby Le Blanc: In our supplemental information package, we outline more information, including Convex's structural competitive advantages, how management plans to continue to grow through cycle, and how Convex should deliver significant value to Onex shareholders. When we announced the transaction, one of our commitments to shareholders was to ensure you receive transparency on our investment in Convex, so you can value it appropriately. Next month, in follow-up to today's earnings update, we plan to publish complete financial information for Convex, similar to the tables we provided at the time of our Q3 announcement. The addition of Convex as a core Onex platform, alongside private equity and credit, will play a pivotal role in our ongoing transition, where we continue to prioritize consistently growing net income and free cash flow to help drive overall enterprise value.

Speaker #3: When we announced the transaction, one of our commitments to shareholders was to ensure you receive transparency on our investment in Convex so you can value it appropriately.

Speaker #3: Next month, in follow-up to today's earnings update, we plan to publish complete financial information for Convex, similar to the tables we provided at the time of our Q3 announcement.

Speaker #3: The addition of Convex as a core ONEX platform, alongside private equity and credit, will play a pivotal role in our ongoing transition, where we continue to prioritize consistently growing net income and free cash flow to help drive overall enterprise value.

Speaker #3: Our future capital allocation initiatives will align with this strategy, focusing on direct investments with strong risk-adjusted returns, low leverage, and longer hold periods in sectors where we have a right to win.

Bobby Le Blanc: Our future capital allocation initiatives will align with this strategy, focusing on direct investments with strong risk-adjusted returns, low leverage, and longer hold periods in sectors where we have a right to win. While we continue to support our private equity and credit strategies to ensure continued alignment with our LPs and co-investors by participating in each fund up to a maximum of 10%, this capital-lighter model will enable a higher proportion of third-party capital in our funds. This, in turn, will contribute to ongoing growth in fee-generating AUM, fee-related earnings, and carried interest. Early in 2025, both of our private equity platforms, Onex Partners and ONCAP, completed successful fundraisers.

Speaker #3: While we continue to support our private equity and credit strategies, to ensure continued alignment with our LPs and co-investors by participating in each fund up to a maximum of 10%, this capital-lighter model will enable a higher proportion of third-party capital in our funds.

Speaker #3: This in turn will contribute to ongoing growth and fee-generating AUM fee-related earnings and carried interest. Early in 2025, both of our private equity platforms ONEX Partners and ONCAP completed successful fundraisers.

Speaker #3: And throughout the year, both made progress in continuing to return capital to their limited partners and co-investors. A total of $8 billion in realizations.

Bobby Le Blanc: And throughout the year, both made progress in continuing to return capital to their limited partners and co-investors, a total of $8 billion in realizations, and in securing new investment opportunities with high conviction value creation plans. Onex Partners had an active and successful year and has extended the momentum into 2026. OP announced $7.7 billion in total distributions in 2025, including $4.3 billion to its co-investors. Since 2024, OP has returned $10 billion of capital across eight realizations and completed six new investments totaling $2 billion. Recently, OP entered into an agreement to create a $1.5 billion multi-asset continuation vehicle with leading global secondary funds and sovereign investors. The transaction is expected to close this quarter and deliver proceeds of approximately $310 million to Onex.

Speaker #3: And in securing new investment opportunities with high conviction, value creation plans. ONEX Partners had an active and successful year, and has extended the momentum into 2026.

Speaker #3: OP announced $7.7 billion in total distributions in 2025, including $4.3 billion to its co-investors. Since 2024, OP has returned $10 billion in capital across eight realizations and completed six new investments totaling $2 billion.

Speaker #3: Recently, OP entered into an agreement to create a $1.5 billion multi-asset continuation vehicle with leading global secondary funds and sovereign investors. The transaction is expected to close this quarter and deliver proceeds of approximately $310 million to Onex.

Speaker #3: Importantly, we'll also bring DPI for ONEX Partners 5 to 0.8, positioning it very favorably relative to other funds of its vintage. As you all know, there has recently been a lot of news around software and AI disruption.

Bobby Le Blanc: Importantly, we'll also bring DPI for Onex Partners V to 0.8, positioning it very favorably relative to other funds of this vintage. As you all know, there has recently been a lot of news around software and AI disruption. Looking at the percentage of our investing capital in technology-enabled businesses, we feel comfortable with our relative exposure and the embedded protections of our company's business models and competitive environments. Only 4% of Onex's total investing capital is tied directly to pure vertical software businesses. Looking at it from the broadest perspective, only 14% of Onex's total investing capital is invested in tech-enabled firms. All these businesses have proprietary data and significant competitive moats, sustained by regulatory barriers and B2B workflows occurring inside their systems.

Speaker #3: Looking at the percentage of our investing capital in technology-enabled businesses, we feel comfortable with our relative exposure and the embedded protections of our company's business models and competitive environments.

Speaker #3: Only 4% of ONEX's total investing capital is tied directly to pure vertical software businesses. Looking at it from the broadest perspective, only 14% of ONEX's total investing capital is invested in tech-enabled firms.

