Manulife’s Hong Kong investment chief stressed the importance of a clear exit plan in private markets to keep liquidity risks at bay, but the company continues to add positions in alternative assets .
“Public assets provide most of the liquidity a business needs, while alternative assets can be used for diversification,” said Timothy Yiu, head of investment management at Manulife (International). said.
Yiu leads Manulife Hong Kong Life Insurance general account investment function work.
Timothy Yu, Manulife
“Especially for fund investments, we spend time with our GPs (general partners) to understand how effective they are in exiting portfolio companies. We can get the capital flow back to us. It’s also another source of liquidity,” Yiu said at a panel discussion. asian investorQuarterly Insurance Investment Briefing Hong Kong last week.
Manulife sees alternative assets such as private equity, infrastructure, real estate and agriculture as a good fit for its long-term debt. They see it as a ‘portfolio stabilizer’ that provides diversification benefits with lower volatility and lower correlation between asset classes compared to public equity markets.
It is gradually moving from public to private assets and will continue to steadily build its portfolio over the next few years, Yiu said without giving specific goals.
Yiu primarily manages its alternative assets in-house through its general account team and its investment management arm, Manulife Investment Management (IM).
safe and sound
In the meantime, the company spends a good deal of time with GPs to understand their evaluation process and policies.
“We prefer GPs with more conservative valuation policies. We are not just trying to sell it at a high price.
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They want to make sure fund managers have a variety of ways to raise deals. For example, through our own sourcing and industry relationship networks to obtain exclusive deals, as well as compete in auctions and competitive markets.
“That way, they can make acquisitions at much lower multiples than the market average, providing some buffer if market valuations decline,” he said.
In the real estate sector, Manulife seeks core or core-plus properties across Asia, such as logistics facilities and apartment complexes.
Earlier this year, Manulife IM agreed to acquire a significant minority stake in Hong Kong-based Arch Capital Management, a private equity firm specializing in real estate in the Asia Pacific region.
Once the transaction receives regulatory approval, Arch Capital’s experience in opportunistic and value-added strategies and Manulife’s core assets across the region will build on the partnership to manage more than $5 billion in assets in 12 Asian markets. and $2.9 billion in Core Plus assets. Arch Capital said in his February announcement:
In March, Manulife IM entered the Japanese multi-family real estate sector for the first time through a ¥19.8 billion ($137 million) joint venture with Tokyo-based Kenedix. The JV will acquire properties in apartment complexes located in major cities in Japan.
Manulife also focuses on a variety of upper to lower middle market buyout funds from a variety of quality fund managers.
Green infrastructure assets such as energy storage and electric vehicle charging facilities are also where the company sees opportunity.
“We are looking at different opportunities. We are continuing to put capital in to meet the increasing demand,” said Yiu, noting that asset supply here in Asia is not a challenge, but rather a variety of private sector opportunities. He mentioned that he has invested heavily in equity funds and other real estate. For example, trading.
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