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Operator
Welcome to ONNX Second Quarter 2024 Conference Call-in Webcast. During the presentation, all participants will be in listen-only mode. Afterwards, we will conduct a question and answer session with pre-qualified analysts. At that time, if you have a question, please press star 1-1 on your telephone keypad. As a reminder, this conference is being recorded. I will now turn the conference over to Jill Homonook, Managing Director, Shareholder, Relations, and Communications at ONNX. Please go ahead. Thank you.
Jill Homonook
Good morning, everyone, and thanks for joining us. We're broadcasting this call on our website. Hosting the call today are Bobby LeBlanc, ONNX Chief Executive Officer, and Chris Govind, our Chief Financial Officer. Earlier this morning, we issued our Second Quarter 2024 Press Release, MD&A, and Consolidated Financial Statements, which are available on the Shareholder section of our website and have also been filed on CDAR. A supplemental information package is also available on our website. As a reminder, all references to dollar amounts on this call are in US, unless otherwise stated. I must also point everyone to our webcast presentation for our usual disclaimer and cautionary factors relating to any forward-looking statements contained in today's presentation and remarks. With that, I'll now turn the call over to Bobby.
Bobby
Good morning, everyone. I want to first welcome Sarah Wechter to ONNX's Board of Directors. This morning, we announced Sarah as a new independent director, and I'm very happy that she has joined us. Sarah is the Chief Human Resources Officer at Citigroup, where she is responsible for all talent management and employee relations programs. She's a recognized leader in effective and equitable compensation structures that are aligned with strategic objectives. Her experience supporting leaders and boards through transition periods will be of particular benefit to ONNX and me in the coming years. Now on to Q2 results. Overall, ONNX had a good second quarter, with continued fundraising activity in priority areas and strong progress on realizations across ONCAP and ONNX partners. Our investing capital per share had a 3% return in Q2, driven by gains across our private equity platforms, including a strong contribution from ONCAP. Both OP and ONCAP saw incremental progress with fundraising. Including ONNX commitments, our ONNX Partners Opportunities Fund has now raised $820 million, while ONCAP 5 had reached commitments nearing $1 billion. Our PE teams are doing good work securing return capital for our limited partners, which is a positive for our fundraising efforts. Last week, ONCAP completed the sale of Englobe, and recently ONCAP 4 sold its investment in Wise Meter Solutions to a single asset continuation fund to be managed by ONCAP. This is ONCAP's first continuation vehicle and follows ONNX Partners successful continuation efforts. We also raised $1 billion in the cash donation fund for Ryan LLC last fall. These funds will continue to play an important role in our realization strategies, providing valuable ongoing fee and carry generation opportunities for ONNX. Through July, ONCAP returned approximately $390 million to investors, or 15% of the value of ONCAP investments at the start of the year. The ONNX Partners team was also active in Q2. ONNX Partners 4 entered into an agreement to sell approximately half of its shares in PowerSchool as part of a take private transaction, which is expected to close in the third quarter. I am also pleased to report that the sale of ASM has met all required conditions and is expected to close by the end of this month. Combined, the two transactions represent an expected return of capital of approximately $1.6 billion to ONNX Partners and approximately $530 million to ONNX. Turning to credit, our CLO platform has had a stellar year so far, raising or extending a total of $7 billion of fee generating AUM through new issuances and resets of prior CLOs. In July, the team priced its 34th US CLO, which was the third-largest broadly syndicated CLO this year, and its 10th European CLO, matching its largest CLO since inception. With deals priced or closed through July, we have well exceeded the growth we had targeted for all of 2024. The team has continued to take advantage of opportunities to further grow the platform backed by strong investor demand for allocations across the entire capital structure. Moreover, this growth has been very capital efficient from a -Expallan-Street perspective. You have heard me say this before, but as we look to the future, we will continue to prioritize areas where we have a right to compete and win. Our teams in private equity have proven that they can persevere through industry cycles and continue to provide strong performance for investors. Ronnie and our credit team are showing what can be achieved when you build long-standing investor relationships based on proactive management, innovative client solutions, and high-performing portfolios that protect investor capital. Recently, we made the decision to separate Falcon from Onyx to operate as an independent entity from now on. While we believe in the team's ability to deliver investing success, the synergies across the remainder of our platforms did not materialize to the extent that the Onyx resources needed to support the business outweighed the benefits. We will continue to maintain minority interests in Falcon along with future carrier agency participation. Chris will provide more details in his remarks. One of my commitments to shareholders in Investor Day was to ensure we are disciplined in the use of our resources, particularly our balance sheet. Our balance sheet is a key differentiator, and we must use it wisely to drive increased shareholder value. Strategic alignment of our businesses and our balance sheet to our long-term objectives is my top priority, and you can expect to hear more from me on our plans in the coming quarters. Thank you for your continued support as we work towards building a stronger Onyx for all stakeholders. With that, I'll now turn it over to Chris.