Speaker #3: All these businesses have proprietary data and significant competitive moats, sustained by regulatory barriers and B2B workflows occurring inside their systems. Across our operating companies, we are not seeing any meaningful evidence of disruption, but rather they are continuously improving their product value proposition through the adoption of AI and other data analytic tools.

Bobby Le Blanc: Across our operating companies, we are not seeing any meaningful evidence of disruption, but rather, they're continuously improving their product value proposition through the adoption of AI and other data analytic tools. Turning to ONCAP, the team returned $270 million to investors, including Onex, in 2025, which was primarily driven by the partial sale of Precision Concepts. ONCAP also recently completed its leadership succession process, which resulted in two of its most proven leaders, Adam Shantz and Steve Marshall, becoming co-heads of the platform. Michael Lay has transitioned into the role of ONCAP Executive Chair. Congratulations to each of them on this milestone, which ensures long-term leadership continuity for ONCAP. Our credit team had another outstanding year.

Speaker #3: Turning to ONCAP, the team returned $270 million to investors, including ONEX, in 2025. This was primarily driven by the partial sale of Precision Concepts.

Speaker #3: ONCAP also recently completed its leadership succession process, which resulted in two of its most proven leaders, Adam Schantz and Steve Marshall, becoming co-heads of the platform.

Speaker #3: Michael Lay has transitioned into the role of ONCAP Executive Chair. Congratulations to each of them on this milestone, which ensures long-term leadership continuity for ONCAP.

Speaker #3: Our credit team had another outstanding year. Within structured credit, where we are recognized as a global leader, we priced 28 CLOs across the US and Europe, raising more than $6 billion of new fee-generating AUM and extending another $6 billion.

Bobby Le Blanc: Within structured credit, where we are recognized as a global leader, we priced 28 CLOs across the US and Europe, raising more than $6 billion of new fee-generating AUM and extending another $6 billion. Chris will get into more detail on fee-related earnings, but it's worth noting that the team's ability to increase fee-generating AUM has enabled them to exceed our Investor Day run rate FRE expectations. We have a reputation for delivering strong performance within our CLOs relative to peer firms through a proactive and diligent approach to portfolio management. By heavily investing in our underwriting processes and implementing state-of-the-art risk management tools and processes, we were able to navigate the spread-challenged credit landscape and avoid involvement in some of the high-profile casualties, like First Brands and Saks Global, that impacted the broader credit market last year.

Speaker #3: Chris will get into more detail on fee-related earnings, but it's worth noting that the team's ability to increase fee-generating AUM has enabled them to exceed our investor day run-rate FRE expectations.

Speaker #3: We have a reputation for delivering strong performance within our CLOs relative to peer firms. Through a proactive and diligent approach, the portfolio management. By heavily investing in our underwriting processes and implementing state-of-the-art risk management tools and processes, we were able to navigate the spread-challenged credit landscape and avoid involvement in some of the high-profile casualties like First Brands and Sachs Global.

Speaker #3: That impacted the broader credit market last year. The credit team, to which credit is also underweight, is underweight software and AI risk credits across its portfolio.

Bobby Le Blanc: The credit team, to its credit, is also underweight software and AI risk credits across its portfolio. Across Onex, our success wouldn't be possible without the commitment and dedication of the people who make up the organization. I want to thank them for all they do and also for making Onex a great place to come to work every day. We have strong conviction in Onex's intrinsic value and are intensifying our efforts to have that value reflected in our stock price. In the supplemental information package, we've included how management views Onex's intrinsic value. At this stage of our capital allocation transition, we believe it is appropriate to utilize a sum of the parts framework. There are currently three distinct value drivers for shareholders: Convex, our asset management business, and our remaining balance sheet investments. The slide on the screen is a really important one to focus on.

Speaker #3: Across ONEX, our success wouldn't be possible without the commitment and dedication of the people who make up the organization. I want to thank them for all they do, and also for making ONEX a great place to come to work every day.

Speaker #3: We have strong conviction in ONEX's intrinsic value, and we are intensifying our efforts to have that value reflected in our stock price. In the supplemental information package, we've included how management views ONEX's intrinsic value.

Speaker #3: At this stage of our capital allocation transition, we believe it is appropriate to utilize a sum-of-the-parts framework. There are currently three distinct value drivers for shareholders.

Speaker #3: Convex, our asset management business, and our remaining balance sheet investments. The slide on the screen is a really important one to focus on. As you can see, when utilizing first the acquisition for Convex—which we believe is conservative given the strong recent performance—and then applying a 15-times multiple to pro forma 2026 year-end run rate fee-related earnings, and then finally looking at the value of our remaining investing capital at the Q4 valuation, we believe intrinsic value is $174.

Bobby Le Blanc: As you can see, when utilizing, first, the acquisition for Convex, which we believe is conservative, given the strong recent performance, and then applying a 15x multiple to pro forma 2026 year-end run rate fee related earnings, and then finally, looking at the value of our remaining investing capital at the Q4 valuation, we believe intrinsic value is $174. Importantly, our current estimate does not include the value we expect to generate for shareholders over time from reorienting realized proceeds from our private equity investments into one or two direct balance sheet investments similar to Convex, that ideally have a good strategic fit with Convex and our asset management business. These investments will use lower leverage and have attracted risk-adjusted return profiles to drive growth and enterprise value for Onex shareholders.

