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(Bloomberg) — Manulife Investment Management is buying most of billionaire Michael Hintze’s CQS.
Manulife is acquiring the CQS credit platform, which has approximately $13.5 billion in assets under management, and the CQS brand, according to a statement. The transaction is expected to close in early 2024 and financial terms were not disclosed.
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“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,” said Paul Lorentz, president and CEO of Manulife Investment Management. Manulife Investment Management has about C$845 billion ($618 billion) in assets under management.
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“In Manulife Investment Management we have found the optimal long-term partner,” said Soraya Chabarek, CEO, CQS.
London-based CQS has managed research-driven alternative credit strategies for over two decades, including corporate credit, asset backed securities, collateralized loan obligations, convertible bonds and structured credit.
Hintze’s flagship Directional Opportunities fund, and certain related mandates, are not included in the transaction. The founder will be forming his own firm under which he will continue to manage his fund, according to the statement.
Hintze, a former Australian army captain, started trading Yankee bonds for Salomon Brothers in 1982, and joined Goldman Sachs Group Inc. two years later but quit after he wasn’t made a partner. Brady Dougan, the former CEO of Credit Suisse, hired him and later gave Hintze $200 million to start his own hedge fund in 1999. Five years later, Hintze returned $500 million to Credit Suisse and took full control of CQS.
The move comes after a challenging few years for CQS following steep losses in some of its funds in 2020. Since then, the firm has shuttered at least two money pools, scuttled an expansion plan, spun off non-core strategies and cut jobs to return to its credit-investing roots. Assets have declined from peak of nearly $20 billion before the losses.
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The Directional Opportunities fund gained 6.2% this year through September, and has returned an annualized 10.8% over its track record, which goes back to 2005, according to a letter to investors.
Job Cuts
Manulife said Tuesday that it will cut 250 jobs in its wealth and asset management unit, reducing staff at offices in the US, Canada, the UK and Asia.
“Like every other asset manager, we are weathering sustained market volatility and, for the first time in 15 years, a market cycle of higher-for-longer interest rates,” Lorentz said in a memo to employees.
Manulife is going ahead with job cuts after reporting a boost in third-quarter earnings from its business in Asia, where insurance sales in Hong Kong to mainland Chinese visitors continue to improve after the loosening of pandemic travel restrictions.
The Toronto-based insurer and asset manager said core earnings grew by 28% to C$1.74 billion, or 92 cents a share, in the third quarter, compared with analysts’ expectations of 83 cents, according to estimates compiled by Bloomberg.
—With assistance from Nishant Kumar and Nabila Ahmed.
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