Onex : 2024 Annual Information Form

Published: 2025-02-21 07:06:11 ET ONEX.TO

Onex Corporation

Annual Information Form for the Year Ended December 31, 2024

February 20, 2025

TABLE OF CONTENTS

KEY DEFINITIONS AND INTERPRETATIONS

INCORPORATION BY REFERENCE

NAME, ADDRESS AND INCORPORATION

BACKGROUND AND GENERAL DEVELOPMENT OF THE BUSINESS

EMPLOYEES

CODE OF BUSINESS CONDUCT AND ETHICS

FINANCIAL STATEMENTS AND INFORMATION REGARDING REPORTABLE SEGMENTS....

RISK FACTORS

DIVIDENDS

CAPITAL STRUCTURE

MARKET FOR SECURITIES

DIRECTORS, OFFICERS AND EXECUTIVES

REGISTRAR AND TRANSFER AGENT

INTERESTS OF EXPERTS

EXTERNAL AUDITOR SERVICE FEES

AUDIT, NOMINATING AND GOVERNANCE COMMITTEE

ADDITIONAL INFORMATION

APPENDIX A: AUDIT, NOMINATING AND GOVERNANCE COMMITTEE CHARTER

KEY DEFINITIONS AND INTERPRETATIONS

The following is a list of defined terms and names used throughout this Annual Information Form:

AIF

This Annual Information Form for Onex Corporation dated

February 20, 2025.

Company

Unless the context otherwise requires or implies, references to the

"Company" are intended to be broad and include Onex' various

investment and asset management platforms and their respective

predecessors, subsidiaries and other investee businesses

irrespective of legal form.

OCAM

Onex Canada Asset Management Inc. (formerly Gluskin Sheff +

Associates Inc.) and its subsidiaries

ONCAP or ONCAP Funds

ONCAP I LP, ONCAP II LP, ONCAP III LP, ONCAP IV LP

and ONCAP V LP collectively

Onex

Onex Corporation

Onex Credit

Onex Credit Partners LLC, Onex Credit Management LLC and

their subsidiaries

Onex Partners or Onex Partners Funds

Onex Partners I LP, Onex Partners II LP, Onex Partners III LP,

Onex Partners IV LP, Onex Partners V LP and Onex Partners

Opportunities Fund LP collectively

2024 Information Circular

Notice of Annual and Special Meeting of Shareholders and

Information Circular of Onex dated March 25, 2024.

2025 Information Circular

Notice of Annual Meeting of Shareholders and Information

Circular of Onex to be filed in connection with Onex' 2025 annual

meeting scheduled to be held on May 8, 2025.

Throughout this AIF, all references to "$" or "dollars" are to U.S. dollars unless otherwise indicated. All references to "C$" are to Canadian dollars.

INCORPORATION BY REFERENCE

This AIF incorporates by reference certain information contained in Onex' 2024, 2023 and 2022 Management's Discussion & Analysis, which are available at www.sedarplus.ca. Those filings are referred to herein as the "2024 MD&A", "2023 MD&A" and "2022 MD&A", respectively. This AIF also incorporates certain information contained in Onex' 2025 and 2024 Information Circulars, which are/will be available at www.sedarplus.ca.

NAME, ADDRESS AND INCORPORATION

Onex was incorporated under the Business Corporations Act (Ontario) on December 30, 1980 and its corporate name was changed to its present name on March 11, 1987. A summary of the Company's share provisions can be found in the 2024 Information Circular and the amended and restated articles of incorporation of Onex are available at www.sedarplus.ca. Onex' registered and principal office is located on the 49th Floor, 161 Bay Street, P.O. Box 700, Toronto, Ontario, Canada M5J 2S1. Onex' Subordinate Voting Shares ("SVS") are listed on the Toronto Stock Exchange ("TSX") under the symbol "ONEX".

BACKGROUND AND GENERAL DEVELOPMENT OF THE BUSINESS

Onex was founded in Toronto, Canada to make private equity investments in companies located primarily in North America. Onex has since grown its investment activities and has evolved into a multi-strategy alternative asset management business which manages and invests capital across private equity and public and private credit investment platforms on behalf of its shareholders, institutional investors and high net worth private clients. Onex' current investment platforms include: Onex Partners, private equity funds focused on mid- to large-cap opportunities in North America and Western Europe; ONCAP, private equity funds focused on middle market and smaller opportunities in North America; and Onex Credit which manages various investment strategy products, including funds focused on structured credit, opportunistic credit, direct lending and liquid investment strategies. At December 31, 2024, Onex had $8.3 billion of its own investing capital, primarily invested in or committed to its private equity and private credit platforms. Additionally, at December 31, 2024, Onex also had assets under management1 of $42.7 billion from institutional investors and private clients. Onex generates annual management fee income on $34.9 billion of assets under management.