Speaker #3: Importantly, our current estimate does not include the value we expect to generate for shareholders over time from reorienting realized proceeds from our private equity investments into one or two direct balance sheet investments, similar to Convex, that ideally have a good strategic fit with Convex and our asset management business.

Speaker #3: These investments will use lower leverage and have attractive risk-adjusted return profiles to drive growth in enterprise value for ONEX shareholders. We will also provide significant transparency and financial KPIs, similar to Convex, on each investment to support our shareholders and in measuring our performance.

Bobby Le Blanc: We will also provide significant transparency and financial KPIs, similar to Convex, on each investment to support our shareholders in measuring our performance. Having our intrinsic value properly reflected in our share price is a top priority, and we are committed to delivering the earnings growth, disciplined execution, and transparency to make this happen. I want to thank our shareholders for their ongoing support over the past year and for their confidence as we move forward. The pieces are in place for a solid year, and our team is laser-focused on driving enterprise and shareholder value. I'll now turn the call over to Chris.

Speaker #3: Having our intrinsic value properly reflected in our share price is a top priority. We are committed to delivering the earnings growth, disciplined execution, and transparency to make this happen.

Speaker #3: I want to thank our shareholders for their ongoing support over the past year and for their confidence as we move forward. The pieces are in place for a solid year, and our team is laser-focused on driving enterprise and shareholder value.

Speaker #3: I'll now turn the call over to Chris.

Speaker #2: Thanks, Bobby, and good morning, everyone. While most of my remarks will focus on our results for the quarter, I will also take some time to provide an update following the completion of the Convex acquisition.

Chris Govan: Thanks, Bobby, and good morning, everyone. While most of my remarks will focus on our results for the quarter, I will also take some time to provide an update following the completion of the Convex acquisition. So let's start with our investing segment. Onex ended the year with investing capital per share of $124.70, a return of 3% in the quarter and 10% for the year. The 5-year CAGR on investing capital per share is now 11%. Investing gains in the quarter were driven by strong returns from Onex Partners V and Onex Partners Opportunities of 4% and 7%, respectively, and a 6% return across the ONCAP portfolio. Our credit investments were essentially flat in Q4, driven by spread compression on the CLO's underlying portfolio of loans.

Speaker #2: So let's start with our investing segment. ONEX ended the year with investing capital per share of $124.70, a return of 3% in the quarter and 10% for the year.

Speaker #2: The five-year CAGR on investing capital per share is now 11%. Investing gains in the quarter were driven by strong returns from ONEX Partners V and ONEX Partners Opportunities, at 4% and 7%, respectively.

Speaker #2: And a 6% return across the ONCAP portfolio. Our credit investments were essentially flat in Q4, driven by spread compression on the CLO's underlying portfolio of loans.

Speaker #2: With spreads on the CLO's debt fixed in the short term, spread compression in the portfolio results in a reduction in the mark-to-market value of our CLO equity.

Chris Govan: With spreads on the CLO's debt fixed in the short term, spread compression in the portfolio results in a reduction in the mark-to-market value of our CLO equity. However, it's important to note that our CLO investments continue to offer an attractive go-forward return and cash distribution profile. Moreover, we expect any mismatch in spreads to be eliminated by refinancing the CLO liabilities as they come out of their no-call period, which is typically one or two years. As Bobby discussed, 2025 was a strong year of private equity realizations for us, with the $8 billion of realizations across the platforms delivering over $800 million to Onex Corporation. Realizations in the fourth quarter included Onex Partners V sales of 54% of OneDigital and 25% of WestJet. In addition, Onex Corp completed its final realization of Ryan Specialty, netting just over $200 million.

Chris Govan: With spreads on the CLO's debt fixed in the short term, spread compression in the portfolio results in a reduction in the mark-to-market value of our CLO equity. However, it's important to note that our CLO investments continue to offer an attractive go-forward return and cash distribution profile. Moreover, we expect any mismatch in spreads to be eliminated by refinancing the CLO liabilities as they come out of their no-call period, which is typically one or two years. As Bobby discussed, 2025 was a strong year of private equity realizations for us, with the $8 billion of realizations across the platforms delivering over $800 million to Onex Corporation. Realizations in the Q4 included Onex Partners V sales of 54% of OneDigital and 25% of WestJet. In addition, Onex Corp completed its final realization of Ryan Specialty, netting just over $200 million.

Speaker #2: However, it's important to note that our CLO investments continue to offer an attractive go-forward return and cash distribution profile. Moreover, we expect any mismatch in spreads to be eliminated by refinancing the CLO liabilities as they come out of their no-call period, which is typically one or two years.

Speaker #2: As Bobby discussed, 2025 was a strong year of private equity realizations for us. With the $8 billion of realizations across the platforms, delivering over $800 million to ONEX Corporation.

