Manulife Financial Corp. is formally launching a new institutional investment business group after a year of building up assets and planning an expansion.
The business, called Manulife Asset Management Private Markets, manages $74-billion of its parent company's $575-billion in funds under management. Management plans to grow that pool by seeking out new investors and deepening its focus on three target areas: commercial real estate equity, commercial mortgage lending and private placements.
Right now, Manulife's private asset offerings are anchored by the Hancock Natural Resource Group, a trio of farmland, timber and renewable energy investments. The timberland division, for example, currently holds $11.5-billion in assets and 6.5 million acres of timberland on behalf of investors. It's not the sort of business most investors would associate with an insurer, but trees take years and years to grow, making them compatible long term investments.
Among the offerings, there is also a large private placement debt team with $22.1-billion in assets, and a commercial mortgages team with $21.0-billion in assets.
The business is going after pension plans, endowments, family offices and some mid- and small-sized insurers that have similar needs as Manulife. Mandates have increased in the past year.
"We believe our clients are going to benefit from our value proposition – we have a long-term investment philosophy…we're not timers in the market," said Kevin Adolphe, who will lead the unit as president.
Mr. Adolphe also thinks clients will be attracted to Manulife's willingness to invest alongside clients. "A lot of clients through the financial crisis – they bought into a lot of funds and the providers weren't co-invested with them," he said. "But when bad things happened the proprietor wasn't in the same situation as the investor. We will be."
Many investors are looking for alternative investments to bolster portfolios in the lower yielding environment, but it will likely take a couple of years for Manulife Asset Management Private Markets to generate the investments required to gain momentum with the business, Mr. Adolphe said. Still, Manulife thinks that its broad geographic foot print and diverse asset classes will attract more assets, and help the group get access to better deals.
"What we focus is on a consistent, low volatility return. We're trying to maintain a stable but growing income stream," Mr. Adolphe said.