Manulife Financial Corporation has held a $4 billion final close on its first infrastructure fund as the Canadian insurance giant moves into managing third-party capital.
The fundraising collected commitments from 25 institutional investors, with nearly half coming from pension funds and insurance companies and the rest from global asset managers with select sovereign wealth funds. Forty-five percent of investors are from North America, 40 percent are from Europe and 15 percent from Asia.
Managing third-party capital in addition to its own balance sheet is a recent strategy shift Manulife has adopted for other alternative asset classes in which it invests, according to John Anderson, head of corporate finance at the insurance company. With interest in infrastructure investments pushing up the price of assets, Manulife executives saw raising third-party capital as a way to participate in larger deals.
“In the past year, we have seen situations where we could have done a larger investment,” Anderson told Infrastructure Investor. “We thought, ‘if we had other investors with us, we could invest in larger sizes and an even larger amount of the transaction’.”
John Hancock Investments, Manulife’s US division, will manage the fund – John Hancock Infrastructure Fund – and invest alongside the third-party capital, according to a statement. Manulife will maintain a 40 percent ownership of certain assets and 50 percent ownership of the balance of assets.
The fund has been seeded with around $1 billion in prior Manulife infrastructure investments, which include wind and solar farms, a natural gas plant, utilities and toll roads, Anderson said. In addition, the insurer will match the fund’s new primary investments on a dollar-for-dollar basis, according to the statement.
When third-party capital, Manulife’s own assets and own money are combined, the result is a $4 billion fund, Anderson said.
Manulife has invested in infrastructure for its own clients for 15 years, building a $35 billion infrastructure equity and debt portfolio, according to Anderson, the equity portion of which totals $8 billion.
The fund will target regulated utilities, energy generation, transportation and telecommunications.
“We’re not turning away from investing for our life insurance companies, but with this fund, we can increase the size of our programme and take advantage of market opportunities,” Anderson said.
He will manage the fund along with Recep Kendircioglu, Manulife’s senior managing director for power and infrastructure.
Placement agent Campbell Lutyens acted as exclusive financial advisor.