Manulife Investment Management (IM) is targeting clients of private banks and wealth managers in Singapore with its Manulife Private Credit Plus strategy, which invests in senior loans to middle market companies as well as gaining exposure to performance-enhancing asset-based lending.
It is a semi-liquid strategy that invests in US middle market senior secured loans sourced across Manulife IM’s global private equity and credit platform and enhanced through a range of asset-based lending (ABL) sourced through the strategy’s third-party manager, Marathon Asset Management, Alex Catterick, senior managing director, head of alternative solutions at Manulife IM told FSA.
Private credit has historically provided investors with income and diversification benefits through a combination of differentiated yield, floating rate returns, and the potential for a high level of asset-based principal protection with low volatility, he added.
Catterick highlighted five key aspects of the strategy, which comprises senior direct lending (50-70%), asset-based lending (20-40%) and liquid credit (0-20%), to generate a double-digit yield.
First, it has “differentiated exposure” by investing US middle market senior loans which represent a growing sector in the US economy, and in assets-based lending, which is “an underrepresented exposure in most portfolios”.
Second, there is sponsor investment, with Manulife Financial Corporation, Manulife IM’s parent company, committing $100m into the strategy.
Third, “capital will be put to work quickly”, as the strategy was launched with a seeded portfolio of loans, meaning it can build a track record quickly and investors may see near term distribution.
Fourth, there is “robust deal flow”, with the senior loans team at Manulife IM maintaining a healthy deal flow by working with various private markets firms to ensure plenty of potential deal options and investment opportunities.
Finally, the strategy “leverages a strategic third-party manager”, in its partnership with Marathon Asset Management, which has a track record of more than 24 years in ABL strategies. These include a range of sectors such as healthcare, transportation, consumer and real estate.
“Manulife Private Credit Plus Strategy was purposely built to be a semi-liquid strategy encompassing a diverse range of income-generating assets, giving investors a more flexible access to liquidity,” said HuiJian Koh, chief executive officer, Manulife Investment Management Singapore, in statement.
Koh added: “The number of publicly traded companies have been on a steady decline in recent years, and more private companies require debt financing to fund their growth. Banks have traditionally played this role, but since the global financial crisis, non-bank lenders have looked to fill the void.”
According to Preqin Forecasts, private debt assets under management will grow from $1.4trn in 2022 to $2.7trn in 2027, product differentiation is “key to providing value and diversification to investors already having existing exposure in private credit,” she said.
