Opportunistic Credit in an Evolving Market: Our Approach

Charles Asfour, Partner | Greg Reynolds, Partner | Derek Gould, Managing Director

Manager selection drives opportunistic credit outcomes through differentiated sourcing, structuring, and active platform capabilities.

Opportunistic credit addresses gaps created by the constraints of traditional lending. The most compelling opportunities typically arise in situations that fall outside the mandates, comfort zones, or capacities of many conventional lenders. As a result, an allocation to opportunistic credit requires more than portfolio construction considerations. It demands an evaluation of a manager’s ability to move fluidly across the capital structure, underwrite with imperfect information, and dynamically adapt both underwriting and asset management approaches as circumstances evolve.

Opportunistic credit is best understood as complexity-oriented credit investing with selective equity participation.

Given this dynamic, we believe four attributes are central to manager differentiation:

• Sourcing: the ability to originate differentiated, less competitive opportunities
• Structuring: expertise across capital structure, including both debt and equity-like instruments
• Platform: the scale, experience, and capabilities to actively manage complex situations and influence outcomes over time
• Track record: demonstrated performance across at least one full market cycle

Our approach: a platform designed and resourced for complexity

Manulife | Comvest Credit Partners’ opportunistic credit approach is designed to leverage both credit and equity experience and resources.

We evaluate investments through a dual lens, combining a lender’s focus on cash flow, collateral, and capital structure with an equity investor’s focus on growth and value creation. This perspective extends to portfolio management, allowing adaptation as situations evolve. It’s grounded in the following core elements:

• Differentiated sourcing and execution: We believe access to differentiated opportunities is a key driver of returns. Our multi-strategy platform and origination capabilities provide early visibility into a broad range of situations, many of which evolve from conventional financings into more complex opportunities that require tailored solutions. Early engagement often leads to proprietary transactions and to enhanced investment terms and protections.
• Disciplined, total-return-oriented structuring: Investments are structured with a credit-first orientation, emphasizing contractual income and downside protection, but also complemented by selective equity participation and a hands-on approach to enhance total return potential. Our 25+ years of private equity heritage, combined with more than 20 years in private credit, provide a differentiated perspective and capabilities in the middle market.
• Industry expertise and operational value creation: Sector specialization across key verticals supports deep market insights and disciplined underwriting, while in-house operational resources and a diverse investment team's skill set enable active engagement with portfolio companies as needed to drive value creation or recover capital.
• Track record: A demonstrated 25-year history of investing across credit cycles and varying market environments provides context for navigating a variety of non-standard, complex situations.

Overview of our approach

• Opportunity set: growth capital, deleveraging and debt recapitalizations, dividend and shareholder buyouts, stressed and distressed credit, forward flow asset purchases
• Investment types: non-traditional first lien, second lien, and junior debt, structured equity, and asset investments
• Borrower profile: $50M–$500M enterprise value; sponsor and non-sponsored backed

Manager selection as the defining factor

Opportunistic credit offers exposure to differentiated opportunities beyond traditional lending, but outcomes are inherently execution-dependent. In a strategy defined by complexity and variability, manager selection is a primary driver of performance. Identifying managers with differentiated sourcing, disciplined structuring, and the platform to navigate evolving situations is critical to capturing the full potential of the asset class.

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Important disclosures

This material was prepared solely for informational purposes, does not constitute a recommendation, professional advice, an offer or invitation by or on behalf of Manulife Wealth and Asset Management (“Manulife WAM”), Manulife | Comvest Credit Partners, or its affiliates, to any person to buy or sell any security or adopt any investment strategy, and is no indication of trading intent in any fund or account managed by Manulife WAM or its affiliates. No investment strategy or risk management technique can guarantee returns or eliminate risk in any market environment.

The information in this material may contain projections or other forward-looking statements regarding future events and is only current as of the date indicated. Information concerning financial market trends are based on current market conditions, which will fluctuate and may be superseded by subsequent market events or for other reasons.

This material has not been reviewed by, is not registered with any securities or other regulatory authority, and may, where appropriate, be distributed by Manulife Wealth and Asset Management and its subsidiaries and affiliates, which includes the Manulife John Hancock Investments brand.

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