Manulife Investment Management, the asset management arm of Canadian insurance conglomerate Manulife, has unveiled its first fund dedicated to GP-led secondary deals.
The new pool of capital will ramp up Manulife’s capacity to invest in concentrated continuation funds, a market that has seen growing interest among secondary buyers in recent years.
This is the first fund raised by Manulife IM’s secondaries team to include third-party capital since the asset manager launched its secondaries platform in 2019.
The vehicle, known as Manulife Strategic Secondaries Fund, raised a significant amount of capital from external LPs, including pension plans, endowments, foundations, and private wealth fond in North America and Asia, according to Jeff Hammer, global co-head of the secondaries platform at Manulife IM.
The fund also includes capital from Manulife’s general accounts, bringing the total capital available for investing in GP-led secondaries to $610 mn.
Hammer also added that he believes GP-led secondaries will generally generate higher returns than traditional LP-led secondary deals.
That will occur this year while green shoots are emerging in the exit markets, including the recent uptick in IPO and M&A activity and lower financing costs from lenders who are compromising on pricing amid competition.
The institutional pressures for liquidity have been building up. At a certain point, they need a release valve. The secondary market is a release valve
Jeff Hammer, global co-head of the secondaries platform at Manulife IM
Manulife Strategic Secondaries Fund will primarily target GP-led continuation funds containing no more than three assets, making bets typically between $25 mn and $125 mn.
Several secondary firms have recently pitched new funds or raised fresh capital targeting GP-led continuation funds.
The list includes LGT’s Crown Secondaries Special Opportunities III, Blackstone‘s $2.7 bn Strategic Partners GP Solutions, and Morgan Stanley’s Ashbridge Transformational Secondaries Fund II, which closed in early 2023 at $2.5 bn.
A growing percentage of assets in private markets portfolios are approaching their time to exit. GPs don’t want to sell these assets at unfavorable prices, so they are extending the exit timeline by using continuation funds.
In 2023, continuation funds accounted for 12% of sponsor-backed exit volume, compared with 7% seen in 2022, according to the Global Secondary Market Review.
Manulife Investment Management is the global wealth and asset management segment of Manulife Financial Corporation, a leading Canada-based financial services group with principal operations in Asia, Canada, and the United States. The firm offers a financial services including long-term savings, investment, and retirement solutions.
The firm operates under the brand names “Manulife” and “John Hancock” in the United States, where it also provides a broad array of investment and life insurance products.
With a heritage dating back over 130 years, Manulife Investment Management aims to leverage its diverse global presence and deep operational expertise to offer unique insights and investment strategies that help clients achieve their financial objectives.
by Yana Keller
