Understanding Asset-Based Finance

Stewart (00:31): Hey, welcome back to another edition of the InsuranceAUM Podcast. My name's Stewart Foley. I'll be your host, and today we're under the hood of one of the most talked-about areas of private credit, asset-based finance, or ABF. And for the insurance sector, that label covers a pretty wide waterfront. Today, we want to get underneath the acronym, what ABF actually is, and what drives the risk and return where risks can hide, and what separates an experienced manager from someone who has simply shown up because the asset class has gotten hot. And today I'm joined by Jason Gelberd and Tim Kim of Manulife Comvest Credit Partners. Jason is partner, chief operating officer, and co-head of direct lending. He leads operations and portfolio management and is responsible for investment management across the platform.

Tim is a partner and head of specialty finance and is responsible for originating, structuring and managing investments primarily in specialty finance. Jason and Tim, welcome to the show. How are you today?

Jason (01:38): Doing great. Good to be here.

Stewart (01:40): Okay, so we'll start the way we always do. So we'll start with you, Tim. Where'd you grow up and what's a fun fact that your colleagues might be surprised to know?

Tim (01:50): I grew up in the suburbs of Chicago, the North Shore.

Stewart (01:53): Which one?

Tim (01:54): Glenview.

Stewart (01:55): Oh, wow. Okay. Because I used to live in Evanston, taught at Lake Forest College, so I know that area well.

Tim (02:02): Yeah, yeah. Great spot. Fun fact, I am colorblind. And so every time my colleagues or deal team send me an email and they redline a document, I tell them I can't see it. And so they have to do it in different color or highlight or whatever. It's a total pain, but that's what I got to do.

Stewart (02:22): I like it. All right. That is an interesting fact. Jason, how about you? Where'd you grow up and what's a fun fact?

Jason (02:29): Yeah, there seems to be a good Chicago connection here. So, I also grew up in the northwest suburbs. I'm up in Long Grove, Hawthorn Woods area of Chicago. So I think a fun fact would be when I'm not doing direct lending, I am a glutton for punishment for endurance type challenges. So I've done 5 different marathons and over 10 half marathons, I think, over the past 15 years or so. So my knees and my feet definitely tell the story today, but it's always been something I've enjoyed.

Stewart (03:00): It's funny because I moved from Evanston to Barrington Hills. So I went from next door neighbors to Tim to down the road neighbors from you. That's right. Which is really cool. And it's funny, people who don't know Chicago, there's a lot of days when it's 10 degrees warmer there than it is on the lakefront. It's amazing how much that lake affects the weather locally.

So Jason, let's start at 30,000 feet. I mean, ABF is certainly not new. It's been covered on this show and others, but it seems as though the hot ticket switched from direct lending to ABF a little bit ago and it is getting a lot of attention. It seems like what's old is new again in some ways, right? It certainly is one of the most talked about areas of private credit. Can you give us some insights on how we got here?

Jason (03:56): Yeah, thanks Stewart. I agree. ABF has become heavily talked about within private credit, and I think a lot of that has to do with the fact that ABF has become one of the fastest growing sectors in private credit. When you look at the overall market, the ABF market is estimated to be $20 trillion right now. And within that global market, the private part of it, the ABF market is around $6 trillion, and that's projected to grow to $9 trillion or so by 2029. So there's been a lot of growth and there's still a huge opportunity for growth in the future. So why is it growing? Why is it on this growth trajectory? I think we think of it as really three main factors. First, there's been strong growth in the specialized non-bank originators and Fintech platforms that you've read about quite a bit. So that's really increased the demand for the capital.

And at the same time, the historical sources of the capital, many of them have been pulled back or have been constrained to provide the capital needed for the space. So an example of that would be banks, which really used to dominate the space. They've really been pulling back on the space due to regulatory capital treatment constraints following the GFC. Then there's other sources like hedge funds and others that used to provide capital to the sector. They really started pulling out and seeking more liquidity-focused strategies. And then you have certain fund structures within private credit, even within private credit like BDCs and others that really have a limitation on how much they can invest in these types of transactions. LPs, I don't think you can ignore that LPs are continually searching for yield and diversified investment opportunities outside of traditional private credit or private equity.