Chris
Thanks, Bobby, and good morning, everyone. Onyx ended Q2 with investing capital per share of $110.35, reflecting a return of 3% in the quarter. Investing capital per share has returned 11% over the last 12 months and 13% annually over the last five years. To put that five-year return in context, the $110 of investing capital per share today compares to just $67 per share five years ago, meaningful growth in the underlying value of our shares. Onyx repurchased approximately 880,000 shares in Q2, the second most active quarter since 2022. Over the last 12 months, repurchases totaled 3.9 million shares, or almost 5% of outstanding shares, allowing us to capture $175 million of hard NAD for continuing shareholders. It was a solid quarter from an investment and realization perspective. As Bobby mentioned, Onyx partners closed out OP5 with the acquisition of Accredited in late June. On the realization front, we progressed and completed several transactions that crystallized attractive returns for our investors and will provide meaningful DPI. Oncap recently completed the sale of N-Globe and the sale of Wise Meter Solutions to a continuation fund that will continue to provide management fees and carried interest going forward. At Onyx partners, we announced an agreement to sell approximately half of the PowerSchool investment as part of a take-private transaction expected to close later in Q3. We ended the second quarter with cash and near-cash of $1.4 billion, or 16% of the investing capital, with liquidity expected to increase in the near term in light of the realizations I just mentioned. Looking at private equity, our PE portfolio produced a $121 million net gain or a 2% return in Q2. The returns were fairly broad-based across our financial services, business services, and industrial businesses, while offset slightly by healthcare investments. In credit investing, our credit strategies delivered a $17 million net gain or a 1% return in Q2. The gain here was also broad-based across our credit portfolio and generally consistent with the returns for the credit market at large. Now let's turn to the asset management side of the business. Onyx ended the quarter with nearly $33 billion of fee-generating AUM. This reflects the removal of FGAUM associated with Falcon, which thankfully offset by $2.2 billion of new FGAUM raised across the credit and PE platforms in Q2. However, recent changes in firm-wise AUM may be masking the strong growth in our structured credit business. FGAUM in that business has grown 22% in the last 12 months and more importantly has been growing at an annual rate of 16% over the last four years. And a reminder, this growth has occurred while consistently requiring less and less of Onyx's balance sheet capital. In the first half of 2024, our balance exposure was reduced by $93 million driven by recurring distributions and the partial sale of equity interests more than offsetting new investments. And over the last four years, Onyx's ownership of the platform CLO Equity has decreased from 87% to 46%. With about $75 million of run rate management fees and a much less capital intensive business model, the structured credit team has done a great job building a valuable asset management franchise over the last four years. Turning to fee related and distributive earnings, second quarter total FRE was a loss of $8 million with a $2 million loss from the asset management platform. These results improved slightly from Q1 and reflect the continued impact of cost saving opportunities as well as lower compensation in the quarter. As we've communicated previously, the end of OP5 commitment period in late 2023 together with the change in our private wealth business model, our FRE headwinds in 2024. These will be partially offset as new fees come online from ONCAP5, the Onyx Partners Opportunities Fund, continuation vehicles and the growth in structured credit. Run rate management fees were $179 million at quarter end, down $18 million, primarily due to the Falcon separation. As Bobby mentioned, the decision to have Falcon operate independently was in the best interest of both businesses, given the prospects for synergies with the rest of the Onyx platform. In terms of FRE, the platform was essentially neutral to FRE over the last 12 months. The new arrangement will allow Onyx to share in potential future upside through its 20% ownership of the manager and to carry interest in the next few funds. Additionally, all contingent consideration from the acquisition of Falcon in 2020 has been waived and Onyx's commitment to Falcon Fund 7 was reduced to $40 million from $80 million previously. Looking at distributable earnings, we generated $74 million of DE in Q2, driven by the recurring CLO distributions and the sale of Onyx's interest in WISE as part of the ONCAP continuation fund transaction. Finally, an update on Onyx's incentive and carried interest opportunity. We ended Q2 with $258 million of accrued carry, which reflects $14 million of the generated in the quarter, primarily from Onyx Partners 5 and ONCAP 4. As a reminder, Onyx has over $30 billion of private equity and credit AUM subject to carry or incentive fees, which provides a meaningful opportunity for value creation going forward. In summary, we had a solid quarter with momentum building across the businesses. We will continue to prioritize decisions that allocate our resources where we have right to compete and drive long-term value for our shareholders. That concludes the prepared remarks and we'll now be happy to take any questions.
Operator
As a reminder, to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please stand by while we compile the Q&A roster. First question comes from Nick Preet with CIBC Capital Markets.
