Onex has raised $1.6bn for a continuation fund that will allow the private equity firm to hold on to three core assets as it prepares to return to the fundraising market, Bloomberg reported.

The vehicle is backed by Neuberger Berman, Apollo Global Management’s S3 unit, Singapore sovereign wealth fund GIC, and StepStone Group, according to people familiar with the matter. The continuation fund will take ownership of education technology company PowerSchool, insurance claims administrator Sedgwick, and Fidelity Building Services Group from older Onex vehicles.

The transaction received approval from existing limited partners, with Jefferies advising on the deal. Continuation funds have become an increasingly common tool for private equity firms seeking to extend ownership of assets while providing liquidity options to investors.

Toronto-based Onex is undergoing a strategic reset under chief executive Bobby Le Blanc, who took over in 2023 following founder Gerry Schwartz’s decision to step back from the role. The firm has been refocusing on its core strengths in aerospace, insurance, and business services after expansion into other sectors weighed on performance.

Onex halted plans to raise $8bn for its sixth flagship fund in 2023. Under private equity head Tawfiq Popatia, the firm is now preparing to relaunch the fund and is targeting about $3bn, according to people familiar with the plans.

Over the past 12 months, Onex has returned more than $3bn of capital to investors. The use of a continuation vehicle mirrors a prior transaction in 2023, when the firm raised about $600m to move tax and software group Ryan LLC into a single-asset continuation fund.

The latest raise underscores how private equity firms are increasingly using structured solutions to manage exits and portfolio duration amid still-challenging public and M&A markets.

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