So you've got a situation where the constraints from possible competition combined with the growth in the category really provides a strong risk adjusted return opportunity for private credit managers and their investors that have the expertise and experience in the category. And then lastly, I would just note that there's been many advancements in structures to suit investors where today, depending on the needs and situation of the LP, they can invest in a commingled fund, a rated note feeder, an SMA or other structures with a focus really on capital efficiency for investors, such as what happens in insurance capital quite a bit. So today there's a good number of options for investors that are seeking to get exposure in that space with a wide array of asset categories and structures and risk return profiles. But now I think allocators have the challenge in understanding what sits behind the general ABF label.

Really looking under the hood is important for allocators to make sure they understand the different flavors of ABF, the different structures that exist and different manager expertise and track records when they're evaluating investing in the space.

Stewart (06:44): So you said $20 trillion and $6 trillion of it's private. Is a lot of that $20 trillion credit cards and auto loans, is that sort of the center of the fairway big volume stuff? And then when it gets into private markets, you begin to diversify the pool of collateral. Is that a fair assessment, when people say specialty finance and it means about as many different things as many people who say it? So I'm just trying to make sure when we talk about this, I mean the concept of ABF was and is ABS, which is where you have a collateral pool and you have structure on top of it. And so I think that it seems to me that the structure of some of these investments are what a lot of the insurance carriers like. They like that subordination and they like the structure. Tim, that gives us some history, but now I mean we're sure and we want to make sure that everybody understands what we're talking about.

When you think about this in the range of assets, talk a little bit about what does ABF fundamentally stand for?

Tim (08:03): Yeah, I mean not to define ABF, literally obviously it's asset-backed finance, but I think to your point, Stewart, I mean it started with ABS and kind of worked its way to ABF. I think ABF is an even broader term, and that's honestly one of the bigger challenges that we see today. I think it's so broad that when you say you have an ABF strategy, that doesn't really say anything about the risk profiles you're taking on or the structures you're looking to invest in. To your point, when investors and allocators hear ABF, they normally associate that with some sort of downside protection, some sort of diversification, less correlation and yield premiums. But I think our jobs as investors and when we're talking to LPs to educate them is really telling them that you need to peel back these layers of the onion because once you do that, you can see how different the risk profiles can be from one strategy to another.

And so LPs that are newer to the ABF industry, what we typically recommend to them is start with where the manager sits in the capital structure because that will be very telling in terms of the type of risk profile of that strategy. I think the reason why I said ABF has become even broader is because it now not only includes lending strategies, but it also includes equity strategies and the fact that one term, ABF, can include both lending and equity just goes to show how broad that term has become. And so let's break down each group there. So within lending strategies, first of all, it's important to distinguish first lien versus second lien. Both strategies will have some form of structural protections, whether it may be borrowing-based requirements or financial and asset performance covenants over collateralization to your point about subordination. And I think the difference though is that the first lien lender will have more control over the deal and the workout strategy, whereas the second lien is typically more along for the ride versus being in the captain's chair.

I would also say the second lien typically attaches deeper in the capital structure, so that might mean less downside protection, less cushion built into those deals compared to what you would see in a first lien. So breaking apart first lien and second lien to me is important because what you see a lot of managers say in their marketing materials is that they're senior secured and senior secured can include both first lien and second lien, which I think is a little misleading.

Stewart (10:50): Yeah, I would agree.

Tim (10:52): Yeah. With regards to equity strategies, just to tackle that second bucket real quick, this is typically from our point of view when investors are either purchasing the assets as opposed to when they lend against it. And so from a capital structure standpoint, these are even deeper in the capital structure compared to a second lien and they have even less structural protection in place. So you might read about certain asset purchasers talk about how they have some downside protections and structural clawbacks where they can claw back a portion of the purchase price. But I would tell you those are typically pretty limited in size, think 5%, if not less than the total purchase price. It's nothing like the downside protection you might see in a lending strategy. And so it's just very different from that aspect. I think what you get as a result is that the returns of an equity strategy are likely to be much less consistent compared to the returns of a debt strategy because any sort of deterioration in performance will directly impact the returns of the equity.