Bobby
You're building a substantial amount of balance sheet liquidity here. Just wondering what your priorities might look like from a capital allocation standpoint. Does the experience with Falcon and Gillespin Chef reduce appetite for M&A at the Onyx Corp level? I also noticed that Buyback stepped up in the quarter and I'm just wondering the intent would be to keep that going.
Bobby
Hi Nick, it's Bobby. Capital allocation and how to use our wonderful balance sheet, believe me, is top of mind in my thinking and I hope to be able to come back to all shareholders in the coming quarters to better articulate the plans around that. Obviously, share buybacks will continue to be a top priority for us. You'll see us slowing those down anytime soon. On your question about Falcon, M&A on the asset management side is more difficult M&A than we're used to within our PE funds. Their people businesses, their culture fit and things like that are important. I don't see us prioritizing buying other asset managers in the near term when I think about capital allocation. As for the other plans we're working on, I think I need a bit of time to be able to come back to shareholders.
Bobby
Understood. That's helpful. This question is a bit premature and I'm aware of that. Wondering what you might need to see in order to consider re-initiating fundraising for your larger cap buyout strategy. Is that a decision that's made in consultation with some of your larger LPs that you would expect to re-up or do you simply have more work to do regarding return of capital first?
Bobby
I think there's a couple of things. Firstly, that opportunities fund should allow us to do four or five deals or so depending on the use of co-invest. Importantly, the performance of ONIX partners five, and that's from an IRR and a return of capital perspective, will be an important milestone to go into fund six. That's one where our LPs are obviously rooting for us. Everybody wants that to be a good fund, but I do think we're going to need some more DPI and a bit more seasoning, which is the whole point of the OUPS fund is to have the next 18 months or so to do that, show those results and then begin fundraising again on a normal fund structure for OP6.
Bobby
Got it. Okay. Then last one for me, you've got a few relatively mature investments in the P&C insurance space. Just wondering what your read or your internal thinking is around where we're at in that cycle. It just feels like the hard market cycle is pretty long in the tooth. New money rates are dropping, which has been a tailwind for the carriers anyway. What's your view on that sector? I'm just wondering how that might inform a hold or sell decision on those investments.
Bobby
What I'm seeing, I'm on the boards of those particular companies, Russell, what I'm seeing is rates are still increasing. They're increasing at a decreasing rate. It really varies by reinsurance or insurance and it's even subsectors underneath of those two things. On the balance sheet side of that industry where you're able to invest assets alongside your liabilities, there's still a tailwind there because given that the duration of liability for a company like Convex, for example, is three to four years, dollars that were in the ground to support liabilities, even though rates are ticking down a little bit right now, are still materially higher than when those dollars got put to work. You're right, the rate increase is beginning to slow, but it's still growing. It's just slowing a bit across the board. Look at rate as the easiest form of revenue you can get. What I really focus on, because you can't control rate, is are we winning new volume that we like the risk pricing on? There, I think we're doing a nice job.
Bobby
Okay, that's a great color. I'll pass the line for now. Thank you.
Operator
Thank you. Our next question will come from the line of Jeffrey Kwan with RBC Capital Markets.
Jeffrey Kwan
Hi, good morning. I just wanted to go back to the Falcon transaction. Can you elaborate on what drove it where you had the comment that the synergies were maybe not as much as you initially thought it and why the costs were outweighing the benefits?
Bobby
Yeah, so again, I'm rooting for them. I said, John and that team, they were good partners. So we own a piece of the business and are going to participate in the carry. But it turned out for us, Mez was really more of a PE product than a credit product. So it didn't really fit in well with the credit platform and the fundraising around the credit platform. We actually had products that were competing with each other on a return profile that were different parts of the balance sheet. And when we looked at that and the priorities that we wanted for our distribution team, we decided that Mez as a PE business, but the specific thing Mez would be a tougher thing to scale over time. And that's where the sort of the limited energies we saw coming in came into play. I do like the junior capital business and I think I've been pretty outspoken about that. But when I think about where we could create shareholder value in junior capital, I don't think it's really on the asset management side in traditional sense of the word. I think it'll be on cap or OP looking at a deal that is more appropriate for a junior capital type return versus a PE return and trying to use our balance sheet to lean in on places where we really know the industry well. So I could see us still wanting to participate in junior capital. I do think there are going to be an opportunity from a lot of PE balance sheets that were issued in 2000, 2021, 22, where junior capital will look attractive. But I think the way to play that will be -a-vis the balance sheet, again, in industries where we know we have a right to compete rather than trying to scale on asset management. That's how we came to this decision. And like Chris said, we've been pretty clear that we're looking at things and making sure we're prioritizing our resources and this is one of the decisions coming out of that.
Jeffrey Kwan
Okay. No, thanks for expanding that. Just my other question was, I think it was that investor day you talked about ways to kind of reduce what's called the vulnerability to times when the fundraising environment is not good. And I think there were things like maybe having more funds or strategies and diversifying the fundraising cycle to kind of spread it out from a time perspective. I know that the fundraising environment is kind of a bit mixed at this point, but just wondering if there's kind of an update on your thoughts on how you think about the fundraising and the strategies that you've got in place and ones you may look to launch at some point.
