USI Insurance Services offers property and casualty insurance, employee benefits and retirement consulting with about 100 offices.
Onex managing director Robert Le Blanc said USI has established a strong national insurance brokerage with an impressive management team.
"The company is well positioned to continue to grow both organically and by building on its track record of successful acquisitions," Le Blanc said in a statement.
The GS Capital Partners fund took the insurance broker private in 2007 for $1.4 billion, including debt.
USI employees invested in the 2007 deal and will now own the business with Onex, the companies said Monday.
Sumit Rajpal, a managing director at GS Capital Partners said, in a statement on Monday that "we are pleased with the company’s performance over the last several years."
"Since our take-private in 2007, USI has successfully integrated operations and developed a common operating platform with industry-leading margins, differentiated acquisition capabilities, and a strong platform for organic growth," Rajpal said.
Onex holds a wide range of investments including manufacturing, real estate, movie theatres and sugar refining. It typically invests a relatively small amount of its own capital in friendly deals on behalf of itself and institutional partners.
The USI deal Monday includes a $700-million equity investment in USI through Onex Partners III. Onex owns about 25 per cent of the partnership and manages it on behalf of itself and the other partners.
Once the acquisition is completed, USI will be co-owned by Onex, Onex Partners III and employees of USI.
BMO Capital Markets analyst Bert Powell, who rated Onex a "market perform" with a $43 price target, called the deal neutral for the company.
"Typically, Onex prefers equity carve-outs from industrial-based business," Powell wrote in a note to clients.
Powell estimated that after the USI deal and other recent deals, Onex will have about $785 million remaining in cash.
In September, Onex signed a pair of deals including an agreement to buy KraussMaffei, a manufacturer of plastic and rubber processing equipment, in a deal valued at euro568 million.
The company also agreed to acquire U.S.-based SGS International Inc., a global leader in graphics and packaging services for consumer products for US$813 million.
Among USI's recent deals was its purchase of a U.S. insurance subsidiary of TD Bank (TSX:TD). That deal, announced in September, was expected to contribute $58.2 million in annual revenue to USE. Other terms weren't disclosed.
USI chief executive Mike Sicard said in a statement that "we look forward to our next phase of growth in partnership with Onex."
Founded in 1994, USI operates in 26 states and has its headquarters in Briarcliff Manor, N.Y. It's ranked as the ninth largest insurance broker in the United States and 13th largest in the world.
Onex shares were down 55 cents at $40 in trading on the Toronto Stock Exchange.