Whereas in a lending strategy, you have that cushion, it's a coupon that they're generating. There has to be a lot that goes wrong before the returns are impacted for debt investors.

Stewart (12:14): And Jason, that tees up the next question nicely. So once I understand the collateral and where I sit in the capital structure, there are obviously some other things that determine what makes it a good investment. So beyond what part of the capital structure an ABF manager focuses on, what else impacts the risk return profile of a given deal?

Jason (12:37): Yeah, I would acknowledge it. Certainly capital structure, as Tim mentioned, is a major factor, but there really are others, certainly many others. I think a major one is the asset class, I'll call it. And each asset class really comes with its own set of characteristics that can affect the quality of the collateral.

Stewart (12:55): Just for clarity, when you say asset class, you mean the underlying collateral?

Jason (13:00): That's exactly what I mean. It's the underlying borrower category that supports the collateral.

Stewart (13:04): Got It. Okay.

Jason (13:05): So, examples could be consumer. Everyone's familiar with that. Those are things like auto loans or personal loans, credit cards you mentioned earlier. So that's an asset class. Another asset class would be commercial applications, should be things like equipment finance or commercial receivables or transportation assets, CRE, that type of thing. A third one that we focus on is NAV lending, and we think of that as an asset class. And NAV lending is that basically represents lending to funds based on the NAV, the net asset value of investments that they've made in that fund. So that would be another asset class. And then one last just one to comment on would be esoteric categories. That's an area that's getting a lot of press and people are excited about those. Those are things like IP lending or royalty lending, debt settlement or insurance premium finance. So all these different asset categories fall under the general ABF umbrella, but they all have their own nuances. They all have their own unique risks and opportunities. And a manager, we think, really has to have relevant experience in these subcategories, in these asset classes to really understand how to incorporate the specific risk that might exist into their structure.

Then I think there's also some other factors outside of just asset category that affects all the different asset categories when you think about investing in ABF and things like diversification within the collateral pools, extremely important, correlation with economic environments. So how cyclical would this behave? The duration of the collateral that's in these pools, how long does it take to liquidate out? And then lastly, the nature of that collateral is either, we think of it as either self-liquidating or more relying on residual value that's longer term in nature. So all these factors really need to be looked at and correlated to the underlying asset category to understand the overall risk of that investment.

From our perspective, we really think of the most compelling opportunities within ABF involve highly diversified pools of collateral. They're shorter in duration, and we like to see things that are self-liquidating in nature in asset categories that we as the manager have extensive experience.

Stewart (15:15): Yeah. I'm going to ask you a question. I'm not sure what I'm asking you. What is advance rate and how important is it?

Jason (15:26): Yeah, so I think you mentioned earlier, these are borrowing-based driven structures. So the nature of these deals is you are advancing on a pool of collateral, and let's say that pool of collateral is a bunch of auto finance loans. The advance rate that we refer to is exactly that. It's the rate that we'd advance on eligible collateral. So if there's a $10,000 auto loan and the advance rate is 85%, we're advancing $8,500 on that $10,000 auto loan.

Stewart (15:57): I see. And where does the remaining $1,500 go?

Jason (16:01): So that would be the equity piece or the subordinated debt piece of these structures. So where we focus is primarily on the senior unit tranche type of financing, but the rest is made up by junior capital.

Stewart (16:13): Got it. And that's a different, I mean, most of the time, the insurance company wants to be in that 85% range, of course. And the other thing that occurs to me is back in the day when the earth was cooling and I was running money, different ABS categories had different duration and convexity profiles. Resi mortgages are far more negatively convexed than these things are. But can you talk, is there a correlation between the kind of collateral and the resulting duration of the security or can those be disconnected?