Bobby
Yeah. So like fundraising will always be an important aspect for OP and ONCAP and credit, but you can't time like a fundraising market and where LPs sit within a cycle of wanting to deploy capital to PE. I think it's getting better. The market, I wouldn't say it's good, right? I think it's getting better. And there's certain LPs that were over-allocated that are becoming more balanced over time. And once that happens, I think you'll see the fundraising market become normalized again. Now a normal PE market might be 70% of what it was in 2021 or 2022, but once the LPs get the DPI back that they need, and I still think PE is going to be an asset class people want to allocate to, it's just been slow as that imbalance has persisted for probably longer than people thought. You really can't time the fundraising. You deploy the fund at different pace and you begin to fundraise. But I think what we need to do as an organization for the places where we do want to emphasize our CAPS team and the raising of third-party capital is being more consistent in the marketplace where we're fundraising every day, even days when we're not asking for money for a new fund.
spk07
Okay. Thank you. Our next question will come from the line of Graham Writing with
Operator
TD Securities.
Chris
Oh, good morning. Just on the fundraising theme, so it sounds like momentum is intact on the CLO front. What's the status on, and Paul just missed it, but just the bridging fund and the on-cab fundraising, where are you at in that sort of process?
Bobby
Yeah, so on the Ops Fund, Chris, correct me if I'm wrong, I think we're at 810 or 820 million. And on-cap, we're at about a billion with three months or so left in their fundraising. On-caps actually has a good pipeline of people working towards last close. So I believe that's in the earnings release as well, those numbers.
Chris
Okay, so you're in the last close stages for both those funds? Yeah. Yeah. Okay. And then with the 2.2 billion, I think you flagged it, you raised in the quarter. How much of that was from credit and how much was from equity?
Chris
Oh, I don't have that breakdown right at my fingertips, Graham. We can reach out. I know it's in the SIP somewhere, but we'll identify it and get back to you.
Chris
Okay. And then with the Falcon divestment, can you just flesh out what sort of capital you think this is going to free up? You mentioned a little bit, but I think you've got contingent payments that no longer do commitments maybe that are freeing up and then it sounds like you expect the impact on FRE to be minimal despite amnestying and losing about $20 million in run rate fees. Maybe just elaborate on that,
Chris
please. Sure. Yeah. Yeah. I think you kind of hit all the high points there. With the removal of the potential contingent or earn out payments for the 2020 acquisition, we had $15 million on our balance sheet, but the maximum amount was quite a bit more than that that they could have earned into. And then as part of the transaction as well, we took our commitment to their new fund down from $80 million to $40 million. So you can sort of think about that as $55 million of capital we don't need to reserve, if you will, for that business. Yeah. And then going back to Bobby's synergy point, that business had scaled but had not raised a fund of sufficient scale. And so really was operating at a break even, fully loaded perspective for ONIX from an FRE perspective. So there's really no change there, I'll say in our run rate FRE as a result of the transaction. But as Bobby said, what we want to do is really get focused on places where we think can grow FRE meaningfully and take action on those ones.
Chris
Okay. And how much AUM actually left your platform from the fall?
Chris
Around $3 billion.
spk12
Okay. Okay, that's it for me. Thank you.
Operator
Thank
spk12
you.
Operator
Our last question today will come from the line of Nick Breep with CIBC Capital Markets.
Bobby
Yeah, thanks. I thought I'd just sneak in another question or two. I don't know a lot about the wealth enhancement group, but I just wanted to ask whether CashSweep income might represent any share of the economics of that platform like it does for the US broker dealers. And it doesn't sound like it would, but I just want to confirm because of the heightened focus on that revenue.
Bobby
I don't believe it does. And I'll confirm that with Adam Coburn, but I'm pretty close to that I'm pretty sure it does not. But if that's the wrong answer, I'll call you back.
Bobby
Okay. No, very good. I think that's good for me. I'll leave it there. Thanks very much.
spk12
Thank you.
Operator
That concludes our question and answer session. I'll now turn the conference back to Bobby LeBlanc for closing remarks.
Bobby
Thank you for your time today. Thank you for your support. We will continue to be transparent and up to date on our progress and we're working hard towards thinking about future capital allocation. Enjoy the rest of your summer. Thank you.
Operator
This concludes today's conference call. Thank you for participating. You may now disconnect.
spk05
Thank you.
Operator
Thank you. Thank you. Thank you. Welcome to ONNEC's second quarter 2024 conference call and webcast. During the presentation, all participants will be in listen-only mode. Afterwards, we will conduct a question and answer session with pre-qualified analysts. At that time, if you have a question, please press star 1 1 on your telephone keypad. As a reminder, this conference is being recorded. I will now turn the conference over to Jill Homonook, Managing Director of Shareholder Relations and Communications at ONNEC. Please go ahead. Thank you.
