ONEXF reported Q1 2026 earnings with Convex's value at $4B, $9.4B investing capital, and strong asset management growth. Read more for insights.

Key Takeaways

• Convex's fair value increased to $4 billion, representing a 4% rise since the acquisition.
• Total investing capital at Onex stood at $9.4 billion, equating to $122.45 per share.
• The asset management business reported a $42.8 billion in fee-generating AUM, with credit AUM increasing by 1%.
• The company returned over $8 billion to limited partners last year, with momentum continuing into 2026.
• Onex ended the quarter with $398 million in cash, maintaining a robust liquidity position.

Financial Performance

In the first quarter of 2026, ONEXF demonstrated solid financial performance amidst a challenging market landscape. The company reported total investing capital of $9.4 billion, a figure that translates to approximately $122.45 per share. This marked a 2% decline relative to the end of 2025, primarily driven by the dilution from shares issued in connection with the Convex acquisition. However, excluding this impact, investing capital per share would have increased by 1% quarter-over-quarter and 8% year-over-year.

Convex, a newly acquired subsidiary, accounted for 42% of Onex's investing capital. The fair value of the investment in Convex increased to $4 billion, reflecting a valuation based on a 2.0 times price to tangible book value. The adjusted price-to-earnings multiples stood at 8.1 times for the last 12 months and 10 times for the full year 2025, indicating a promising outlook compared to peers.

Strategic Initiatives

One of the standout themes from the earnings call was the robust performance of Convex. The management highlighted several structural levers anticipated to boost Convex’s earnings, including market share gains, prudent asset leverage growth, and improved investment portfolio yields. Paul Brand, a key executive at Convex, emphasized the company's commitment to maintaining a solid underwriting discipline even amidst fluctuating market conditions.

In addition, Onex Partners, the asset management division, successfully closed a $1.6 billion multi-asset continuation fund, attracting capital from leading institutional and sovereign investors, including new entrants. This momentum signifies a healthy fundraising pipeline, particularly in the private equity space, with expectations for a positive run rate management fee base as the company progresses through 2026.

Future Outlook

Looking ahead, management expressed optimism regarding Convex's growth trajectory and overall market positioning. There is a clear expectation for Convex to sustain a 20% return on equity, supported by the company’s ability to double its size without significantly impacting expenses. The team also anticipates that upcoming realizations from the private equity portfolio will further enhance cash flow, thereby improving capital allocation flexibility.

The asset management business is poised for growth as well, with management forecasting a gradual increase in fee-related earnings (FRE). Although Q1 results reflected a loss of $3 million in overall FRE, management expects this trend to reverse in subsequent quarters, driven by ongoing fundraising efforts and enhancements in credit products. The anticipation of achieving a $35 million run rate for FRE by the end of 2026 highlights the company’s strategic focus on building a more durable recurring management fee base.

The liquidity position remains strong, with $398 million in cash available and $600 million accessible via a revolving credit facility. This robust liquidity provides Onex with ample capacity to meet its capital commitments and explore strategic investments in alignment with Convex and asset management growth.

Closing Assessment

In summary, Onex's first-quarter results reflect a strategic pivot towards enhancing shareholder value through strong performances in its Convex investment and asset management initiatives. The company appears well-positioned to navigate the complexities of the current market landscape while maintaining a disciplined approach to underwriting and capital allocation. With a positive outlook for both Convex and asset management, investors can anticipate continued value creation in the coming years. As the company works to balance growth and risk, it remains committed to delivering strong returns for its shareholders.

This analysis is based on public earnings call materials and is not investment advice.