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oncap.com

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Investments

6

Portfolio Exits

7

Funds

5

Partners & Customers

1

About ONCAP

ONCAP is a Toronto, Ontario based private equity firm. ONCAP invests in mature companies with a preference for companies located in Canada, midwest US, northeast US, southeast US, west. They primarily engage in the following transaction types: acquisition / expansion financing, buyout (lbo, mbo, mbi), divestiture, going private, shareholder liquidity. In terms of deal size, ONCAP prefers to invest in companies that have a minimum enterprise value of $50 million and a maximum enterprise value of $500 million. It is the mid-market investment arm of Canadian private equity firm Onex.

ONCAP Headquarter Location

161 Bay Street 48th Floor

Toronto, Ontario, M5J 2S1,

Canada

416-214-4300

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Latest ONCAP News

Drax Group to acquire ONCAP backed Pinnacle Renewable for $831M

Feb 8, 2021

On: CPE News (2/8/2021) – Drax Group plc (LSE: DRX) has agreed to acquire acquire all of the issued and outstanding common shares of Pinnacle Renewable Energy Inc. (TSX: PL) for CDN $11.30 per share in cash for CDN $385 million, with a enterprise value of CDN $831 million including the assumption of net debt (CDN $356 million) and Pinnacle’s non-controlling interests in its joint ventures. (all dollar figures in Canadian dollar) Subject to Drax and Pinnacle shareholder approval, court approval, regulatory approvals and the satisfaction of certain other customary conditions, the transaction is expected to close in Q2 or Q3 2021. ONCAP, the mid-market private equity platform of Onex Corporation (TSX: ONX) and holder of 10,422,463 Pinnacle shares through ONCAP II funds, representing approximately 31% of the outstanding Pinnacle shares, has agreed to support the transaction. Pinnacle major shareholders also include Prospect Co., Ltd. (TSE: 3528) which holds 3,570,269 Pinnacle shares, representing approximately 10.70% of the outstanding Pinnacle shares. Pinnacle is the second largest producer of industrial wood pellets in the world. The company’s products are used to displace fossil fuels in the production of baseload electrical power in key markets around the world. Pinnacle is a key supplier of wood pellets for Drax and other third parties in Asia and Europe, with $6.7 billion of contracted third-party sales (including sales to Drax). In 2011 ONCAP in partnership with founders acquired controlling stake in Pinnacle. ONCAP has received $51 million from a secondary sale (priced at $13.75) in June 2018, following Pinnacle’s $150 million IPO (priced at $11.25) in February 2018. photo credit: Pinnacle, Drax Pinnacle Shareholders to Receive All-Cash Consideration of C$11.30 per share Transaction Provides Immediate Liquidity and Certainty of Value Pinnacle Shareholders, including ONCAP, Holding 36% of the Outstanding Pinnacle Shares have Entered into Support Agreements IN FAVOUR of the Transaction Pinnacle’s Board Unanimously Recommends Shareholders Vote IN FAVOUR of the Transaction VANCOUVER, BC, Feb. 8, 2021 /CNW/ – Pinnacle Renewable Energy Inc. (“Pinnacle” or the “Company”) (TSX: PL), today announced that it has entered into an arrangement agreement (the “Arrangement Agreement”) with Drax Group plc (“Drax”) (LSE:DRX) and its wholly-owned subsidiary, Drax Canadian Holdings Inc., pursuant to which Drax will acquire all of the issued and outstanding common shares of Pinnacle in an all-cash transaction valued at C$831 million, including the assumption of net debt and Pinnacle’s non-controlling interests in its joint ventures (the “Transaction”). Under the terms of the Arrangement Agreement, Pinnacle shareholders are entitled to receive C$11.30 per share in cash, which represents a premium of approximately 13% to the closing price and 15% to the 20-day volume-weighted average price of Pinnacle shares on the Toronto Stock Exchange (the “TSX”) on February 5, 2021 and a premium of approximately 33% to the closing price of Pinnacle shares on the TSX on December 4, 2020, the last trading day before Pinnacle and Drax entered into an exclusivity agreement. Duncan Davies, Pinnacle’s CEO, said “Pinnacle’s Board of Directors has unanimously determined that the Transaction represents the best course of action for the Company and its shareholders. On closing, the Transaction will deliver immediate, significant and certain cash value to our shareholders. At the same time, the combination of Pinnacle and Drax will create a global leader in sustainable biomass with the vision, technical expertise and financial strength to help meet the growing demand for renewable energy products around the world.” Gregory Baylin, Chair of Pinnacle’s Board of Directors, added, “The Transaction is a testament to the hard work of Pinnacle’s management team and employees in building the strong business we have today. We believe the transaction represents attractive value for our shareholders and positions the business for continued success for the benefit of our customers, suppliers, and other stakeholders.” Will Gardiner, Chief Executive Officer of Drax remarked, “I am excited about this deal which will reinforce Drax’s position as the world’s leading sustainable biomass generation and supply business, delivering against our strategy to increase self-supply, reduce our biomass production cost and create a long-term future for sustainable biomass. We expect to benefit greatly from Pinnacle’s operational and commercial expertise, and I am looking forward to what we can achieve together.” TRANSACTION DETAILS The Transaction will be implemented pursuant to a plan of arrangement under the Business Corporations