The deal, worth approximately CAD $300 million, will involve Onex injecting CAD $135 million into BMP-CEI Holdings - the parent holding company of Cosmetics Essence - to give the company a 90 per cent stake.
The management board of CEI, and a number of financial institutions will share the remaining 10 per cent.
Onex' share of the investment will be an estimated CAD $35 million arising from the fact it is a 25 per cent limited partner in Onex Partners LP and controls the investment partnership.
CEI, based in New Jersey, is a provider of supply chain management services to the personal care sector, which formulates, manufactures and distributes a raft of cosmetics products, including fragrances, crèmes, lotions and colour cosmetics.
The majority of CEI's client portfolio includes branded fragrance manufacturers, as well as a number of major and speciality retailers.
John Croddick, president and CEO of Cosmetic Essence, said the deal would be mutually beneficial for both companies, commenting: "Our partnership with Onex begins the next stage of growth for CEI."
"CEI will benefit from Onex' experience in building leading global companies as we explore the many avenues of growth in front of us," he added.
CEI currently has an estimated annual turnover of $250 million, and is owned by Brockway Moran and Partners Fund LP, which acquired the firm in March 2001.
"CEI has a highly-experienced management team that has rapidly grown the company's market leadership with a strong group of customers, commented Mark Hilson, a managing director at Onex.
"We intend to work with CEI management in extending this success in penetrating new customers and distribution channels in the cosmetics and health and beauty category both domestically and abroad, he added.
Although the deal is still to be subjected to inspection from regulatory authorities, it is anticipated to close by the end of the year.
Headquartered in Toronto, Onex Partners LP is a CAD $2.2 billion private equity fund established by Onex. The CEI acquistion will represent the fourth transaction completed by the investment arm in a year - of which it has been given a total investment budget of CAd $525 million from its parent company Onex.