Speaker #2: Realizations in the fourth quarter included ONEX Partner 5 sales of 54% of OneDigital and 25% of WestJet. In addition, ONEX Corp completed its final realization of Ryan Specialty, netting just over $200 million.

Speaker #2: In total, the Ryan's Specialty investment generated aggregate proceeds of $1.2 billion for Onex Corp over almost eight years—a multiple of capital of 3.8 times and a 49% IRR.

Chris Govan: In total, the Ryan Specialty investment generated aggregate proceeds of $1.2 billion for Onex Corp over almost eight years, a multiple of capital of 3.8x and a 49% IRR. On the new investment front, activity in Q4 included the acquisition of integrated specialty coverages by Onex Partners Opportunities and ONCAP V's investment in CSN Collision. Onex Partners Opportunities also agreed to invest in its fourth portfolio company, a transaction that is expected to close later this quarter. On the asset management side of the business, Onex ended the quarter with nearly $44 billion of fee-generating AUM, an increase of 24% during the year. The increase primarily reflects the issuance of new CLOs, commitments made to ONCAP V and Onex Partners Opportunities, and net write-ups in the PE portfolio.

Speaker #2: On the new investment front, activity in the fourth quarter included the acquisition of Integrated Specialty Coverages by ONEX Partners Opportunities and ONCAP 5's investment in CSN Collision.

Speaker #2: ONEX Partners Opportunities also agreed to invest in its fourth portfolio company, a transaction that is expected to close later this quarter. On the asset management side of the business, ONEX ended the quarter with nearly $44 billion of fee-generating AUM.

Speaker #2: An increase of 24% during the year. The increase primarily reflects the issuance of new CLOs, commitments made to ONCAP 5 and ONEX Partners Opportunities, and net write-ups in the PE portfolio.

Speaker #2: The asset management segment generated earnings of $49 million in Q4, of which $2 million was fee-related earnings from our PE and credit platforms. After factoring in the costs associated with managing ONEX Corporation's capital, and maintaining the public company, firm-wide FRE was a loss of $4 million for the quarter and $3 million for the year.

Chris Govan: The asset management segment generated earnings of $49 million in Q4, of which $2 million was fee-related earnings from our PE and credit platforms. After factoring in the costs associated with managing Onex Corporation's capital and maintaining the public company, firm-wide FRE was a loss of $4 million for the quarter and $3 million for the year. Looking forward, credit continues its strong FRE trajectory, ending 2025 with run rate FRE of $60 million. As Bobby noted, this is ahead of our 2023 Investor Day target. Consistent with the Q3 earnings call commentary, we ended the year with firm-wide run rate FRE of $17 million, which includes the benefit of the multi-asset continuation vehicle or MACV that Bobby mentioned.

Speaker #2: Looking forward, credit continues its strong FRE trajectory. Ending 2025 with run-rate FRE of $60 million, as Bobby noted, this is ahead of our 2023 Investor Day target.

Speaker #2: And, consistent with the Q3 earnings call commentary, we ended the year with firm-wide run rate FRE of $17 million, which includes the benefit of the multi-asset continuation vehicle, or MACV, that Bobby mentioned.

Speaker #2: At the time of the Q3 call, we expected the MACV to be signed up for the year-end, so its impact was included in the $17 million forecast.

Chris Govan: At the time of the Q3 call, we expected the MACV to be signed up for the year-end, so its impact was included in the $17 million forecast. I should also note that since management fees on the MACV won't start accruing until the transaction closes later this quarter, we don't expect our quarterly FRE to reflect the $17 million annual run rate until Q2. With that in mind, we're projecting firm-wide FRE for 2026 in the low- to mid-$20 million range. And more importantly, we expect to exit 2026 with firm-wide run rate FRE that is more than twice the $17 million from the start of the year. And I think it's important to note, our assumptions around new fee-generating AUM in 2026 include only about 1/3 of AIG's $2 billion of expected commitments and no additional allocations from Convex.

Speaker #2: I should also note that, since management fees on the MACV won't start accruing until the transaction closes later this quarter, we don't expect our quarterly FRE to reflect the $17 million annual run rate until Q2.

Speaker #2: With that in mind, we're projecting firm-wide FRE for 2026 in the low to mid-$20 million range. And more importantly, we expect to exit 2026 with firm-wide run rate FRE that is more than twice the $17 million from the start of the year.

Speaker #2: And I think it's important to note our assumptions around new fee-generating AUM in 2026 include only about one-third of AIG's $2 billion of expected commitments, and no additional allocations from Convex.

Speaker #2: As an aside, for those of you wondering about the MACV economics, from an investing capital perspective, ONEX's expected proceeds from the sale represent pricing that is about 98% of where we had those investments marked at Q4.