Act (British Columbia), and is subject to the approval of at least two-thirds of the votes cast by holders of Pinnacle shares present in person or represented by proxy at a special meeting of Pinnacle shareholders to be called to consider the Transaction (the “Pinnacle Special Meeting”). Pinnacle’s largest shareholder, ONCAP Investment Partners II L.P. and its related entities (“ONCAP”), together with Pinnacle’s directors and senior officers, who collectively with ONCAP own approximately 36% of the outstanding Pinnacle shares, have entered into voting support agreements with Drax pursuant to which, among other things, they have agreed to vote all of the Pinnacle shares owned or controlled by them in favour of the Transaction at the Pinnacle Special Meeting. The payment by Drax of the consideration to Pinnacle shareholders pursuant to the Transaction is also subject to the approval by a majority of the votes cast by holders of Drax shares at a general meeting of Drax shareholders (the “Drax Meeting”). Under the Arrangement Agreement, Pinnacle has agreed to suspend the declaration of its dividends on Pinnacle Shares for the first quarter of 2021. The Arrangement Agreement provides for customary non-solicitation provisions on the part of both Pinnacle and Drax, subject to “fiduciary out” rights. Pinnacle has agreed to pay Drax a termination fee of C$12,500,000 and Drax has agreed to pay Pinnacle a reverse termination fee of C$25,000,000 if the Arrangement Agreement is terminated in certain circumstances. Drax has also agreed to make an expense reimbursement payment to Pinnacle of C$5,000,000 if the Arrangement Agreement is terminated as a result of the Drax shareholders not approving the Transaction at the Drax Meeting. In addition to Pinnacle and Drax shareholder approvals, the Transaction is subject to other closing conditions including governmental and regulatory approvals as well as the approval of the Supreme Court of British Columbia. The Transaction is not subject to a financing condition and is expected to close in the second or third quarter of 2021. The summaries contained herein are qualified in their entirety by the provisions of the Arrangement Agreement, which will be publicly filed by the Company under its profile on SEDAR at www.sedar.com. As well, additional information regarding the terms of the Arrangement Agreement, the background to the Transaction, the rationale for the recommendations made by the Special Committee and the Pinnacle Board of Directors and how shareholders can participate in and vote at the Pinnacle Special Meeting will be provided in the management information circular for the Pinnacle Special Meeting, which is expected to be held in early April 2021, which will be filed under the Company’s profile on SEDAR at www.sedar.com. Shareholders are urged to read these and other relevant materials when they become available. FAIRNESS OPINIONS AND PINNACLE BOARD OF DIRECTORS RECOMMENDATION Pinnacle’s Board of Directors, on the recommendation of a Special Committee of independent directors and in consultation with its financial and legal advisors, has unanimously determined that the Transaction is in the best interests of the Company and fair to Pinnacle shareholders and is recommending that Pinnacle shareholders vote in favour of the Transaction at the Pinnacle Special Meeting. CIBC Capital Markets and Scotiabank have each provided a fairness opinion to the Special Committee and Board of Directors that, as of the date of the opinions and based upon and subject to the assumptions and limitations described in their respective opinions, the consideration to be received by holders of Pinnacle shares pursuant to the Transaction is fair, from a financial point of view, to such holders. ONCAP INFORMATION Entities related to ONCAP Investment Partners II L.P. collectively own or control (directly or indirectly) an aggregate of 10,422,463 Pinnacle shares, representing approximately 31% of the outstanding Pinnacle shares. These entities have entered into a support agreement with Drax pursuant to which they have agreed to vote in favour of the Transaction at the Pinnacle Special Meeting. In accordance with applicable Canadian securities laws, these entities will file an early warning report in respect of the foregoing matters on Pinnacle’s profile on SEDAR at www.sedar.com. ADVISORS CIBC Capital Markets is acting as financial advisor to Pinnacle and Scotiabank is acting as financial advisor to Pinnacle’s Special Committee. Stikeman Elliott LLP and Kirkland & Ellis LLP are acting as legal advisors to Pinnacle. RBC Capital Markets is acting as financial advisor to Drax. Osler, Hoskin & Harcourt LLP and Slaughter and May are acting as legal advisors to Drax. ABOUT PINNACLE Pinnacle is the second largest producer of industrial wood pellets in the world. The Company’s products are used to displace fossil fuels in the production of baseload electrical power in key markets around the world. The Company operates nine production facilities in Western Canada and one in Alabama, with one additional facility under construction in Alabama and more in development. The Company also owns a port terminal in Prince Rupert, BC. Pinnacle has entered into long-term, take-or-pay contracts with utilities in the U.K., Europe and Asia that represent an average of 99% of its production capacity through 2026. SOURCE Pinnacle Renewable Energy Inc. For further information: Duncan Davies or Andrea Johnston, Pinnacle Renewable Energy, Tel: 1-877-737-4344, Email: investors@pinnaclepellet.com, Web: www.pinnaclepellet.com

ONCAP Investments

6 Investments

ONCAP has made 6 investments. Their latest investment was in International Language Academy of Canada as part of their Private Equity on August 8, 2019.