Onex operates from offices located in Toronto, Ontario; New York City, New York; Englewood Cliffs, New Jersey; and London, England.

The restated articles of incorporation of Onex (the "Articles") provide for authorized share capital consisting of an unlimited number of senior preferred shares, an unlimited number of junior preferred shares, 100,000 Multiple Voting Shares ("MVS") and an unlimited number of SVS. Onex completed an initial public offering of SVS on the Toronto Stock Exchange in 1987 and as of December 31, 2024: 71,715,920 SVS were issued and outstanding, having an equity market capitalization of approximately $5.6 billion (C$8.1 billion); 100,000 MVS have been issued to and are personally held (directly or indirectly) by Gerald W. Schwartz, the founder and Chairman of Onex since 1987; and no senior preferred shares or junior preferred shares were issued and outstanding. In May 2023, 98.4% of Onex SVS shareholders approved a special resolution to amend the articles of incorporation to revise the definition of "Event of Change" to, amongst other things, adopt a new three-year sunset provision to fix the end date of the MVS voting structure. In connection with the May 2023 approval of the amended articles of incorporation, Mr. Schwartz, then Founder, Chairman and Chief Executive Officer of Onex, transitioned to the role

1 The glossary in Onex' 2024 annual MD&A further describes the composition of assets under management.

of Founder and Chairman of the Onex Board and Mr. Robert M. Le Blanc was appointed to the role of Chief Executive Officer and President of Onex. The succession of Mr. Le Blanc to the Onex CEO role and the approval of the three-year sunset to conclude the MVS voting structure marked an important step forward in Onex' ongoing transition from a founder-centric controlled investment company to a "one share, one vote" multi-strategy alternative asset manager. Further details regarding the amendment to the articles of incorporation are set forth under "Approval of the Articles Amendment" of the Onex 2023 Information Circular which is available at www.sedarplus.ca.

Private Equity

Onex has generated a gross multiple of capital of 2.5 times and a gross internal rate of return2 of 27% on its publicly- traded, realized and substantially realized private equity investments.

Onex' private equity investment activities are conducted primarily through two platforms: Onex Partners (for upper- middle market transactions) and ONCAP (for lower-middle market transactions). Onex participates in the Onex Partners and ONCAP investment funds as the largest limited partner investor and through its direct and indirect ownership of the funds' general partners and managers. A discussion of the Company's significant private equity transactions, fund-level developments and performance is set forth under "Private Equity Investing" of the 2024 MD&A, 2023 MD&A and 2022 MD&A, which discussions are incorporated herein by reference.

Onex Partners

Onex Partners has raised six institutional private equity funds since 2003. Each Onex Partners fund was established with a view to making control investments in businesses organized or domiciled in North America and, opportunistically, in Western Europe. Onex Partners typically pursues investments requiring at least $125 million of equity. As at December 31, 2024, the Onex Partners Funds comprised:

Aggregate

Total

Remaining Investments

Fund

Vintage

Commitments(1)

Investments(2)

at Original Cost(2)

Onex Partners I

2003

$1.7 billion

10 companies

none(3)

($1.5 billion)

Onex Partners II

2006

$3.5 billion

7 companies

none(3)

($2.9 billion)

Onex Partners III

2009

$4.7 billion

10 companies

3 companies

($4.2 billion)

($1.2 billion)

Onex Partners IV

2014

$5.7 billion

13 companies

6 companies

($5.6 billion)

($3.0 billion)

Onex Partners V

2018

$7.15 billion

13 companies

14 companies

($6.1 billion)

($6.5 billion)

Onex Partners

2024

$1.0 billion

2 companies

Opportunities

($314 million)

2 The glossary in Onex' 2024 annual MD&A further describes the composition of gross multiple of capital and gross internal rate of return.

In aggregate, Onex Partners Funds have invested approximately $21.7 billion, or $27.2 billion including Onex and affiliated vehicles, in 52 operating companies since 2003.