Chris Govan: As an aside, for those of you wondering about the MACV economics, from an investing capital perspective, Onex's expected proceeds from the sale represent pricing that is about 98% of where we had those investments marked at Q4. However, the MACV has a couple of other benefits. It converts Onex's capital into fee and carry generating AUM, and it extends the life of management fees and carry on third-party capital. So when we add the present value of these benefits to the sales proceeds, we think of the value to Onex being well above the Q4 marks. Now, as alluded to at the outset, I think it would be helpful for me to add some color around the final funding of the Convex transaction, as well as Onex's go-forward liquidity position.

Speaker #2: However, the MACV has a couple of other benefits. It converts ONEX's capital into fee- and carry-generating AUM, and it extends the life of management fees and carry on third-party capital.

Speaker #2: So, when we add the present value of these benefits to the sales proceeds, we think of the value to ONEX being well above the Q4 marks.

Speaker #2: Now, as alluded to at the outset, I think it would be helpful for me to add some color around the final funding of the Convex transaction.

Speaker #2: As well as ONEX's go-forward liquidity position. At closing, ONEX grew $700 million under a NAV loan facility—$300 million less than originally contemplated in a $1 billion draw.

Chris Govan: At closing, Onex drew $700 million under a NAV loan facility, $300 million less than originally contemplated in a $1 billion draw. The reduced draw was possible due to incremental realizations and distributions from our private equity platforms. Following the close of the transaction, Onex retained approximately $400 million of cash and near cash and maintained access to $500 million of undrawn funds on the revolving portion of the NAV loan, providing total liquidity of approximately $900 million. As a reminder, Onex has almost $5 billion of PE investments relative to $735 million of unfunded commitments, of which only $330 million are to fund in their commitment period. So we're quite comfortable that this liquidity is sufficient to fund our capital needs, and we expect significant net PE realizations over the next few years.

Speaker #2: The reduced draw was possible due to incremental realizations in distributions from our private equity platforms. Following the close of the transaction, ONEX retained approximately $400 million of cash and near-cash, and maintained access to $500 million of undrawn funds on the revolving portion of the NAV loan.

Speaker #2: Providing total liquidity of approximately $900 million. As a reminder, Onex has almost $5 billion of PE investments, relative to $735 million of unfunded commitments.

Speaker #2: Of which only $330 million are to funds in their commitment period. So we're quite comfortable that this liquidity is sufficient to fund our capital needs, and we expect significant net PE realizations over the next few years.

Speaker #2: With this being my final earnings call as CFO, I want to close by thanking all of my colleagues at Onex who have supported me over the last 11 years, including, of course, Bobby.

Chris Govan: With this being my final earnings call as CFO, I want to close by thanking all of my colleagues at Onex who have supported me over the last 11 years, including, of course, Bobby. Most importantly, thank you, Gerry, for building this wonderful company and giving me the opportunity to serve as its CFO. Finally, a warm welcome to Megan McClellan, Onex's next CFO. I look forward to supporting her during the transition. That concludes the prepared remarks. We'll now be happy to take any questions.

Speaker #2: And most importantly, thank you, Jerry, for building this wonderful company and giving me the opportunity to serve as its CFO. Finally, a warm welcome to Meg McCullen, Onex's next CFO.

Speaker #2: I look forward to supporting her during the transition. That concludes the prepared remarks. We'll now be happy to take any questions.

Speaker #3: Certainly. And as a reminder, ladies and gentlemen, if you do have a question at this time, please press *11 on your telephone. If your question has been answered and you'd like to remove yourself from the queue, simply press *11 again.

Operator: Certainly. And as a reminder, ladies and gentlemen, if you do have a question at this time, please press star one one on your telephone. If your question has been answered and you'd like to remove yourself from the queue, simply press star one one again. One moment for our first question. Our first question comes from the line of Graham Fryett from TD Securities. Your question, please.

Speaker #3: One moment for our first question. Our first question comes from Graham Wrighty from TD Securities. Your question, please.

Speaker #4: Hi, good morning. I appreciate the disclosure you provided on Convex, and I think you flagged some areas in your presentation—slide 14—where you think there could potentially be offsets to what looks like it might be, or is, a softening pricing environment.

Graham Ryding: Hi, good morning. I appreciate the disclosure you provided on Convex. And I think you flagged some areas in your, in the presentation, slide 14, where you think could potentially offset what looks like it might be a softening or is a softening pricing environment. What areas do you think in particular are going to have the most impact here, and are you expecting Convex to continue to generate earnings growth in what might be sort of a later stage in the cycle?

Speaker #4: What areas do you think in particular are going to have the most impact here? And are you expecting Convex to continue to generate earnings growth with what might be sort of a later stage in the cycle?

Speaker #5: Yeah. Hi, Graham. It's Bobby. We're viewing 2026 as a sort of minus 4-ish percent rate environment for property and casualty. But just given where Convex is in its evolution, we believe those levers that we have to pull would more than offset that type of rate, that type of rate pressure.

Bobby Le Blanc: Yeah. Hi, Graham, it's Bobby. Like, we're viewing 2026 as a sort of minus 4-ish% rate environment for property and casualty. But just given where Convex is in its evolution, you know, we believe that those levers that we have to pull would more than offset that type of rate pressure. Those things include continuing to gain market share. Importantly, we are nowhere near growing into our expense base, so that operating leverage is going to continue as we continue to grow the top line. And on the left side of the balance sheet, we've really never done anything to sort of optimize yield enhancement, if you will.

