Manulife ponders third-party capital for Asian co-investments

Manulife Investment Management, the asset management arm of Canada’s largest insurer, will consider extending its push into third-party management to Asian co-investments.

The firm, which has an office in Hong Kong, could invite “like-minded” investors to participate in its regional co-investment programme, Myron Zhu, head of private markets for the region, told delegates at the Hong Kong Venture Capital and Private Equity Association’s annual forum last week.

Zhu joined in August from Aberdeen Standard Investments where he was co-head of Asia-Pacific private equity. He will be responsible for building out its existing private equity, private credit and real estate teams to explore a third-party offering.

“These teams have predominantly been focused on our balance sheet mandate, but my role is trying to assess whether I can leverage these teams to broaden our offering to allow other investors to participate,” Zhu told Private Equity International on the sidelines of the event.

“Historically, our private markets exposure has been very North America-centric, so the firm is really trying to diversify. Asia is the fastest growth market within the company and accounts for one-third of our top and bottom line on the insurance side, so we’re hoping to develop our asset management business somewhere nearer to that.”

Manulife plans to increase its exposure to Asia-Pacific private markets, Zhu added. Asian private equity fund commitments and co-investments represent around 2 percent of its roughly $100 billion private markets portfolio globally.

The firm has C$854 billion ($653.8 billion; €589.8 billion) in assets under management and administration, according to its website.

Co-investments are a popular means of doing so. Dutch pension giant APG Asset Management, for example, is planning to launch its own dedicated team out of Hong Kong later this year to at least double its exposure to the region.

Manulife has been actively building its third-party capabilities. The insurer closed its debut fund of funds, Manulife Private Equity Partners, earlier this month on $1.5 billion, according to a statement. MPEP was seeded with an existing portfolio of North American funds and co-investment interests with more than 25 growth and buyout fund managers.

That fund was facilitated by Manulife selling a $1.7 billion private equity portfolio off its balance sheet in August with backing from a syndicate led by AlpInvest Partners, sister publication Secondaries Investor reported at the time.

In 2018, it sold a $1 billion portfolio of infrastructure assets to Ardian before collecting an extra $1 billion from new investors.