Manulife Investment Management Closes Manulife Strategic Secondaries Fund L.P. as GP-led Secondary Program Reaches More Than $600 Million

Rhea-AI Summary

Manulife Investment Management (Manulife IM) has closed the Manulife Strategic Secondaries Fund L.P., reaching $610 million in capital commitments. The fund focuses on GP-led secondaries, recognized for creating interim liquidity for partners and value creation for sponsors. The team aims to deliver premium returns through continuation vehicles and sponsor alignment. Manulife IM's sponsor-centric platform has $25.8 billion in AUM across private equity and credit, offering capital solutions across five verticals.

Insights

Market Research Analyst

The announcement of Manulife Investment Management's final closing of its Strategic Secondaries Fund L.P. signifies a notable development within the private equity secondary market. The fund's focus on GP-led secondaries, which account for a significant portion of the market, highlights a strategic move to capitalize on the demand for liquidity solutions among limited partners and general partners. The growth of this niche sector, with Manulife's fund amassing $610 million, reflects investor appetite for alternative investment strategies that promise interim liquidity and the potential for enhanced returns through concentrated asset transactions.

From a market research perspective, the emphasis on creating 'secondary market alpha' suggests a differentiation strategy, aiming to outperform in a market that traditionally lacked the precision Manulife IM claims to achieve. This approach could attract investors seeking to diversify their portfolios with assets that have been meticulously underwritten, potentially leading to a competitive edge for Manulife IM in the private equity space.

Financial Analyst

Manulife IM's announcement regarding the closing of its Strategic Secondaries Fund L.P. has implications for its financial position and the attractiveness of its offerings to investors. With the fund's strategy to invest primarily in continuation vehicles, Manulife is positioning itself to take advantage of a market trend that allows for the retention and further development of high-value assets. The fund's preference for concentrated transactions suggests a high conviction approach that could lead to outsized returns if successful, but also carries the risk of increased exposure to individual asset performance.

Given the $25.8 billion in AUM across private equity and credit, the success of this fund could have a meaningful impact on the overall performance of Manulife IM's private equity portfolio. The $8.2 billion in unfunded commitments also indicates a strong pipeline for future investments, which could further influence the firm's financial stability and growth trajectory.

Private Equity Expert

The strategic positioning of Manulife IM in the GP-led secondaries market is indicative of the evolving landscape of private equity investing. The fund's strategy to invest alongside strong sponsors who are materially aligned with new investors is a key component of risk mitigation and value creation. By rigorously underwriting both the sponsors and the companies, Manulife IM is demonstrating a commitment to due diligence that is essential in the secondary market, where the quality of underlying assets and the alignment of interests are paramount.

This approach also suggests that Manulife IM is leveraging its network of over 200 general partner relationships to source and execute deals, which is a critical capability in the competitive secondary market. The ability to provide flexible capital solutions across five verticals further showcases Manulife IM's adaptability and expertise in meeting sponsor needs, which is important for sustaining long-term partnerships and ensuring continued access to high-quality investment opportunities.

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BOSTON, April 4, 2024 /PRNewswire/ - Manulife Investment Management (Manulife IM) today announced the final closing of Manulife Strategic Secondaries Fund L.P. (the fund). The fund strategy focuses exclusively on investments in sector-leading companies backed by high-quality general partners (GPs). With this close, the total GP-led secondaries platform has reached $610 million in aggregate capital commitments from a diverse roster of third-party investors and the Manulife general account.

Manulife IM was early to recognize the expanding breadth of the secondary market, most recently seen in the rise of GP-led secondaries. Jeff Hammer and Paul Sanabria lead this strategy as global co-heads and serve as co-portfolio managers of the fund.

"The importance of GP-led secondaries has been validated by the market given it represents roughly 50% of overall global secondary transaction volume for the last four years running," said Paul Sanabria. "GP-led secondaries create interim liquidity for limited partners to own great companies and allow sponsors to hold onto trophy assets through the next stage of value creation. It's a win/win and the fund is well positioned to take advantage of this growing opportunity." 

The fund invests primarily in continuation vehicles with a strong preference for concentrated transactions of three or less assets. The investment team believes that the fund can create secondary market alpha by thoughtfully curating a portfolio of great companies, underwritten one asset at a time. An important part of the team's approach is to be invested alongside strong sponsors, who are underwritten with the same intensity as the companies themselves, and who are materially aligned with new investors.

"Continuation vehicles are a game changer for the secondary market," said Jeff Hammer. "Portfolio construction in the GP-led market involves deep dive diligence. We analyze companies and underwrite returns with a degree of precision that the traditional LP secondary market has never been able to achieve. This creates an opportunity to deliver premium secondary market returns on behalf of our investors."

Manulife IM's sponsor-centric platform comprises a network of over 200 general partner relationships offering capital solutions across five verticals: primary fund investments, equity co-investments, senior credit and junior credit, and GP-led secondaries. As of December 31, 2023, Manulife IM has $25.8 billion in AUM across private equity and credit.¹

"We appreciate the long-standing relationships with our global private equity sponsors and the recognition of our expertise in providing flexible capital solutions across sponsor needs" added Vipon Ghai, global head of private equity and credit, Manulife IM. "We are pleased with the support of our inaugural fund focused on GP-led secondaries. By successfully navigating a challenging macro environment, the team was able to provide a new and compelling investment opportunity for our clients."

________________________________ 1 AUM of private equity & credit ("PE&C") includes funded committed capital as of December 31, 2023. The total value includes $8.2B of unfunded commitments.

About Manulife Investment Management

Manulife Investment Management is the brand for the global wealth and asset management segment of Manulife Financial Corporation. Our mission is to make decisions easier and lives better by empowering investors for a better tomorrow. Serving more than 17 million individuals, institutions, and retirement plan members, we believe our global reach, complementary businesses, and the strength of our parent company position us to help investors capitalize on today's emerging global trends. We provide our clients access to public and private investment solutions across equities, fixed income, multi-asset, alternative, and sustainability-linked strategies, such as natural capital, to help them make more informed financial decisions and achieve their investment objectives. Not all offerings are available in all jurisdictions. For additional information, please visit manulifeim.com.

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SOURCE Manulife Investment Management

FAQ

What is the total capital commitments reached by Manulife Strategic Secondaries Fund L.P.?

The fund has reached $610 million in aggregate capital commitments.

What is the focus of the fund strategy?

The fund strategy focuses on investments in sector-leading companies backed by high-quality general partners (GPs).

Who leads the strategy as global co-heads and co-portfolio managers of the fund?

Jeff Hammer and Paul Sanabria lead the strategy as global co-heads and serve as co-portfolio managers of the fund.

What percentage of overall global secondary transaction volume do GP-led secondaries represent?

GP-led secondaries represent roughly 50% of overall global secondary transaction volume for the last four years running.

What is the AUM of Manulife IM across private equity and credit?

As of December 31, 2023, Manulife IM has $25.8 billion in AUM across private equity and credit.