Kirkland Advises Comvest on Formation of a Top Private Credit Management Platform with Manulife

Manulife And Comvest Credit Partners Form $18.4 Billion Private Credit Platform

August 6, 2024

Manulife Investment Management And Comvest Credit Partners Have Announced A definitive Agreement To create A significant Player In The Private Credit Market. The Partnership Will Combine comvest‘s Expertise With manulife’s Existing Senior Credit Team, Resulting In A $18.4 Billion Asset Management Platform.

Kirkland & Ellis Provided Legal Counsel To comvest Credit Partners Throughout The Transaction. The Firm’s Team, Led By Partners Christopher Gandia And Jack Rossman, Guided Comvest Through The Complexities Of Selling A 75% Stake To Manulife.

This Strategic Move Is Expected To Strengthen Comvest’s Position In The Middle Market Direct Lending Space.It Will Also Enhance its Ability to Serve Founder-Owned And Sponsor-Backed Businesses, Providing Increased Access to Capital And Supporting Continued Growth.

The Collaboration Will Leverage Manulife’s Established Reputation And extensive Network Within The Private Equity Sponsor Community. This Synergy Aims To Broaden Origination Reach And Meet The Growing Demand For private Credit Solutions.

The Transaction Is Anticipated To Finalize In The fourth Quarter Of 2025, Pending Standard Regulatory Approvals And Closing Conditions. Investors Can Expect Strong Risk-Adjusted Returns Across Various Market Cycles.

Further Details Are Available In The Official Press Release.

Private Credit Is Becoming Increasingly Vital For companies Seeking Choice Funding Sources. This Deal Highlights The Continued Consolidation And Growth Within The Asset management Industry.

Frequently Asked questions

• What is private credit? Private credit refers to debt financing provided by non-bank lenders, frequently enough to companies that may not have access to traditional bank loans.
• Who are Comvest Credit Partners? Comvest Credit Partners is a leading middle market direct lending private credit manager with approximately $14.7 billion in assets under management.
• What is Manulife’s role in this partnership? Manulife is acquiring a 75% stake in Comvest’s private credit business and integrating it with its existing Senior Credit team.
• When is the transaction expected to close? The transaction is expected to close in the fourth quarter of 2025.

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What regulatory considerations were key to Kirkland & Ellis LLP’s counsel in this fund formation?

Teh Deal: A Strategic Partnership in Private Credit

kirkland & Ellis LLP recently advised comvest Credit Partners, a leading provider of flexible financing solutions to middle-market companies, on the formation of a strategic partnership with Manulife Investment Management, a global investment manager. This collaboration establishes a top-tier private credit management platform,significantly expanding Comvest’s capabilities and reach within the option credit market. The deal underscores the growing investor appetite for direct lending and private debt strategies.

Key Players and Their Roles

Comvest Credit Partners: A specialist in providing debt and equity financing to companies with enterprise values typically between $50 million and $750 million. Their expertise lies in sponsor finance, leveraged buyouts, and recapitalizations.

Manulife Investment Management: the global wealth and asset management arm of Manulife Financial Corporation,managing trillions in assets. Their involvement brings substantial capital and institutional expertise to the platform.

Kirkland & Ellis LLP: Provided legal counsel to Comvest throughout the transaction, navigating the complexities of fund formation, regulatory compliance, and partnership agreements. Their private equity legal expertise was crucial.

Understanding the Private Credit Landscape

Private credit, also known as direct lending, has experienced substantial growth in recent years. Several factors contribute to this trend:

1. Bank Retrenchment: Traditional banks have scaled back their lending to middle-market companies, creating a gap filled by private credit providers.
2. Yield Enhancement: Investors are seeking higher yields in a low-interest-rate environment, making private debt funds attractive.
3. Flexibility & Speed: Private credit offers more flexible financing terms and faster execution compared to traditional bank loans.
4. Increased Demand from Sponsors: Private equity firms increasingly rely on private credit to finance their acquisitions.

The Benefits of the Comvest-Manulife Partnership

This strategic alliance offers several key advantages:

Expanded Capital Base: Manulife’s meaningful capital commitment allows Comvest to deploy more capital into attractive credit opportunities.

Enhanced Product Offering: The platform can now offer a broader range of private credit solutions, including unitranche debt, second lien debt, and mezzanine financing.

Global Reach: Manulife’s global network expands Comvest’s reach to new markets and investors.

Operational Synergies: Combining Comvest’s specialized credit expertise with Manulife’s operational capabilities creates a more efficient and scalable platform.

Increased investment Capacity: The partnership significantly boosts the platform’s ability to support larger and more complex transactions.

Implications for the Middle Market

The formation of this platform is positive news for middle-market companies seeking financing. Increased competition among private credit lenders typically leads to:

More Favorable Terms: Companies may be able to negotiate more attractive interest rates and covenants.

Greater Access to Capital: A larger pool of capital is available to fund growth initiatives and acquisitions.

Faster Funding: private credit providers can often close transactions more quickly than traditional banks.

Kirkland’s Role in Navigating Complexities

Kirkland’s team, renowned for its expertise in financial sponsor transactions, played a pivotal role in structuring the partnership. Key areas of focus included:

Fund Documentation: drafting and negotiating the complex legal documents governing the new platform.

Regulatory Approvals: Ensuring compliance with relevant securities laws and regulations.

Tax Considerations: Structuring the transaction to minimize tax liabilities for all parties involved.

Due Diligence: Conducting thorough due diligence on all aspects of the transaction.

Negotiation Strategy: advising Comvest on negotiation strategy to achieve favorable terms.

Future Trends in Private Credit

The private credit market is expected to continue its growth trajectory in the coming years. Key trends to watch include:

Increased Institutionalization: More institutional investors, such as pension funds and endowments, are allocating capital to private credit.

Specialization: lenders are increasingly focusing on specific industries or niches within the private credit market.

Technology Adoption: The use of technology, such as artificial intelligence and machine learning, is becoming more prevalent in credit underwriting and portfolio management.

ESG Integration: Environmental, social, and governance (ESG) factors are playing a growing role in investment decisions.

* Secondary Market Progress: A more liquid secondary market for private credit investments is emerging.