Jason (16:52): Yeah, I think why duration matters, first of all, I guess is a core function of what we focus on. And I think, obviously, the longer the duration of the asset, you're taking economic risk for a longer period of time and you're taking asset risk and valuation risk across a longer period of time. So more factors, more likelihood of different cycles might come in that might affect the collateral and the collateral performance. We try to focus on the shorter end of the duration so that we can better isolate the risk that we understand going into a transaction. So you're right, different asset categories have different duration profiles. Mortgages are historically long, do much in mortgages, but there are many asset categories that are very short. And we say short, that's usually 12 to 24 months that's kind of considered short. And those are the asset categories that we typically focus on.

Stewart (17:44): Yeah, I mean we have obviously Manulife is life and we have lots of PNC carriers. And so it's not only the length of time you're exposed to the economic cycle, but it's also the duration of your liability that you're trying to fund. And that's kind of why I was asking.

So Tim, I want to spend a little time on something that I know is getting a lot of attention from allocators right now. There's been some noise in the news about fraud in the ABF industry. And listen, let me hop up on my soapbox for a minute. Nobody likes a salacious headline more than the Wall Street Journal or CNBC, right? I mean, they love it. And everybody goes, "Oh, there's all these redemptions." And I'm like, "Yeah, yeah, yeah." So you got a bunch of high net worth people that you sell an illiquidity premium to, and then they all want liquidity.

And it's like, are you kidding me? They should never have owned this stuff in the first place, but that's my opinion. I don't want to put that off on YouTube. But so there's been some noise about this stuff. What's the real story? I do think that it is very dangerous to listen to something coming out of a talking head's mouth on CNBC versus talking to people who are in this stuff neck deep every day. And I know that we're going to get the real answer from you guys, so I appreciate you taking this on.

Tim (19:02): Yeah, that's a great question and a great lead up. I do think the retail news and the noise around that compared to the fraud cases are a little bit different because I think the latter might be more grounded in actual fact and things that had happened. So I think the coverage there was completely fair game. I think to call ABF as extremely risky as a result of three or four deals, obviously that's not something I agree with, but these things did happen and they happened for a reason and they happened for things that I think should have been avoided. And so that's a very different sort of fact pattern compared to the retail redemption sort of news, I would say. And I think when I look at the deals like First Brands or Tricolor, MFS, you name it, everything that got the attention of the Wall Street Journal and others over the last call it year, what I would tell you is that we see some common themes across each of those deals, which I think is pretty interesting.

I do think it tells a story about the underlying risk of the market where those deals play in. And I don't think that's talked about as much because everyone's trying to paint a broad picture over EBF, but I do think it is more specific to that one market. So diving to that, the two common themes that we see in those cases is number one, double pledging of assets. And then number two, something that's not pointed out as directly the relatively loose cash management processes that take place in these deals. And the pattern across those two things in these deals is that I think these dynamics are much more prevalent in the upper market as opposed to the middle market or even the lower middle market. And again, that's something that I think is not talked about enough. And so maybe talking about the first theme about double pledging, this is where the same asset is used as collateral in more than one credit facility.

The risk of double pledging is more relevant in the upper market because these companies could have, call it 10 different credit facilities that's worth more than a couple billion dollars of liabilities. That's just not the reality for companies in the middle market or lower middle market given they typically only have one lender. And so the risk of double pledging just isn't as relevant for the middle market. Now on the second theme, the weak cash management processes, this is what allows companies to access cash before the lender does. And I think that is why you read about how a significant amount of cash just vanished overnight. I think that's how the Wall Street Journal quoted that in a couple of these deals. What happens in these deals when they have 10 different credit facilities is that the cash first gets deposited into a co-mingled collection account and the lenders really trust the companies to take that cash and deposit it into their separate accounts.

Now, not to get too technical, but these accounts are unblocked, and so that's why the companies have access to that cash given they're subject to what's called a springing DACA as opposed to a blocked DACA. And that dynamic is what is more common in the upper market compared to the middle market. Given in the middle market, you typically have full control over the cash that your collateral generates.

Stewart (22:43): That's interesting. It surprises me that the upper part of the market is where you see, I would think that there'd be more eyeballs on that than less, but it's a very good point you're making, Tim.