Jill Homonook
Good morning, everyone, and thanks for joining us. We're broadcasting this call on our website. Hosting the call today are Bobby LeBlanc, ONNEC's Chief Executive Officer, and Chris Govind, our Chief Financial Officer. Earlier this morning, we issued our second quarter 2024 press release, MD&A, and Consolidated Financial Statements, which are available on the shareholder section of our website and have also been filed on CDAR. A supplemental information package is also available on our website. As a reminder, all references to dollar amounts on this call are in U.S., unless otherwise stated. I must also point everyone to our webcast presentation for our usual disclaimer and cautionary factors relating to any forward-looking statements contained in today's presentation and remarks. With that, I'll now turn the call over to Bobby.
Bobby
Good morning, everyone. I want to first welcome Sarah Wechter to ONNEC's Board of Directors. This morning, we announced Sarah as a new independent director, and I'm very happy that she has joined us. Sarah is the Chief Human Resources Officer at Citigroup, where she is responsible for all talent management and employee relations programs. She is a recognized leader in effective and equitable compensation structures that are aligned with strategic objectives. Her experience supporting leaders and boards through transition periods will be of particular benefit to ONNEC's and me in the coming years. Now on to Q2 results. Overall, ONNEC's had a good second quarter with continued fundraising activity in priority areas and strong progress on realizations across ONCAP and ONNEC's partners. Our investing capital per share had a 3% return in Q2 driven by gains across our private equity platforms, including a strong contribution from ONCAP. Both OP and ONCAP saw incremental progress with fundraising, including ONNEC's commitments. Our ONNEC's Partners Opportunities Fund has now raised $820 million, while ONCAP 5 had reached commitments nearing $1 billion. Our PE teams are doing good work securing return capital for our limited partners, which is a positive for our fundraising efforts. Last week, ONCAP completed the sale of Englobe, and recently ONCAP 4 sold its investment in Wise Meter Solutions to a single asset continuation fund to be managed by ONCAP. This is ONCAP's first continuation vehicle and follows ONNEC's Partners Successful Continuation Fund for Ryan LLC last fall. These funds will continue to play an important role in our realization strategies, providing valuable ongoing fee and carry generation opportunities for ONNEC's. Through July, ONCAP returned approximately $390 million to investors, or 15% of the value of ONCAP investments at the start of the year. The ONNEC's Partners team was also active in Q2. ONNEC's Partners 4 entered into an agreement to sell approximately half of its shares in PowerSchool as part of a take private transaction, which is expected to close in the third quarter. I am also pleased to report that the sale of ASM has met all required conditions and is expected to close by the end of this month. Combined, the two transactions represent an expected return of capital of approximately $1.6 billion to ONNEC's Partners and approximately $530 million to ONNEC's. Turning to credit, our CLO platform has had a stellar year so far, raising or extending a total of $7 billion of fee generating AUM through new issuances and resets of prior CLOs. In July, the team priced its 34th US CLO, which was the third largest broadly syndicated CLO this year, and its 10th European CLO, matching its largest CLO since inception. With deals priced or closed through July, we have well exceeded the growth we had targeted for all of 2024. The team has continued to take advantage of opportunities to further grow the platform, backed by strong investor demand for allocations across the entire capital structure. Moreover, this growth has been very capital efficient from an ONNEC's balance sheet perspective. You have heard me say this before, but as we look to the future, we will continue to prioritize areas where we have a right to compete and win. Our teams in private equity have proven that they can persevere through industry cycles and continue to provide strong performance for investors. Ronnie and our credit team are showing what can be achieved when you build long-standing investor relationships based on proactive management, innovative client solutions, and high performing portfolios that protect investor capital. Recently, we made the decision to separate Falcon from ONNECS to operate as an independent entity from now on. While we believe in the team's ability to deliver investing success, the synergies across the remainder of our platforms did not materialize to the extent that the ONNECS resources needed to support the business outweighed the benefits. We will continue to maintain minority interests in Falcon along with future carrier agency participation. Chris will provide more details in his remarks. One of my commitments to shareholders in Investor Day was to ensure we are disciplined in the use of our resources, particularly our balance sheet. Our balance sheet is a key differentiator, and we must use it wisely to drive increased shareholder value. Strategic alignment of our businesses and our balance sheet to our long-term objectives is my top priority, and you can expect to hear more from me on our plans in the coming quarters. Thank you for your continued support as we work towards building a stronger ONNECS for all stakeholders. With that, I'll now turn it over to Chris.
