Onex CEO Le Blanc Channels Buffett With Big Bet on Insurance

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It didn’t launch Onex Partners, its platform for large-scale private equity deals, until the early 2000s. That inaugural fund was a success, producing a 38% net internal rate of return. None of the subsequent vintages came close to that.

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The firm’s stumbles really began a little more than a decade ago, when it raised $5.7 billion for the fourth version of Onex Partners. Major institutions such as the California Public Employees’ Retirement System made large commitments, but the results were disappointing, and the fund returned just 6% annualized. 

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Onex’s acquisitions of wealth manager Gluskin Sheff and private credit shop Falcon Investment Advisors fizzled as the firm struggled to grow its assets.

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Meanwhile, Schwartz remained in charge past his 80th birthday. In 2022, he proposed stepping down as CEO but keeping his voting control until 2028. He eventually agreed to shorten that to 2026. 

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Onex “took their eye off the ball on what made them great, then they handled succession very poorly,” said Langdon Equity Partners founder Greg Dean, whose funds owned Onex shares until 2019. 

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Image Overhaul

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Le Blanc is now on a mission to recast the firm’s image. He cast off some late Schwartz acquisitions, including Gluskin Sheff, and paused fundraising for the sixth vintage of the flagship vehicle. 

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Now he and private equity head Tawfiq Popatia are liquidating holdings to return cash to investors to improve the ratio of distributions to paid-in-capital, or DPI, as they set out to raise another large fund. 

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Le Blanc said a “reasonable DPI number” is necessary for jumping back into the fundraising market. 

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In October, Onex completed the sale of 25% of WestJet, Canada’s second-largest airline, allowing the firm to return all of investors’ original capital while keeping 75% of the business. Soon after, the money manager sold a majority stake in insurance brokerage OneDigital, fetching about $1.3 billion for the firm and its partners. 

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“They’re past some of the challenging performance — the more recent performance has just looked a lot better,” Mark Rutherford, portfolio manager at Mawer Investment Management, said in an interview. “That should set themselves up to raise subsequent funds and keep growing the business and scale it further.” 

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But the Convex deal marks the biggest transformation. 

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Founded in 2019, Convex is led by insurance industry veterans including CEO Brand and Executive Chairman Stephen Catlin. Onex helped capitalize Convex to get it started and stuck with it through those first few years of large catastrophes. 

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“Having losses is a good thing,” Brand said. “It actually enables you to demonstrate there is some purpose in actually buying insurance.” 

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Usually, a string of expensive disasters leads to much higher prices for policies. As long as a firm can successfully underwrite risk over time, it can benefit from billions of dollars of cost-free “float” to invest. 

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It was that insight that led Buffett to put insurance at the heart of Berkshire. Le Blanc is now taking the same approach on a smaller scale.   

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Bermuda Meeting

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In 2024, during a meeting in Bermuda, Le Blanc proposed a change for Convex. Rather than own the insurer through an Onex-sponsored private equity fund, which would inevitably result in a sale, he wanted to control it for the long-term.

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The result was a complex deal that values Convex at $7 billion, with Onex owning 63% of the insurer and AIG taking 35%. At the same time, New York-based AIG agreed to acquire a 9.9% stake in Onex and put as much as $2 billion into the Canadian firm’s private equity and credit funds.