ONCAP

ONCAP has raised four institutional private equity funds since 1999 and is currently fundraising for ONCAP V, which has aggregate commitments of approximately $1.1 billion, including Onex' commitment of $250 million. Each ONCAP fund was established with a view to making control investments in small and medium-sized businesses organized or domiciled in North America. As at December 31, 2024, the ONCAP Funds comprised:

Aggregate

Total

Remaining Investments

Fund

Vintage

Commitments(1)

Investments(2)

at Original Cost(2)

ONCAP I

1999

C$400 million

6 companies

none(3)

(C$208 million)

ONCAP II

2006

C$574 million

8 companies

none(3)

(C$483 million)

ONCAP III

2011

C$800 million

8 companies

2 companies

(C$697 million)

(C$203million)

ONCAP IV

2016

$1.1 billion

13 companies

11 companies

($1.1 billion)

($1.0 billion)

ONCAP V

2024

$1.1 billion(4)

3 companies

($399 million)

In aggregate, ONCAP Funds have invested approximately $3.1 billion, including Onex and affiliated vehicles, in 35 operating companies.

Other Investments

Prior to the formation of the Onex Partners and ONCAP Funds, Onex directly invested its capital in and built 31 businesses, completing 148 acquisitions having an aggregate transaction value of $13.6 billion. From time to time, Onex may directly invest its capital outside of its private equity funds where select opportunities are not ideally suited for Onex Partners or ONCAP fund mandates. Onex currently holds two such direct investments in Ryan Specialty Group LLC and Unanet Inc.

Credit Investments

Onex' credit investment activities are conducted primarily through Onex Credit, which had $25.2 billion of assets under management as of December 31, 2024. Onex Credit invests in non-investment grade debt through its collateralized loan obligations ("CLOs") as well as managing investment funds in public and private credit, structured, opportunistic, direct lending, liquid and other opportunistic credit strategies ("Credit Funds").

In 2019, Onex acquired Gluskin Sheff + Associates Inc. which included its client wealth management advisory business as well as its public credit and equities investment fund management business. In early 2023, Onex announced an agreement with RBC Wealth Management Canda ("RBC WMC") to expand distribution of certain

Onex Credit, Private Equity and legacy OCAM investment strategies, funds, and products through RBC WMC. In connection with the agreement, all OCAM client wealth management advisors were offered employment with RBC WMC and Onex completed the wind down process of legacy OCAM client wealth management and wealth planning operations in 2024. In 2020, Onex acquired Falcon Investment Advisors, LLC ("Falcon") to offer additional credit investment strategies, including private credit financing solutions and opportunistic mezzanine strategies, as part of the Onex Credit platform. In 2024, as part of an effort to focus on its core businesses, Onex Credit divested its majority stake in Falcon, maintaining a 20 percent minority stake along with future carried interest participation in certain Falcon managed funds.

Real Estate

Onex established the Onex Real Estate platform in January 2005 with a mandate to invest in attractive real estate assets in North America. Onex Real Estate participated in an aggregate of seven investments and as of December 31, 2024 completed the final realization of its remaining condominium investment units in Flushing Town Center, located in Flushing, New York. Onex completed the wind down process of the Onex Real Estate platform and its operations in 2024.

EMPLOYEES

Onex had 373 employees as of December 31, 2024.

CODE OF BUSINESS CONDUCT AND ETHICS

Onex has a Code of Business Conduct and Ethics that sets out our commitment to a culture of honesty, integrity and accountability as well as the expected conduct of Onex directors, officers and employees and the subsidiaries and controlled affiliates by the Corporation.

FINANCIAL STATEMENTS AND INFORMATION REGARDING REPORTABLE SEGMENTS

Pages 27 to 30 of the 2024 MD&A and note 29 to the Company's audited annual consolidated financial statements for the year ended December 31, 2024 set forth detailed financial and other information in respect of its reportable segments, both of which are available at www.sedarplus.caand is incorporated by reference herein.

RISK FACTORS

The following risk factors, and the information incorporated by reference herein, should be considered carefully. These risks could materially and adversely affect the Company's future operating results and could cause actual events to differ materially from those described in forward-looking statements relating to the Company.

Onex believes that an assessment of the risks associated with an investment in Onex shares first requires an understanding of the fundamental drivers of Onex' business. As described above (see "Background and Development of the Business"), Onex is an investor in, and a manager of, private equity and credit strategies investment platforms. Fundamentally, our business is to invest our own capital and to manage and invest third-party investor capital.