The next question, Jason, is really important because it's relative to how much capital is moving toward ABF. And you've been at this long enough, I think, to agree with me that whenever an asset class becomes popular, there are folks who have been in that business for a long time and really know it, and you get some new entrants along the way. So can you talk a little bit about the role that experience plays in this sector?

Jason (23:26): Yeah, you're right. We've obviously talked about all this money that's been flowing into ABF. And so while it's important to understand the categories and the strategy that they have, I think evaluating managers is also a key element for an investor when looking at the space, and it's just as important as anything else we've talked about. I think that the experienced manager really focuses on a few things. First of all, if I was interviewing a manager and trying to dig into their history and understand their experience, I'd ask, do they have specialized asset expertise? What toolkits have they developed around different sectors that they really can understand the risk in that sector that they focus on is a key thing. I think in this sector, the origination capabilities for a manager is extremely important. Sourcing in the sector is key, and what you see is that experienced managers have developed relationships and sector expertise and this repeat lending channel to develop that wide funnel opportunities that you need in this sector. Another area to focus on would be structuring discipline. These deals, as we talked about today, are structure heavy, I call them, and managers need to show how they use these structures to address specific risks that they might uncover in the ABF deals.

I think another area of manager diligence and experience is their portfolio monitoring and asset management style. These deals have to be closely monitored, so understanding how a manager does that, are they set up to monitor the collateral performance and see early warning signs and take action if they need to is a key thing. Obviously, you've got to look at their historical track record, and experienced managers should have obviously a track record that extends in different market environments, which is important. But also, I think as important as that is to track records of deals that worked out as planned, the ones that did great, and also looking at track records of deals that didn't. And I think what I find, and I think what we find is that the deals that didn't work out really will shed more light on the structure and monitoring capabilities of that manager than the ones that work out perfect.

Stewart (25:38): And in the immortal words of a famous politician, “There's not a lot of educational value in the second kick from a mule.” So you see these things go wrong, obviously. I mean, when you think about auto or credit cards, I mean, there's boatloads of data about how those things perform. Toyota versus BMW versus Mercedes versus John Deere receivables, whatever. One of the questions I have, though, is in addition to new managers, there are new collateral pool types, and you talked about music royalties and IP and things like that. How do you get your arms around. And in fairness, I think if you go back to back when the CMO market came around, that's when there was real value in the asset class, when everybody and their brother wasn't piled into it already. So it seems like it's obvious to me that there's opportunities in some of those newer collateral pools.

How do you get your arms around how is this thing going to behave when there's less history, if nothing else?

Jason (26:52): Yeah, I think that's a great point. And I think like you mentioned, the opportunity set and the opportunity to get good risk-adjusted return is often better if it is a newer asset category. So we've historically always tried to focus on what other asset categories are out there, but it does come with obviously the risk that you can't directly correlate it exactly to things that are in your portfolio or things you've done several times. I think whenever we look at a new asset category, we're always trying to find what is it closest to? Is there some other asset categories that should look like that in performance? So if it's something related to autos, we can always look at different categories within installment lending or things like that. So we're always trying to find is there similar types of asset categories that can provide a good guide to how that portfolio might look?

Tim (27:46): Just going to your question on advance rates, Stewart, I mean, when you think about these more novel asset classes, what we typically do from a structural standpoint is the advance rate is much, much lower on asset classes where you have less certainty about performance through different cycles or if they're longer dated, for example, we will have significantly lower advance rates and therefore more cushion for things to go wrong and we're still covered on that deal.

Stewart (28:14): So essentially a bigger cushion.

Tim (28:17): Yes.

Stewart (28:18): I mean, that's simple terms, and I'm from Missouri, that's all I got. So the other thing that comes up is I've had people, they call me and they go, "We have a really good track record." And I'm like, "Well, most insurance companies don't really look at the track record too much because they might have reasons why you don't have an unencumbered portfolio mandate." And what I've found is that beyond track record, like typical track record, it's also like “What's your loss record?” Because if you told a carrier, "Hey, I'll give you a top quartile manager or I'll give you the median return and no losses and no OTTI," a lot of them are going to like the latter. So can you give us some insight? If I'm a CIO and I'm doing some manager due diligence in ABF, what should I be asking beyond just track record?