Chris
Thanks, Bobby, and good morning, everyone. ONNECS ended Q2 with investing capital per share of $110.35, reflecting a return of 3% in the quarter. Investing capital per share has returned 11% over the last 12 months and 13% annually over the last five years. To put that in a five-year return in context, the $110 of investing capital per share today compares to just $67 per share five years ago, meaningful growth in the underlying value of our shares. ONNECS repurchased approximately 880,000 shares in Q2, the second most active quarter since 2022. Over the last 12 months, repurchases totaled 3.9 million shares, or almost 5% of outstanding shares, allowing us to capture $175 million of hard NAD for continuing shareholders. It was a solid quarter from an investment and realization perspective. As Bobby mentioned, ONNECS partners closed out OP5 with the acquisition of accredited in late June. On the realization front, we progressed and completed several transactions that crystallized attractive returns for our investors and will provide meaningful DPI. ONNECS recently completed the sale of N-Globe and the sale of Wise Meter Solutions to a continuation fund that will continue to provide management fees and carried interest going forward. At ONNECS partners, we announced agreement to sell approximately half of the PowerSchool investment as part of a private transaction expected to close later in Q3. We ended the second quarter with cash and near cash of $1.4 billion, or 16% of investing capital, with liquidity expected to increase in the near term in light of the realizations I just mentioned. Looking at private equity, our PE portfolio produced a $121 million net gain or a 2% return in Q2. The returns were fairly broad-based across our financial services, business services, and industrial businesses, while offset slightly by healthcare investments. In credit investing, our credit strategies delivered a $17 million net gain or a 1% return in Q2. The gain here was also broad-based across our credit portfolio and generally consistent with the returns for the credit market at large. Now let's turn to the asset management side of the business. ONNECS ended the quarter with nearly $33 billion of fee-generating AUM. This reflects the removal of FGAUM associated with Falcon, which thankfully offset by $2.2 billion of new FGAUM raised across the credit and PE platforms in Q2. However, recent changes in firm-wide AUM may be masking the strong growth in our structured credit business. FGAUM in that business has grown 22% in the last 12 months, and more importantly has been growing at an annual rate of 16% over the last four years. And a reminder, this growth has occurred while consistently requiring less and less of ONNECS' balance sheet capital. In the first half of 2024, our balance sheet exposure was reduced by $93 million driven by recurring distributions and the partial sale of equity interests more than offsetting new investments. And over the last four years, ONNECS' ownership of the platform CLO Equity has decreased from 87% to 46%. With about $75 million of run rate management fees and a much less capital-intensive business model, the structured credit team has done a great job building a valuable asset management franchise over the last four years. Turning to fee-related and distributive earnings, second quarter total FRE was a loss of $8 million with a $2 million loss from the asset management platform. These results improved slightly from Q1 and reflect the continued impact of cost-saving opportunities, as well as lower compensation in the quarter. As we've communicated previously, the end of OP5's commitment period in late 2023, together with the change in our private wealth business model, are FRE headwinds in 2024. These will be partially offset as new fees come online from ONCAP5, the ONNECS Partners Opportunities Fund, continuation vehicles, and the growth in structured credit. Run rate management fees were $179 million at quarter end, down $18 million, primarily due to the Falcon separation. As Bobby mentioned, the decision to have Falcon operate independently was in the best interest of both businesses, given the prospects for synergies with the rest of the ONNECS platform. In terms of FRE, the platform was essentially neutral to FRE over the last 12 months. The new arrangement will allow ONNECS to share in potential future upside through its 20% ownership of the manager and to carry interest in the next few funds. Additionally, all contingent consideration from the acquisition of Falcon in 2020 has been waived, and ONNECS' commitment to Falcon Fund 7 was reduced to $40 million from $80 million previously. Looking at distributable earnings, we generated $74 million of DE in Q2, driven by the recurring CLO distributions and the sale of ONNECS' interest in WISE as part of the ONNECAP Continuation Fund transaction. Finally, an update on ONNECS' incentive and carried interest opportunity. We ended Q2 with $258 million of accrued carry, which reflects $14 million generated in the quarter, primarily from ONNECS Partners 5 and ONCAP 4. As a reminder, ONNECS has over $30 billion of private and credit AUM subject to carry or incentive fees, which provides a meaningful opportunity for value creation going forward. In summary, we had a solid quarter with momentum building across the businesses. We will continue to prioritize decisions that allocate our resources where we have a right to compete and drive long-term value for our shareholders. That concludes the prepared remarks, and we'll now be happy to take any questions.
Operator
As a reminder, to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Nick Preet with CIBC Capital Markets.
Bobby
Okay, thanks. So you're building a substantial amount of balance sheet liquidity here, and I'm just wondering what your priorities might look like from a capital allocation standpoint. Does the experience with Falcon and Gilleskin Chef reduce appetite for M&A at the ONNECS Corp level? And I also noticed that Buyback stepped up in the quarter, and I'm just wondering if the intent would be to keep that going.