Details regarding Onex' corporate investments are set forth in Note 5 to the Company's December 31, 2024 Financial Statements available at www.sedarplus.ca. That information is updated quarterly and appears in the corporate investment note disclosure in the Company's quarterly financial statements.

Our ability to create value through our management fee, carried interest and performance fee opportunities will generally be driven by our ability to raise new investment funds in a competitive market for investor capital, maintain and grow the market value and income generation of our fee-generating assets under management, to do so on advantageous terms and to invest that capital and successfully realize positive returns. To the extent that we are unable to raise successor investment funds of a comparable size and with comparable financial terms to prior investment funds due to the market environment or the performance of our current or predecessor investment funds, our financial opportunities from management fee, carried interest and performance fees may opportunities revenues may decrease.

We therefore face risks related to (i) our general business activities; (ii) the preservation and growth of our own capital invested through our Onex Partners Funds and ONCAP Funds (collectively, "PE Funds") and in businesses in which we may invest outside the PE Funds ("PE Investments"); (iii) the preservation and growth of our own capital in the structured debt and equity investments made in and through certain of our Credit Funds ("Credit Investments"); and (iv) our activities as general partner of our sponsored private equity funds and credit strategies funds ("PE Funds" and "Credit Funds", respectively, and collectively, the "Funds") in managing and investing third-party capital. For greater certainty, our Credit Investments include our investments in the "equity tranche" or other tranches of certain CLOs within our Onex Credit investment platform. CLOs are leveraged structured vehicles that hold a diversified asset portfolio funded through the issuance of long-term debt in a series of rated tranches of secured notes and equity. Finally, references to "Funds" in statements in these risk factors relating to FGAUM, performance fee opportunities or risks associated with client or investor satisfaction, perception, retention or growth, or where the context otherwise requires or implies, generally include the segregated accounts and private pooled fund vehicles offered by Onex Credit. Onex does not invest its own capital in those such accounts or vehicles but they may represent a material element of Onex' performance fee opportunities.

The value and price of our shares will generally reflect the current and anticipated value of our PE and Credit Investments, and other investments and assets as well as our management fee, carried interest and performance fee opportunities. Those values and opportunities will change from time to time, including for reasons outside our control, and may not be reflected in the market trading price of our shares.

This section sets out certain risks that could be material to Onex and could have a material adverse effect on Onex' business, financial condition, results of operations and cash flows and the value of our shares. The risks described below are not the only risks that may impact our business, operations and financial results. Additional risks not currently known to us or that we currently believe are immaterial when considered across our investment and asset management activities as a whole may also have a material adverse effect on future business, operations and performance.

Volatility in the Value and Price of Our Subordinate Voting Shares

The trading price of our SVS shares can be volatile due to market conditions and other factors and cannot be predicted. Shareholders may not be able to sell their shares at or above the price at which they purchased such shares. The volume, value and trading price of our shares could fluctuate significantly in response to factors both related and unrelated to our operating or financial performance and/or future prospects, including, but not limited to: (i) variations in our operating results and financial condition; (ii) changes in the values of our investments (including in the market price of the publicly traded businesses in which our PE Funds have invested and/or our publicly traded Credit Investments); (iii) the extent to which our Funds are able to achieve their investment objectives and investor perception of our and their performance; (iv) changes in the amount of distributions, dividends or interest paid by or in respect of our investments and our ability to successfully monetize or otherwise realize on our investments; (v) differences between our actual financial and operating results and those expected by investors and analysts; (vi) changes in analysts' recommendations or earnings projections; (vii) the depth and liquidity of the market for our shares; (viii) the departure of key personnel and successful leadership transition; (ix) conduct or actions by our personnel that adversely affect our reputation; (x) material announcements by us, our affiliates or our competitors; (xi) market conditions and events specific to sectors and industries to which we operate and invest; (xii) investor perception of our businesses and the industries in which we operate and invest; (xiii) the sale of securities by senior management or significant shareholders; (xiv) changes and developments in general economic, market, political and social conditions, including as a result of geopolitical instability and related economic disruptions; (xv) currency exchange rates, including in particular the Canadian dollar, being the currency in which our shares trade, and the US dollar, which is the functional currency of our Funds and of a substantial number of our PE and Credit Investments; (xvi) actual or prospective changes in applicable laws, regulations or rules; and (xvii) the materialization of other risks described in these risk factors.

