Onex Corporation (TSX:ONEX) announced December 4 that ONCAP, its mid-market private equity platform, was buying IntraPac International Corporation, a North Carolina company that makes all kinds of packaging products, including glass and plastic bottles, single- and double-walled jars, deodorant sticks, etc.
Interestingly, IntraPac was sold by CI Capital Partners, itself a private equity investor. While the terms of the deal weren’t released, Onex’s ONCAP IV fund invested US$120 million of equity with Onex putting in US$45 million of that overall amount.
My guess is the acquisition price, including borrowed debt, was between US$300 and $480 million; it’s not one of its biggest deals in 2017 — a year in which Onex has been busy.
Here’s a rundown of Onex’s most significant acquisition this past year and what lies ahead in 2018.
In March, Onex completed its biggest deal of the year buying a British operator of recreational vehicle parks for US$1.8 billion, including US$627 million in equity from Onex Partners IV, an investment fund it uses for larger purchases.
The private equity model looks to double the value of the business over three to five years by increasing the top and bottom line and then selling for an annualized total return of 30% or considerably higher.
This deal suggests the RV business, one of the hottest in recent years, will continue to grow for at least a few more. You might consider picking up shares in one of the publicly traded RV manufacturers, such as Thor Industries, Inc. (NYSE:THO).
Unfortunately, given high valuations and time constraints on making these types of big deals possible, Onex only has made one acquisition of more than US$1 billion in 2017.
However, eight of its operating businesses did manage to make 15 add-on acquisitions for US$324 million while paying down US$1.6 billion in debt.
Busy with IPOs
Two of its portfolio companies went public in 2017 — Jeld-Wen Holding Inc. (NYSE:JELD), a window manufacturer in January at $23, and Emerald Expositions Events Inc. (NYSE:EEX), a trade show operator in April at $17 — and they’re both up significantly from their IPO prices.
In the case of Jeld-Wen, Onex acquired 83% of the window manufacturer in May 2011 for US$871 million; US$689 million of the purchase price was in equity and the rest was in debt.
Six years later through the IPO and two subsequent secondary offerings, Onex sold 36.4 million shares for a total of US$1.1 billion while still holding on to 32.9 million shares (31.2% ownership) valued at US$1.2 billion.
As it stands now, Onex has generated a 22.5% annualized return on its investment with more to come.
Bottom line on Onex stock
Onex has almost US$10 billion in uncalled capital ready to invest when the right deals come along.
Look for more acquisitions in 2018.
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Fool contributor Will Ashworth has no position in any stocks mentioned.