Manulife Investment Management has signed an agreement to acquire multi-sector alternative credit manager CQS. Upon completion of the transaction, Manulife Investment Management will acquire the CQS credit platform and the CQS brand.

The acquisition of London-based CQS will give the clients of both Manulife Investment Management and CQS enhanced access to their complementary global investment solutions. Manulife Investment Management 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. CQS and its clients will benefit from Manulife Investment Management’s strong capital base to continuously invest in the business and support growth across its strategies. The CQS credit platform has approximately US$13.5 billion in assets under management as of October 31, 2023.

“We are pleased to enter into this agreement which we see as mutually beneficial to both firms as well for those who have been investing with CQS for decades,” said Paul Lorentz, president and CEO, Manulife Investment Management. “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. We are very excited for the opportunity as CQS’s capabilities are a complement to our existing fixed income and multi-asset solutions business and a powerful addition to our global credit offering.”

“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,” said Soraya Chabarek, CEO, CQS. “I would like to take this opportunity to thank Lord Hintze for the personal support and wise counsel he has given me as CEO. Over the last decade we have transformed CQS into a global alternative credit platform and this transaction is an exciting and important strategic step forward for our business, our clients, and our employees.”

CQS is one of the most established names in alternative credit, having managed research-driven credit strategies for over two decades across multiple market cycles and geographies. CQS was founded in 1999 by Lord Hintze as a hedge fund manager, and under the leadership of Ms. Chabarek, who joined the firm in 2012, along with the Senior Partners Group that was formed in 2021, it has evolved into a multi-sector credit platform. Today, CQS offers alternative credit strategies including corporate credit (loans and bonds), asset backed securities (ABS), collateralized 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 Ms. Chabarek and her fellow Senior Partners Craig Scordellis, CIO Credit, and Jason Walker, CIO ABS. Manulife Investment Management will acquire the CQS brand and intends to align it with the Manulife brand as a co-branded logo – Manulife | CQS Investment Management – where permitted.

Lord Hintze’s founder’s hedge fund, the Directional Opportunities Fund, and certain related mandates are not included in the transaction. Lord Hintze will be forming his own firm under which he will continue to manage his fund on behalf of investors.

Lord Hintze said, “I’m delighted that CQS has found the right partner in Manulife Investment Management. It provides a long-term platform that will enable CQS to thrive as a leading alternative credit manager for years to come under Soraya’s exceptionally able leadership. I will now focus full-time on running the Directional Opportunities Fund, an opportunity that I am excited about. I wish Soraya and the CQS team every success as they embark on this exciting new chapter.”

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 Investment Management over time. The financial terms of the transaction were not disclosed. Piper Sandler & Company served as exclusive financial advisor and Simmons & Simmons LLP served as legal counsel to CQS in this transaction.

Source: Manulife