Macro-Economic Volatility; Geopolitical Conditions; Market Dislocation; Trade Barriers

General macro-economic and geopolitical conditions, including, without limitation: adoption of protectionist trade policies and tariffs; disruptions to international free trade zones and agreements; global supply chain interruptions; interest rates, price and wage inflation; domestic and international political circumstances and developments; changes in gross domestic product growth; general levels of economic activity; labour market challenges; impacts from the continuing military conflicts in Ukraine-Russia and the Middle East region; fluctuations in the market prices of securities; changes to fiscal and monetary policy; the pace and frequency of natural disasters attributable to climate change; participation by other investors in the financial markets; economic uncertainty; public health crises; heightened exposure to corruption; restrictions on foreign currency exchange and movement; and other

events outside of our control, may affect the activities of Onex, our Funds and the businesses in which our Funds invest, the value of our PE and Credit Investments, and the investment strategies of Onex Credit and OCAM. Liquidity and volatility, credit availability and market and financial conditions generally could change at any time. These changes could have a material adverse effect on our ability to complete investment programs, our ability to realize on PE and Credit Investments, the terms of those investments, or our business, operations, condition or prospects or those of the operating businesses in which our PE Funds invest or that are the direct or indirect counterparties to our Credit Investments ("Borrowers"). Challenging market and economic conditions, including those caused by protectionist trade policies and tariffs, changes in tax laws, disputes under international trade agreements and other regulatory restrictions, may make it difficult for our Funds to find suitable investments or secure financing for investments on attractive terms. Such conditions may also result in reduced opportunities for our Funds to exit and realize value from their investments or the ability to refinance investments. In addition, in the event that sources of finance are not readily available or become too costly, it may be difficult for potential purchasers to secure capital to purchase our Funds' investments.

Variable Earnings and Cash Flows

Our earnings and cash flows are highly variable from quarter to quarter, reflecting the volatility of investment returns, carried interest and performance fees earned from our business activities. Onex' entitlement to share in the investment gains generated for third-party investors in the Funds will generally depend on the terms of the Fund's governing agreements, the extent to which we may agree on different terms with one or more Fund investors, the realized and unrealized gains or losses reported by each Fund, and whether the Fund's performance threshold is met, if applicable. Further, (i) many of our PE and Credit Funds provide investors with the right to remove us as general partner, terminate the investment period or accelerate the liquidation of a Fund for cause or for convenience, and (ii) certain of our Credit investment strategies allow investors or clients to reduce or withdraw their investments on relatively short notice, any of which could have a material adverse effect on our business, earnings, cash flow and prospects. Certain performance fees earned by Onex are calculated based on the difference in net asset value on the first and last days of the relevant performance period - typically a quarter or a year. The use of single-day data points in determining performance fees could cause those fees to be significantly impacted by market events or factors that have an aberrational effect on net asset value on a calculation date. Any of the foregoing may contribute to lower-than-expected returns, which could negatively impact both our return on invested capital and our carried interest and performance fee opportunities. See also "Changes in Asset Management Fees and Returns" below. Finally, our earnings and cash flows may be substantially affected by the varied pace and size of investments and realizations of our invested capital, a large portion of which is episodic. See also "Liquidity" below.

Additional or Successor Funds; Maintenance and Growth of FGAUM

We compete with other asset managers and investment advisors in raising, retaining and growing FGAUM. To the extent that we are unable to raise successor private equity and credit funds of a comparable size and with comparable financial terms to our current or predecessor Funds, revenues may decrease as the investment period of the Funds expire and associated fees and other financial opportunities decrease. Our ability to raise new funds will be materially affected by the performance of our current or predecessor Funds and will also be hampered if the general appeal of private equity, credit and alternative investments was to decline, our reputation or relationship with investors was to deteriorate or general economic and market conditions negatively impact fundraising efforts. In addition, significant portions of our current investment funds may rely on commitments from a few large institutional investors which may result in concentration risk if such investors decide to reduce or withdraw future fund commitments and certain large pension funds, sovereign wealth funds and other institutional investors may be subject to regulations, rules or policies which restrict or limit investments in certain asset classes, including private

Disclaimer

Onex Corporation published this content on February 21, 2025, and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on February 21, 2025 at 12:05:18.514.