Speaker #5: Those things include continuing to gain market share. Importantly, we are nowhere near growing into our expense base, so that operating leverage is going to continue as we continue to grow the top line.

Speaker #5: And on the left side of the balance sheet, we've really never done anything to sort of optimize yield enhancement, if you will. I think there's a very good opportunity there.

Bobby Le Blanc: I think there's a very good opportunity there without taking, you know, much incremental risk, by the way, including using some of the Onex products for, you know, a small portion of their balance sheet. And finally, you know, the way it works in insurance, as you grow into scale, you also grow into your asset leverage. And our asset leverage has meaningful upside from this point forward. So I feel quite good, you know, absent very strange, catastrophic events, that we have continuous earnings growth in 2026 from Convex.

Speaker #5: Without taking much incremental risk, by the way, including using some of ONEX's products for a small portion of their balance sheet. And finally, the way it works in insurance, as you grow on scale, you're also growing your asset leverage.

Speaker #5: And our asset leverage has meaningful, meaningful upside from this point forward. So I feel quite good. Absent very strange, catastrophic events, that you guys continue to see earnings growth in 2026 from Convex.

Speaker #4: Okay, great. And on the FRE outlook, Chris, that you provided—I appreciate the sort of ladder that you provided to get you to $35 million as a run-rate.

Graham Ryding: Okay, great. And, on the FRE outlook, Chris, that you provided, appreciate the sort of ladder that you provided to sort of get you to $35 million as a run rate. Is that- should we interpret that as sort of Q4, you hit that $35 million, like Q4 2026? And, did, did you say that 1/3 of the $2 billion from AIG is part of that sort of exit run rate?

Speaker #4: Should we interpret that as sort of Q4? You hit that $35 million, like Q4 '26. And did you say that one-third of the $2 billion from AIG is part of that sort of exit run rate?

Speaker #5: Yeah, so I'll take the second part first. That's correct. Our budget, I'll call it, has about one-third of that capital being allocated this year.

Chris Govan: Yeah, so I'll take the second part first. That, that's correct. Our, our budget, I'll call it, has about 1/3 of that capital being allocated, this year. And so it would be in the, fully in the year-end run rate, but obviously doesn't, fully impact in-year, revenues and profitability. In, in terms of when we expect to hit that 35, yeah, we're going to hit it at year-end. But that, again, given, you know, it's a run rate, and so you have capital being raised constantly throughout the year, you know, you sort of- we take the benefit of that all at year-end on an annualized basis. But you know, some of that revenue won't be fully impacting Q4. So you, you really don't expect...

Speaker #5: And so it would be fully in the year-end run rate. But obviously, it doesn't fully impact in-year revenues and profitability. In terms of when we expect to hit that $35, yeah, we're going to hit it at year-end.

Speaker #5: But that, again, given it's a run rate, and so you have capital being raised constantly throughout the year, you sort of we take the benefit of that all at year-end on an annualized basis.

Speaker #5: But some of that revenue won't be fully impacting Q4. So you really don't expect—we don't expect—to hit our run rate in terms of in-quarter earnings.

Chris Govan: We don't expect to hit our run rate in terms of quarter earnings until the following quarter. So you'd expect something close to a quarter of that in Q1 2027.

Speaker #5: Until the following quarter. So you’d expect something close to a quarter of that in Q1 ’27.

Speaker #4: Understood. Thank you.

Graham Ryding: Understood. Thank you.

Speaker #5: Yep. And one other thing, Graham, that those numbers only include a third of AIG, but they also include no dollars coming in from Convex, which I think is a very conservative assumption.

Bobby Le Blanc: Yeah. One other thing, Graham, that those numbers only are include 1/3 of AIG, but they also include no dollars coming in from Convex, which I think is a very conservative assumption.

Speaker #4: Understood.

Graham Ryding: Understood.

Speaker #3: Thank you. And our next question comes from the line of Bart Jursky from RBC Capital Markets. Your question, please.

Operator: Thank you. Our next question comes from the line of Bart Jersky from RBC Capital Markets. Your question, please.

Bart Dziarski: Great, thanks. Good morning, everyone. Wanted to ask around the software tech exposure. So thanks for giving that to us, Bobby, 4% invested capital. Just to confirm, is that also 4% of AUM? And could you split that between the exposure within private equity and private credit? Thanks.

Speaker #6: Great, thanks. Good morning, everyone. I wanted to ask about the software tech exposure, so thanks for giving that to us, Bobby—4% of invested capital.

Speaker #6: Just to confirm, is that also 4% of AUM? And could you split that between the exposure within private equity and private credit? Thanks.

Speaker #5: Yeah, so that is our overall NAV exposure to software—it's 4%. And things that are on our balance sheet, okay, so for that, it is mostly private equity.