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ONCAP Investments Activity

investments chart

Date

Round

Company

Amount

New?

Co-Investors

Sources

8/15/2019

Private Equity

International Language Academy of Canada

Yes

2

11/8/2018

Private Equity

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$99M

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10

6/3/2015

Private Equity

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$99M

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10

Other Investors

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$99M

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10

Other Investors

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$99M

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10

Date

8/15/2019

11/8/2018

6/3/2015

Round

Private Equity

Private Equity

Private Equity

Other Investors

Other Investors

Company

International Language Academy of Canada

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Amount

$99M

$99M

$99M

$99M

New?

Yes

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Co-Investors

Sources

2

10

10

10

10

ONCAP Portfolio Exits

7 Portfolio Exits

ONCAP has 7 portfolio exits. Their latest portfolio exit was Tecta America on October 29, 2018.

Date

Exit

Companies

Valuation
Valuations are submitted by companies, mined from state filings or news, provided by VentureSource, or based on a comparables valuation model.

Acquirer

Sources

10/29/2018

Acq - Fin - III

Altas Partners

2

00/00/0000

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10

00/00/0000

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10

00/00/0000

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10

00/00/0000

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10

Date

10/29/2018

00/00/0000

00/00/0000

00/00/0000

00/00/0000

Exit

Acq - Fin - III

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Companies

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Valuation

Acquirer

Altas Partners

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Sources

2

10

10

10

10

ONCAP Acquisitions

18 Acquisitions

ONCAP acquired 18 companies. Their latest acquisition was Komar Industries on June 03, 2021.

Date

Investment Stage

Companies

Valuation
Valuations are submitted by companies, mined from state filings or news, provided by VentureSource, or based on a comparables valuation model.

Total Funding

Note

Sources

6/3/2021

Acq - Fin

2

11/14/2019

Management Buyout

1

9/21/2018

Acq - Fin

1

8/7/2018

Acq - Fin

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$99M

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10

12/28/2017

Acq - Fin

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$99M

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10

Date

6/3/2021

11/14/2019

9/21/2018

8/7/2018

12/28/2017

Investment Stage

Acq - Fin

Acq - Fin

Companies

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Valuation

Total Funding

$99M

$99M

Note

Acq - Fin

Management Buyout

Acq - Fin

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Sources

2

1

1

10

10

ONCAP Fund History

5 Fund Histories

ONCAP has 5 funds, including ONCAP IV.

Closing Date

Fund

Fund Type

Status

Amount

Sources

11/8/2016

ONCAP IV

Buyouts & Acquisitions

$1,100M

2

11/7/2016

ONCAP IV Select

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$99M

10

9/30/2011

ONCAP III LP

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$99M

10

5/30/2006

ONCAP II LP

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$99M

10

12/31/2000

ONCAP I LP

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$99M

10

Closing Date

11/8/2016

11/7/2016

9/30/2011

5/30/2006

12/31/2000

Fund

ONCAP IV

ONCAP IV Select

ONCAP III LP

ONCAP II LP

ONCAP I LP

Fund Type

Buyouts & Acquisitions

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Status

Amount

$1,100M

$99M

$99M

$99M

$99M

Sources

2

10

10

10

10

ONCAP Partners & Customers

1 Partners and customers

ONCAP has 1 strategic partners and customers. ONCAP recently partnered with International Language Academy of Canada on August 8, 2019.

Date

Type

Business Partner

Country

News Snippet

Sources

8/15/2019

Partner

International Language Academy of Canada

Canada

ILAC Partners with ONCAP.

In partnership with operating company management teams , ONCAP invests in and builds value in North American headquartered small and medium-sized businesses that are market leaders and possess meaningful growth potential .

2

Date

8/15/2019

Type

Partner

Business Partner

International Language Academy of Canada

Country

Canada

News Snippet

ILAC Partners with ONCAP.

In partnership with operating company management teams , ONCAP invests in and builds value in North American headquartered small and medium-sized businesses that are market leaders and possess meaningful growth potential .

Sources

2

ONCAP Team

6 Team Members

ONCAP has 6 team members, including current Managing Partner, Michael Lay.

Name

Work History

Title

Status

Michael Lay

Managing Partner

Current

D. Michael Lay

Managing Partner

Current

Gregory O. Baylin

Managing Director

Current

Mark Mactavish

Managing Director

Current

Jeremy Thompson

Managing Director

Current

Name

Michael Lay

D. Michael Lay

Gregory O. Baylin

Mark Mactavish

Jeremy Thompson

Work History

Title

Managing Partner

Managing Partner

Managing Director

Managing Director

Managing Director

Status

Current

Current

Current

Current

Current

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