Manulife Investment Management has launched a semi-liquid credit strategy for high net worth investors in Singapore, Asian Private Banker can reveal first.
The Manulife Private Credit Plus Strategy, a private credit fund-of-fund solution, aims to provide income and to a lesser extent capital appreciation by investing in US middle market senior secured loans and assets-based lending (ABL).
Alex Catterick, Manulife
Alex Catterick, head of alternative investment solutions, Manulife Investment Management, believes the strategy is “somewhat a unique offering”.
“The strategy provides investors with middle market direct lending along with loans that are secured by individual assets such as transport loans and leases, real estate, healthcare and royalties and other consumer and corporate segments,” Catterick told Asian Private Banker.
Private credit has traditionally offered investors an additional return for dealing with less liquidity and more complexity, often in the form of higher coupon rates or yields.
“The Manulife Private Credit Plus Strategy aims to achieve higher overall returns versus traditional fixed-income portfolios with a diversified approach and aims at prudent risk management,” he said.
Senior secured loans are sourced from Manulife Investment Management’s platform, while ABLs are sourced through Marathon Asset Management, a third-party credit specialist with US$22 billion in assets under management.
Manulife invests US$100 million
The firm’s parent company, Manulife Financial Corporation, has already committed up to US$100 million to the strategy that was launched with a seeded portfolio of loans.
“The number of publicly traded companies are [sic] 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,” said Manulife Investment Management Singapore CEO Hui-Jian Koh.
Koh expects private debt assets under management to grow from US$1.4 trillion in 2022 to US$2.7 trillion in 2027: “With such exponential growth in opportunities, the market is saturated with many private credit strategies coming to market,” she said.
Underrepresented exposure
Manulife believes a key feature of the Manulife Private Credit Plus strategy is its exposure to ABL, an underrepresented exposure in most portfolios with a market size of approximately US$3 trillion.
ABL is a common funding avenue for small to mid-sized enterprises leveraging their physical assets, with large firms also using this approach for short-term cash requirements. It spans sectors like healthcare, transportation, consumer, and real estate.
“We recognised ABL as a relatively untapped segment with substantial demand for loan facilities,” Koh continued. “Currently, the market features a limited number of managers equipped to offer financing solutions to these enterprises. We view ABL as a distinct niche within the broader credit sector, requiring specialised expertise.”
While Manulife’s multi-asset solutions team is the overall portfolio manager of the fund, the direct lending portfolio will be managed by Manulife’s private markets team. The ABL portfolio will be managed by Marathon Asset Management.