Tim (29:16): I think, and this kind of ties the whole conversation back together, Stewart, really just ask them what has to happen before you lose money on the deal. Simply put, I think that will reveal how much or how little downside protection that you have in their deals and their structures and their strategy. I think given the fact that we established how wide ABF is in terms of its reach and spectrum, investors just really need to understand the risk-return profile that they're signing up to, and they need to ask themselves if the risk justifies the reward. I think understanding where you sit in the capital structure, the characteristics of the asset The structure put in place to protect your investment, all the processes that you use to prevent things like fraud and other things that we talked about, all that's very, very important. And in our view, I think the best opportunities for LPs are when they could find managers that are able to find the right combination of identifying good collateral, having a lot of discipline in their structuring and having some sort of expertise in the asset class, the collateral that they lend against.

I think that's really what creates the ability for managers to generate durable-risk return in this space, and that's what they should be looking for.

Stewart (30:40): We have kicked around the idea of a very short podcast called Long Short SWI, and the SWI is some wild idea. So as you look out, and this is for either of you or both of you, and this is where I ask you to dust off the crystal ball over there at Manulife Comvest. What do you like? Where are you cautious? And is there an idea that is out of the box that you think is interesting?

Tim (31:11): Yeah, I'll start, Stewart. I think anytime we see too much capital chasing the same deals and you start to see that effect pricing, obviously leverage, sure. But I think when you start to get scared is when you see structural protections go away, like we have seen in maybe some of the upper market deals in the cases where fraud was able to happen, that's when we say, okay, maybe not for us because the risk-return is diminished. And even maybe more importantly, the typical structural protections that you get in an asset-backed deal are now starting to go away and that might not make sense for us. The opportunities that we target, and this is a little bit high level, I'm not going to give you just one asset class or whatever. It's really when you have the opposite dynamic. I think in processes that are less competitive, maybe you source the deal or opportunity directly from the company and so there's less competition bidding on that deal.

That's when you can really structure a deal that makes sense to you as an investor and price it accordingly and you can structure it in a way that you think will protect your debt investment. That's really where the best risk-return is for us and that's what we try and identify.

Stewart (32:31): That's super helpful. Jason, I'll leave it to you to wrap us. I've got one fun one for you on the way out the door, but if you wanted to have a CIO take one or two talking points with them from this podcast, what would those be?

Jason (32:45): Yeah, I think it's really that ABF as a strategy is obviously a big market, but there are some really interesting subcategories and strategies around that within the private markets. But you really need to really understand the asset categories that you're focused on, the strategies of the managers and the structure that you're investing in to really make sure that the wider opportunity fits for that investment manager. So I think if they can do that, there's a lot of opportunities within ABF.

Stewart (33:16): That's awesome. All right, so last one, fun one. It was great education today on ABF. I mean, you both have done an amazing job. I learned a lot and that's always my goal. I want to learn new things and I know our listeners do too. All right, so we started with Tim on the icebreaker last time. We'll start with you, Jason. Can you describe your best real or fantasy dinner? This is our new closer. James, this gives you a chance to think, man. Or if you've got an idea, you can go.

Tim (33:47): I've heard you ask us one on a different podcast and I'm not going to lie, I have spent some time thinking about this. I do have a fancy dinner that I can share first, Jason.

Stewart (33:57): Good deal.

Tim (33:58): My three people would be, number one, it'd be Kobe Bryant. Number two, it's a US Open right now, so Novak Djokovic, and then number three, Larry David. I think -

Stewart (34:10): Oh wow.

Tim (34:12): Pretty diverse, I know.

Stewart (34:14): I'll say!

Tim (34:14): Talking to Novak and Kobe, I mean that would be awesome. They're obviously legends of their sport, but obviously they have their competitive spirit mental aspect that I think is so compelling. And for Larry David, I don't think I need to say anything more. I mean, having Larry David at a dinner party would be hilarious. So that's my three.

