Why junior credit?

Investors providing junior credit capital to businesses with strong free cash flow generation, room for operational improvements, and multiple ways to create value can pursue an attractive mix of high yields, equity upside, and diversification.¹

High yields associated with double-digit contractual cash coupons in subordinated and second-lien debt and contractual pay-in-kind coupons in structured equity

Equity upside through common equity participation alongside each debt investment and attractive minimum multiples on invested capital tied to structured equity with warrants and convertible features

Diversification achieved by building balanced exposure by sector, vintage year, security type, and private equity sponsor

Important disclosures

1 Diversification or asset allocation does not guarantee a profit or protect against the risk of loss in any market. Past performance does not guarantee future results.

Mezzanine: low leverage and high rates point to attractive risk/return

Mezzanine’s current characteristics—including lower leverage and higher coupons—make it one of the most attractive entry points into the asset class in years.

What sets us apart

Years of investing across the capital stack facilitates efficient execution. With extensive shared direct deal experience, members of our long-tenured team have worked closely together for years, enabling us to evaluate opportunities and execute transactions efficiently and effectively.

$3.5B

Invested since 1998²

200+

private equity relationships through Manulife's private equity and credit platform

80/20

contractual yield to equity upside³

Important disclosures

Data as of June 30, 2024.

2 Represents Junior credit investments made by the U.S.-based PE&C team on behalf of the Manulife investors and third parties since inception of the private credit program in 1998 3 Represents strategy target.

Our strategy is purpose-built for junior credit investment opportunities, accentuating the advantages of Manulife Investment Management’s history, reputation, and unique combination of capabilities

Leveraging our sponsor network

As multidecade investors in private equity and credit, we put our GP-intensive network of relationships to work each day. We work with operationally focused private equity sponsors with specialized expertise and consistently strong track records spanning multiple economic cycles.

Differentiated sourcing

Our presence in primary funds opens doors to direct credit deal flow. A comprehensive lineup of private equity and credit capabilities—including co-investments, GP-led secondaries, and senior credit—further enhances and differentiates deal sourcing.

Selecting assets

When considering investments, we begin with three key objectives in mind: diversification at the portfolio level, fit between the sponsor’s demonstrated area of expertise and the investment opportunity, and opportunities with multiple levers of potential value creation.

Our junior credit strategy and approach

Consistent with our strategy since its inception in 1998, we selectively invest directly in market leading companies by leveraging our private equity sponsor relationships for high-quality deal flow. When considering investments, we look for businesses that offer investors an attractive combination of traits, including:

Strong value propositions

Differentiated product and service offerings that address a market need

Consistent free cash flow

Value creation through debt reduction even if growth or cost reduction strategies don’t materialize immediately

Multiple value creation levers

More than one path to operating improvement and investment success

Our portfolio

We believe that a diversified portfolio of junior credit can provide investors with attractive risk-adjusted, long-term returns through income and capital appreciation across multiple market cycles and macro environments, as demonstrated by results of prior funds.

Innovation and accelerated growth over two decades

1998

1ˢᵗ junior credit fund⁴
2002

2ⁿᵈ junior credit fund⁴
2004

3ʳᵈ junior credit fund⁴
2007

4ᵗʰ junior credit fund⁴
2012

5ᵗʰ junior credit fund⁴
2018

6ᵗʰ junior credit fund⁴
2023

7ᵗʰ junior credit⁴

Important disclosures

4 Junior credit "fund size" represents capital commitments for each respective fund pool, except in the case of Fund II, which reflects 25% of Manulife's initial anticipated aggregate commitment to that fund pool due to the shortening of investment period for that internal fund. Does not include overage amounts invested by the general accounts outside of fund vehicles.

Junior credit capital solutions

We lend and invest alongside private equity sponsors, providing junior capital—including traditional subordinated and second-lien debt and structured equity—to businesses led by experienced management teams that are aligned with their investors. Harnessing our extensive industry experience, we focus our due diligence on critical issues of suitability and value creation, while communicating timely and effective decision-making to support the objectives of our partners.

Investment criteria

We seek to support companies with the following characteristics:

Headquartered in North America or Europe
Involvement of an operationally oriented sponsor
Proven management teams
Meaningful competitive position in target markets
Favorable free cash flow generation with the capacity for additional cash flow growth
Operating and financial flexibility to manage through economic cycles
Demonstrated ability to grow

Why partner with Manulife Investment Management?

