Manulife Investment Management has signed an agreement to acquire multi-sector alternative credit manager CQS.
The acquisition of London-based CQS will give the clients of both Manulife and CQS enhanced access to their complementary global investment solutions, Manulife announced in a statement.
Manulife will retain CQS’s “rigorous investment philosophy and process and bring its differentiated capabilities to new investors while scaling its distribution footprint across broader client segments and geographies”, it added.
CQS and its clients will benefit from Manulife’s “strong capital base to continuously invest in the business and support growth across its strategies”, manulife said. The CQS credit platform has approximately $13.5bn in assets under management as of 31 October 2023.
Paul Lorentz, president and chief executive officer of Manulife, said: “CQS brings to our portfolio a proven investment process, robust performance, and expertise across market cycles, and a culture that has attracted both talent and flows into the firm.”
Soraya Chabarek, CEO of CQS, added: “In Manulife Investment Management we have found the optimal long-term partner. We share a client-focused culture, and the support of its strong platform and global distribution combined with the autonomy of our investment teams will ensure we continue to strive to deliver attractive long-term returns to our client base.”
She noted that over the last decade CQS had transformed into a global alternative credit platform and this transaction is an “important strategic step forward for our business, our clients, and our employees”.
CQS was founded in 1999 by Michael Hintze as a hedge fund manager, and under the leadership of Chabarek, who joined the firm in 2012. CQS offers alternative credit strategies including corporate credit (loans and bonds), asset backed securities (ABS), collateralised loan obligations (CLOs), regulatory capital, convertible bonds, and structured credit. It has ESG principles integrated throughout the organization and into the investment approach.
CQS will continue to be led by Chabarek and her fellow senior partners Craig Scordellis, chief investment officer for Credit, and Jason Walker, CIO for ABS.
Manulife will acquire the CQS brand and plans to align it with the Manulife brand as a co-branded logo – Manulife|CQS Investment Management – where permitted, the firm disclosed.
Hintze’s founder’s hedge fund, the Directional Opportunities Fund, and certain related mandates are not included in the transaction. Hintze will be forming his own firm under which he will continue to manage his fund on behalf of investors.
Hintze said the transaction between Manulife and CQS ”provides a long-term platform that will enable CQS to thrive as a leading alternative credit manager for years to come under [Chabarek’s] exceptionally able leadership”.
He said: “I will now focus full-time on running the Directional Opportunities Fund, an opportunity that I am excited about.”
The transaction is expected to close in early 2024 subject to customary closing conditions and regulatory approvals. At close, CQS will begin the process of integrating with Manulife over time.
The financial terms of the transaction were not disclosed. Piper Sandler & Company served as exclusive financial advisor and Simmons & Simmons served as legal counsel to CQS in this transaction.
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