Bobby Le Blanc: Yeah. So that is our overall NAV exposure to software is 4% and things that are on our balance sheet. Okay, so for that, it is mostly private equity, in particular, two software companies that we have, PowerSchool and Unanet. So we are very underweight on the private equity side, software. On the credit side, to their, to-- and I said credit twice on the, when I did the script, and I'll say it again, like they are meaningfully underweight software by more than 200 basis points against, you know, their concepts, which is great. And I'd be remiss just not to give that team a lot of credit, not only for being underweight software and AI risk type loans, but they're meaningfully underweight in direct lending.

Speaker #5: In particular, two software companies that we have are PowerSchool and Uninet. So we are very underweight on the private equity side in software. On the credit side, too—and I said credit twice.

Speaker #5: When I did the script, and I'll say it again, they are meaningfully underweight software by more than 200 basis points against their comp sets which is great.

Speaker #5: And I'd be remiss not to give that team a lot of credit—not only for being underweight in software and AI risk-type loans, but they're also meaningfully underweight in direct lending.

Speaker #5: And I'm sure you're watching and hearing all of the news around direct lending, particularly on the retail front right now. And they were not in any of the major credits of Tricolor, First Brands, and SACs.

Bobby Le Blanc: I'm sure you're watching and hearing all of the news around direct lending, particularly in the real retail front right now. They were not in any of the major credits of Tricolor, First Brands, and Saks. Like, that team has done a very good job of... We overinvested in analysts, right? And we heavily invested in state-of-the-art risk management tools. But I also give credit just to the judgment and seeing where the puck was going, so to speak, and I'm really proud of, you know, all of our investment teams in terms of where we sit on a relative basis and an absolute basis with exposure to software.

Speaker #5: That team has done a very good job of—we overinvested in analysts, right? And we heavily invested in state-of-the-art risk management tools. But I also give credit just to the judgment and seeing where the puck was going, so to speak.

Speaker #5: And I'm really proud of all of our investment teams in terms of where we sit on a relative basis, and on an absolute basis with exposure to software.

Speaker #5: Yeah. And Bart, just for a second, just on your total AUM question and the 4%, I don't have an exact number, but I know that the total private equity AUM exposure would be less than that 4%.

Chris Govan: ... Yeah, and Bart, just Chris for a second. Just on your total AUM question and the 4%, I don't have an exact number, but I know that the total private equity AUM, the exposure would be less than that 4%. We're a little overweight just in terms of allocation, and commitments to funds, compared to the platform as a whole.

Speaker #5: We're a little overweight just in terms of allocations and commitments to funds compared to the platform as a whole.

Speaker #6: Okay, great, thanks. That's very helpful. And then just on the FRE guide—so thanks for unpacking that for us, Chris. I'm wondering, could you give us the latest on fundraising, OP6—I think that fund has now been launched in Q1, if I'm not mistaken?

Bart Dziarski: Okay, great. Thanks, thanks. That's very helpful. And then just on the FRE guide, so thanks for unpacking that for us, Chris, and wondering, could you give us kind of the latest on fundraising, you know, OP six? I think that fund has now been launched in Q1, if I'm not mistaken, but maybe just your latest thoughts, sizing, timing of that fund. Thanks.

Speaker #6: But maybe just your latest thoughts—sizing, timing of that fund. Thanks.

Speaker #5: Yeah, I wouldn't call it officially launched, but we're certainly in the process of gearing up for fundraising real-time. We're not going to get into today's size and timing, but certainly, we'd be looking to have a first close at some point. There's more we can say on that point.

Bobby Le Blanc: Yeah, I wouldn't call it officially launched, but we're certainly in the process of gearing up for fundraising, like, real-time. We're not going to get into today's size and timing, but, you know, certainly we'd be looking to have a first close, at some point, in 2026. But there's really not much more we can say on that point. Rene's still in the market with his ONCAP fund. You know, we expect that to close sometime in the next quarter or two. I don't see ONCAP in market, in 2026, just given they're about halfway through on their investment period in their current fund. Then as for the rest of our credit products, we're always in market.

Speaker #5: Ronnie's in the market still with his OSCO fund. We expect that to close sometime in the next quarter or two. I don't see OnCap in market in 2026 just given they're about halfway through on their investment period in their current fund.

Speaker #5: And then as for the rest of our credit products, we're always in market vis-à-vis trying to sell every day because those are not traditional fund structure products.

Bobby Le Blanc: You know, vis-a-vis trying to sell every day because those are not traditional, you know, fund structured products. They're things that our, our LPs and other people can invest in every day.

Speaker #5: There are things that are RLPs, and other people can invest in every day.

Speaker #6: Okay, great. And then just one more, if I may. You made an interesting point around Convex Capital coming into Onex. So maybe just help us understand that.

Bart Dziarski: Okay, great. And then just one more, if I may. You made an interesting point around Convex coming into Onex. And so maybe just help us understand that, like, the duration of Convex's liabilities, what assets would they lend themselves to, to be managed by Onex? Like, how would that matching work?