Bobby
Yeah, hi Nick, it's Bobby. Like, the capital allocation and how to use our wonderful balance sheet, believe me, is top of mind in my thinking, and I hope to be able to come back to all shareholders in the coming quarters to better articulate the plans around that. Obviously, share buybacks will continue to be a top priority for us, so you'll see us slowing those down anytime soon. And on your question about Falcon, like M&A on the asset management side is more difficult M&A than we're kind of used to within our PE funds. Like, their people businesses, their culture fit and things like that are important. I don't see us prioritizing buying other asset managers in the near term when I think about capital allocation. Like, that much I can tell you, as for the other plans we're working on, I think I just need a bit of time to be able to come back to shareholders.
Bobby
Understood. Okay, that's helpful. And then this question is a bit premature, and I'm aware of that, but wondering what you might need to see in order to consider re-initiating fundraising for your larger cap buyout strategy. Is that a decision that's made in consultation with some of your larger LPs that you would expect to re-up, or do you simply have more work to do regarding return of capital first?
Bobby
Yeah, so I think there's a couple of things. Firstly, you know, that opportunities fund should allow us to do, you know, four or five deals or so depending on the use of co-invest. And importantly, Nick, the performance of ONIX partners five, right, and that's from an IRR and a return of capital perspective, will be an important milestone to go into fund six. And it's one where our LPs are obviously rooting for us. Everybody knows we want that to be a good fund, but I do think we're going to need some more DPI and a bit more seizing, which is the whole point of the OPS fund is to have the next 18 months to or so to do that, show those results, and then begin fundraising again on a normal kind of fund structure for OP6.
Bobby
Got it. Okay. And then last one for me, you've got a few relatively mature investments in the P&C insurance space. Just wondering what your read or your internal thinking is around where we're at in that cycle. Like, it just kind of feels like the hard market cycle is pretty long on the tooth, you know, new money rates are dropping, which has been a tailwind for the carriers anyway. What's your view on that sector? And I'm just wondering how that might form a hold or sell decision on some of those investments.
Bobby
Yeah. So what I'm seeing, I'm on the boards of those particular companies, Russell, what I'm seeing is rates are still increasing. They're increasing at a decreasing rate, and it really varies by reinsurance or insurance. And it's even, you know, sub-sectors underneath those two things, right? You know, on the balance sheet side of that industry, where you're able to invest assets alongside your liabilities, there's still a tailwind there, Nick, because, you know, given that the duration of liability for a company like Convex, for example, is, you know, three to four years, dollars that were in the ground to support liabilities, even though rates are ticking down a little bit right now, are still materially higher than when those dollars got put to work, right? So, but you're right, the rate increase is beginning to slow, but it's still growing. It's just slowing a bit across the board. And look at rate as the easiest form of revenue you can get. But what I really focus on, because you can't control rate, is are we winning, you know, new volume that we like the risk pricing on? And there, I think we're doing a nice job.
Bobby
Okay, that's a great color. I'll pass the line for now. Thank you.
Operator
Thank you. Our next question will come from the line of Jeffrey Kwan with RBC Capital Markets.
Jeffrey Kwan
Hi, good morning. I just wanted to go back to the LaFalcon transaction. Can you elaborate on, you know, what drove it where you had the comment that the synergies were maybe not as much as you initially thought it and why the costs were upweighing the benefits?
Bobby
Yeah, so again, I'm rooting for them. I said, they've gotten that team there. They were good partners. We own a piece of the business and are going to participate in the carry. But it turned out for us, Mez was really more of a PE product than a credit product, right? So it didn't really fit in well with the credit platform and the fundraising around the credit platform. We actually products that were competing with each other, you know, on a return profile that were different parts of the balance sheet. And when we looked at that and the priorities that we wanted for our distribution team, we decided that Mez as a PE business and but the specific thing Mez would be a tougher thing to scale over time. And that's where the sort of the limited energies we saw coming in came into play. Like I do like the junior capital business. And I think I've been pretty, you know, outspoken about that. But when I think about where we could create shareholder value in junior capital, I don't think it's really on the asset management side in traditional sense of the word. I think it'll be, you know, on cap or OP, looking at a deal that is more appropriate for a junior capital type return versus a PE return and trying to use our balance sheet to lean in on places where we really know the industry well. So I could see us still wanting to participate in junior capital. I do think there are going to be an opportunity from a lot of PE balance sheets that were issued in 2000, 2021, 22, where junior capital will look attractive. But I think the way to play that will be -a-vis the balance sheet, again, in industries where we know we have a right to compete rather than trying to scale on asset manager. And that's how we came to that decision. And like Chris said, we've been pretty clear that we're looking at things and making sure we're prioritizing our resources. And this is one of the decisions coming out of that.