Flexible capital with competitive pricing and structuring
Certainty and high speed of execution
Long-term investment horizon of 5 to 7+ years
Alignment alongside private equity sponsors and management teams with equity upside participation

Our team

Our junior credit team members average nearly two decades of direct investing experience.

Vipon is responsible for the team that oversees global private equity, junior credit, secondaries, and private credit investments. He joined the firm in 2002 and has more than two decades of experience in private equity, four years in corporate and investment banking, and three years of operational experience. Vipon has served as a board director on several public and private companies in the United States and Canada, and he holds the Chartered Financial Analyst, Certified Management Accountant, and Certified Public Accountant designations.

Education: B.B.A., Wilfrid Laurier University
Joined the company: 2002
Began career: 1991

Matt leads Manulife Investment Management’s junior credit business, which focuses on providing subordinated and second-lien debt and structured equity solutions to private equity sponsors and their portfolio companies. He joined Hancock Capital Management—now operating as Manulife Investment Management—in 2013. Previously, he was vice president at Pomona Capital, where he focused on private equity secondary and co-investment opportunities. Earlier in his career, Matt held investment positions at AlpInvest Partners and Prudential Capital Group.

Education: B.S., Finance and Accounting, Boston College; M.B.A., Northwestern University (Kellogg)
Joined the company: 2013
Began career: 2003

Scott has overall responsibility for the firm’s North American junior credit, private equity funds, and equity co-investment programs. Prior to joining the firm, he was a partner at FinanStar Group, a boutique investment bank. Scott’s background also includes numerous merger-and-acquisition assignments and corporate finance transactions while serving in Wachovia’s capital markets group.

Education: B.A., Economics, Williams College; M.B.A., Duke University’s Fuqua School of Business
Joined the company: 2002
Began career: 1988

Rajiv is responsible for sourcing, evaluating, negotiating, and monitoring junior credit and private equity investments. Prior to joining Manulife Capital—now operating as Manulife Investment Management—in 2002, he was with KPMG, where he provided valuation and transaction advisory services primarily to private equity investors. Additionally, Rajiv has served as a director on the boards of several companies and on advisory boards of investment funds in Canada and the United States. Rajiv holds the Chartered Business Valuator, Chartered Financial Analyst, and Chartered Professional Accountant designations.

Education: B.Com., University of Toronto
Joined the company: 2002
Began career: 1998

Brian is responsible for sourcing, evaluating, negotiating, and monitoring junior credit and private equity investments. Prior to joining Hancock Capital Management—now operating as Manulife Investment Management—in 2011, he was with Bain as a member of the private equity group, where he worked with clients to evaluate investment opportunities and drive strategic and operational changes at portfolio companies. Prior to that, he was a senior analyst in the transaction advisory services practice at Ernst & Young. Brian holds the Chartered Financial Analyst designation.

Education: B.A., Economics, Bucknell University; M.B.A., The University of Chicago Booth School of Business
Joined the company: 2011
Began career: 2003

Seth is responsible for the sourcing, underwriting, analysis, and review of junior credit and private equity investments. He joined Hancock Capital Management—now operating as Manulife Investment Management—in 2018. Prior to joining the firm, he was a senior associate at PGIM Private Capital, where he focused on sourcing and underwriting senior and mezzanine investments. Prior to joining PGIM Private Capital, he supported institutional investor relations at Mellon. Seth holds the Chartered Financial Analyst designation.

Education: B.S.B.A., Finance, University of Rhode Island
Joined the company: 2018
Began career: 2011

Related viewpoints

December 18, 2023

Mezzanine: low leverage and high rates point to attractive risk/return

Joshua A. Liebow, CFA, Co-Head of Junior Credit Manulife Investment Management

Matt Szwarc, Managing Director, Head of Junior Credit Manulife Investment Management

Mezzanine’s current characteristics—including lower leverage and higher coupons—make it one of the most attractive entry points into the asset class in years.

July 24, 2023

Mezzanine financing can shine when macro clouds loom

Joshua A. Liebow, CFA, Co-Head of Junior Credit Manulife Investment Management

Matt Szwarc, Managing Director, Head of Junior Credit Manulife Investment Management

Investors extending mezzanine financing to the middle market now have an opportunity to lock in fixed-rate contractual coupons while they’re still high.

July 14, 2023

What is junior credit?

Junior credit, which sits between senior debt and common equity on a company’s capital structure, can provide investors with an attractive mix of high yields, equity upside, and diversification. Learn how.