Manulife buys Comvest to build US$18.4 billion private credit unit

[TORONTO] Manulife Financial agreed to buy a majority stake in Comvest Credit Partners, creating a US$18.4 billion private credit platform as the insurer accelerates its expansion into alternative investments.

The company will acquire 75 per cent of the middle-market lender for about US$938 million, according to a statement on Wednesday (Aug 6). The deal includes a potential earnout of as much as US$337.5 million, contingent on performance, and gives Manulife the option to acquire the remaining 25 per cent stake.

Comvest, which was founded in 2000, specialises in lending to middle-market companies not backed by private equity and speciality finance. Earlier this year, the firm had been weighing options, including a stake sale, Bloomberg News reported.

The deal is expected to be immediately accretive to Manulife’s core earnings per share, return on equity, and margins, according to the statement.

“We are really excited about this acquisition,” Manulife chief financial officer Colin Simpson said in an interview, adding that Comvest has a proven track record in private markets. “It’s in a space that itself has grown, and the private credit market is really enjoying fantastic growth, and as far as we are concerned, it’s here to stay.”

The transaction is expected to close in the fourth quarter, pending regulatory approvals. Morgan Stanley is acting as financial adviser to Manulife, while Skadden Arps Slate Meagher & Flom is providing legal counsel.

Manulife shares have slipped 2.6 per cent so far this year to Wednesday’s close, giving the Toronto-based firm a market capitalisation of about C$73 billion (S$68 billion).

Separately, the insurer reported core earnings of 95 Canadian cents per share in the second quarter, missing the 97 Canadian cents expected by a survey of Bloomberg analysts. Manulife’s core earnings dropped 2 per cent from last year to C$1.7 billion, according to a statement. BLOOMBERG