Onex Credit posts record fees while credit marks slip

Onex ended June with $43.2bn in fee-generating assets, according to Alternative Credit Investor. Onex Credit supplied $30.6bn of that total. The credit arm's fee-generating AUM had been $29.8bn at the close of 2025. The growth came from three CLO deals in the quarter, which added $1.4bn to the fee base.

Structured credit posted a record $19m in fee-related earnings for the quarter, Onex said. In July, the firm held the final close of Onex Structured Credit Opportunities Fund II, with more than $500m in new commitments and AIG among the backers. That close came about five months after Onex completed its acquisition of Convex, a property and casualty insurer. The deal has reshaped how the Toronto-based manager thinks about its balance sheet.

AIG's commitment is in line with the current LP mix in private credit. Private Credit Daily previously reported that Mercer's latest survey ranked private credit ahead of public fixed income for insurers. Insurance balance sheets have been among the most durable sources of capital for credit funds this cycle. AIG's participation in a structured credit vehicle suggests appetite beyond direct lending, extending to CLOs and opportunistic strategies. It also gives Onex an anchor LP that could reinvest in future funds, a point the firm is likely to make as it raises more capital.

CLO activity is holding up better than direct lending. Private Credit Daily has reported that US direct lending volume in the latest quarter was less than half its first-quarter pace. Onex's direct lending exposure is less than 1% of investing capital, the firm said. The credit book sits mostly in CLOs and structured credit, not the segment under the most pressure. Structured credit produced a record quarterly fee number even as direct lending volume sank.

Raising or extending a CLO locks in management fees for the vehicle's reinvestment period, which is why Onex counts that $1.4bn as fee-generating AUM. The $500m fund close adds another fee stream, and AIG gives the fund an anchor LP. Together, they give Onex a recurring fee base and an anchored fund, which should help as the firm reshapes its investing mix.

Fee income and investment marks moved in opposite directions. Onex said volatile markets produced a $5m net loss on its credit investments in the quarter. That compares with a $33m net gain a year earlier. The loss is small next to the firm's $9.5bn of investing capital. It came in a quarter when structured credit fees hit a record. The July close of the structured credit fund, after the quarter ended, shows the loss did not slow fundraising.

The balance sheet now revolves around Convex. Investing capital stood at $9.5bn at the end of June. It had been $8.7bn at year-end. A year earlier, it was $8.4bn. Convex generated $719m in adjusted net income over the twelve months through June. That was up from $520m a year earlier. The insurer gives Onex a larger and steadier source of earnings to absorb swings in credit marks.

The quarter also shows how far fee-generating AUM can drift from invested capital. The $30.6bn fee figure is a management-fee base, not the size of the credit book in the market. Onex's investing capital, at $9.5bn, is the pool that absorbed the $5m loss. Fee AUM can therefore outpace the deployed book, as it did here.

CEO Bobby Le Blanc tied the credit results to that broader repositioning. "Our credit platform had another active quarter for CLOs and held the final close of its second structured credit opportunities fund," he said. He also cited Convex's results and private equity realisations as supporting the shift.

Fee-generating AUM is compounding through CLO issuance even as the investments behind the existing book lost money. The $500m raised for the second structured credit fund is committed but not yet deployed. The early performance of that capital will tell whether the second-quarter volatility was a buying opportunity or a caution flag.