Speaker #6: The duration of Convex's liabilities—what assets would they lend themselves to, to be managed by ONEX? How would that matching work?

Speaker #5: Yeah. So, unlike life insurance, property casualty insurance has less asset leverage, if you will, which is why you see so many people going after these annuity blocks—which we looked at, by the way, and never really could get comfortable with the pricing.

Bobby Le Blanc: Yeah, so like, and unlike life insurance, property casualty insurance has less asset leverage, if you will-

Bart Dziarski: Right.

Bobby Le Blanc: which is why you see so many people going after these annuity blocks, which, which we looked at, by the way, and never really could get comfortable with the, with the pricing. And we knew this asset so much better. It's just an easier place for us, to, to begin. But, it depends on the person investing, the dollars into, into the funds. People, if insurance companies, which are people, are firms, obviously, that we're trying to do business with outside of even AIG and, and Convex. For those that are overcapitalized, that can afford risk-based capital charges, they may be more evenly split between, PE and credit. But the riskier the asset, the higher the capital charge for an insurance company when they invest in alternative asset management.

Speaker #5: And we knew this asset so much better. It's just an easier place for us to begin. But it depends on the person investing the dollars into the funds.

Speaker #5: People, insurance companies—which are people—are firms, obviously, that we're trying to do business with outside of even AIG and Convex. For those that are overcapitalized, that can afford risk-based capital charges, they may be more evenly split between PE and credit.

Speaker #5: But the riskier the asset, the higher the capital charge for an insurance company when they invest in alternative asset management. So most focus on credit, but a lot also focus on PE, and the percent of PE relative to credit for infrastructure, real estate, or whatever asset class you want to talk about—depending on the risk profile and their capital base, they may be more aggressive or less aggressive.

Bobby Le Blanc: So most focus on credit, but a lot also focus on PE and the percent of PE relative to credit or infrastructure, real estate, or whatever asset class you want to talk about, depending on the risk profile and their capital base, they may be more aggressive or less aggressive. But they tend to lean more towards credit than PE. But for what we're looking at with AIG and Convex in the near term, I think it could be more balanced than you would expect from a PE and credit perspective, but we're working on that right now with AIG and Convex. But you should also think about Convex in terms of, you know, how much of their asset base would be in sort of non-investment grade, high quality.

Speaker #5: But they tend to lean more towards credit than PE, but for what we're looking at with AIG and Convex in the near term, I think it could be more balanced than you would expect from a PE and credit perspective.

Speaker #5: But we're working on that right now with AIG and Convex. So you should also think about Convex in terms of how much of their asset base would be in sort of non-investment-grade high-quality.

Bobby Le Blanc: Like the current portfolio at Convex is like literally a double A plus portfolio. You shouldn't be ever thinking that more than 10% goes into those type of assets. 90% of what Convex does will always be sort of double A plus pristine type assets that are assets matched up against liabilities.

Speaker #5: The current portfolio at Convex is literally a AA+ portfolio. You shouldn't ever be thinking that more than 10% goes into those types of assets.

Speaker #5: 90% of what Convex does will always be sort of AA+ pristine type assets that are assets matched up against liabilities.

Speaker #6: Great. Very helpful. Thanks, Bobby.

Bart Dziarski: Great. Very helpful. Thanks, Bobby.

Speaker #5: Thank you.

Bobby Le Blanc: Thank you.

Speaker #1: Thank you. This does conclude the question-and-answer session of today's program. I'd like to hand the program back to Bobby LeBlanc for any further remarks.

Operator: Thank you. This does conclude the question and answer session of today's program. I'd like to hand the program back to Bobby Le Blanc for any further remarks.

Speaker #5: Thank you very much. And thanks for participating on the call. Chris and I were amusing. We're going to try to get this to not be on a Friday.

Bobby Le Blanc: Thank you very much, and thanks for participating on the call. Chris, I'm assuming we're going to try to get this to not be on a Friday, going forward. I think that'll be good for everybody. But before we close the call, just once, once again, I want to thank you, Chris, for your partnership and, and all that you've done for Onex, you know, over your career here. You're not going anywhere, so I'm, I'm gonna start with that. But, as your, as your role, changes, I just want to make sure we thank you for all you've done to date. And as for our new CFO, Meg McClellan, we look forward to her joining us, and she'll be on the next earnings call. And, I look forward to introducing her then.

Speaker #5: Going forward, I think that'll be good for everybody. But before we close the call, I just once again want to thank you, Chris, for your partnership and all that you've done for ONEX.

Speaker #5: Over your career here, you're not going anywhere. So I'm going to start with that. But as your role changes, I just want to make sure we thank you for all you've done to date.

Speaker #5: And as for our new CFO, Meg McClellan, we look forward to her joining us, and she'll be on the next earnings call. I look forward to introducing her again.

Speaker #5: Until then, have a great day and a great weekend. Thanks again.

Bobby Le Blanc: Until then, have a great day and a great weekend. Thanks again.

Operator: Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.

Q4 2025 Onex Corp Earnings Call

Request a DemoDemo

ONE

Onex

Earnings