Jeffrey Kwan
Okay. No, thanks for expanding on it. Just my other question was, I think it was at Investor Day, you talked about ways to kind of reduce what's called the vulnerability to times when the fundraising environment is not good. And I think there were things like, you know, maybe having more funds or strategies and kind of diversifying the fundraising cycle to kind of spread it out from a time perspective. I know that the fundraising environment, you know, kind of a bit mixed at this point, but just wondering if there's kind of an update on your thoughts on how you think about the fundraising and the strategies that you've got in place and ones you may look to launch at some point.
Bobby
Yeah, so like fundraising will, you know, always be an important aspect for OP and, and on cap and credit. But you can't time, like a fundraising market and where LPs sit within a cycle of wanting to deploy capital to PE. I think it's getting better. The market, I wouldn't say it's good, right? I think it's getting better. And there's certain LPs that were over allocated that are becoming more balanced over time. And once that balance happens, I think you'll see the fundraising market become normalized again. Now a normal PE market, right, might be 70% of what it was in 2021 or 22. But once the LPs get the DPI back that they need, right, and I still think PE is going to be an asset class people want to allocate to, it's just been slow as that imbalance has persisted for probably longer people thought. But you really can't time, you know, the fundraising. You deploy the fund at different pace. And, you know, you begin to fundraise. But I think what we need to do is an organization for the places where we do want to emphasize our CAPS team, and they're raising a third party capital is being more consistent consistently in the marketplace where we're fundraising every day, even days when we're not asking for money for a new fund.
spk07
Okay. Thank you. Our next question will come from the line of Graham Writing with
Operator
TD Securities.
Chris
Oh, good morning. Just on the fundraising theme, so it sounds like momentum is intact on the CLO front. What's the status on, and Paul just missed it, but just the bridging fund and the on-cab fundraising, where are you at in that sort of process?
Bobby
Yeah, so on the Ops Fund, Chris, correct me if I'm wrong, I think we're at 810 or 820 million, and on-cap we're at about a billion, with three months or so left in their fundraising. So on-caps actually has a good pipeline of people working towards last close. So I believe that's in the earnings release as well, those numbers.
Chris
Okay, so you're in the last close stages for both those funds? Yeah, yeah. Okay. And then with the 2.2 billion, I think you flagged it, you raised in the quarter, how much of that was from credit and how much was from equity?
Chris
Oh, I don't have that breakdown right at my fingertips, Graham. We can reach out. I know it's in the SIP somewhere, but we'll identify it and get back to you.
Chris
Okay, and then with the Falcon divestment, can you just flesh out what sort of capital you think this is going to free up? You mentioned a little bit, but I think we've got contingent payments that no longer do commitments maybe that are freeing up, and then it sounds like you expect the impact on FRE to be minimal despite amnestying and losing about $20 million in run rate fees. Maybe just elaborate on that, please.
Chris
Sure, yeah. Yeah, I think you kind of hit all the high points there. The removal of the potential contingent or earn out payments for the 2020 acquisition, we had $15 million on our balance sheet, but the maximum amount was quite a bit more than that, that they could have earned into. And then as part of the transaction as well, we took our commitment to their new fund down from $80 million to $40 million. So you can sort of think about that as $55 million of capital we don't need to reserve, if you will, for that business. Yeah, and then going back to Bobby's synergy point, that business had not scaled but had not raised a fund of sufficient scale. And so really was operating at a break even, fully loaded perspective for ONIX from an FRE perspective. So there's really no change there, I'll say in our run rate FRE as a result of the transaction. But as Bobby said, what we want to do is really get focused on places where we think grow FRE meaningfully and take action on those ones.
Chris
Okay, and how much AUM actually left your platform from the fall?
Chris
Around $3 billion.
spk12
Okay. Okay, that's it for me. Thank you.
Chris
Thank you.
Operator
Our last question today will come from the line of Nick Breep with CIBC Capital Markets.
Bobby
Yeah, thanks. I thought I'd just sneak in another question or two. I don't know a lot about the wealth enhancement group, but I just wanted to ask whether CashSweep income might represent any share of the economics of that platform like it does for the US broker dealers. And it doesn't sound like it would, but I just want to confirm because of the heightened focus on that revenue.
Bobby
I don't believe it does. And I'll confirm that with Adam Coburn, but I'm pretty close to that I'm pretty sure it does not. But if that's the wrong answer, I'll call you back.
Bobby
Okay. No, very good. I think that's good for me. I'll leave it there. Thanks very much.
Operator
Thank you. That concludes our question and answer session. I'll now turn the conference back to Bobby LeBlanc for closing remarks.
Bobby
Thank you for your time today. Thank you for your support. We will continue to be transparent and up to date on our progress and we're working hard towards thinking about future capital allocation. Enjoy the rest of your summer. Thank you.
Operator
This concludes today's conference call. Thank you for participating. You may now disconnect.
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