Stewart (34:36): Didn't Djokovic go out in the first round this year, uncharacteristically?

Tim: He did.

Stewart: Sorry for that. I digress. Is there anything around what you're eating or where you're going or just those three people?

Tim (34:50): I think I'm just a huge fan of all three of them, that’s all it is.

Stewart (34:52): All right, Jason, so real or fantasy dinner, your pick.

Jason (34:58): Sure. I guess I'll just draw on some recent. I was just watching a biography on Netflix on Teddy Roosevelt recently, and it was fascinating. It almost seems unreal, his life and what he did and had to overcome and the different phases of his life and things he did. So I just think that'd be an amazing dinner to pick his brain on how he overcame all those challenges and all the different lives that he led, I think it would just be amazing. So that would be one that I can think of, I guess. And as far as what we'd eat, we'd eat something he hunted.

Stewart (35:32): There you go. Well, you can come out to the Hill Country. There's a chef here that's doing. It's all wild game, but it's not wild gamey, as they say. Yeah, it's interesting. I mean, is he the one that did the person in the arena?

Jason (35:51): That was his. Yes, which is great and it suits his life from what I could tell.

Stewart (35:56): Yeah.

Jason (35:57): He was definitely in the arena.

Stewart (35:58): It's interesting. We have this term for folks in our industry that the last time they changed, Roosevelt was probably president and we call them the folded armed observer. And so there's a lot of folded armed observers floating around, but certainly not Teddy Roosevelt. So great choice by both of you. And I just want to say thank you so much for joining us and thank you for sharing your knowledge with us. It's been really helpful and really educational. So, thank you so much.

Tim (36:31): Thanks.  Jason: Great. Thanks, Stewart.

Stewart (36:33): We've been joined today by Jason Gelberd, partner, chief operating officer and co-head of direct lending, and Tim Kim, partner and head of specialty finance at Manulife Comvest Credit Partners. Thanks for joining us and thanks for listening. If you like what we do, please rate us or view us on any of your podcast platforms. You can also watch this video or watch the podcast on YouTube under InsuranceAUM Community. My name's Stewart Foley. I've been your host, and this is The Home of the World's Smartest Money at InsuranceAUM.

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Neither Manulife Investment Management or its affiliates, nor any of their directors, officers or employees shall assume any liability or responsibility for any direct or indirect loss or damage or any other consequence of any person acting or not acting in reliance on the information contained here.  All overviews and commentary are intended to be general in nature and for current interest. While helpful, these overviews are no substitute for professional tax, investment, or legal advice. Clients should seek professional advice for their particular situation. Neither Manulife, Manulife Investment Management, nor any of their affiliates or representatives is providing tax, investment, or legal advice.  This material was prepared solely for informational purposes, does not constitute a recommendation, professional advice, an offer or an invitation by or on behalf of Manulife Investment Management 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 Investment Management. No investment strategy or risk management technique can guarantee returns or eliminate risk in any market environment. Diversification or asset allocation does not guarantee a profit or protect against the risk of loss in any market. Unless otherwise specified, all data is sourced from Manulife Investment Management. Past performance does not guarantee future results.

Manulife Investment Management

Manulife Investment Management is the brand for the global wealth and asset management segment of Manulife Financial Corporation. Our mission is to make decisions easier and lives better by empowering investors for a better tomorrow. Serving more than 19 million individuals, institutions, and retirement plan members, we believe our global reach, complementary businesses, and the strength of our parent company position us to help investors capitalize on today’s emerging global trends. We provide our clients access to public and private investment solutions across equities, fixed income, multi-asset, alternative, and sustainability-linked strategies, such as natural capital, to help them make more informed financial decisions and achieve their investment objectives. Not all offerings are available in all jurisdictions. For additional information, please visit manulifeim.com.

This material has not been reviewed by, is not registered with any securities or other regulatory authority, and may, where appropriate, be distributed by the following Manulife entities in their respective jurisdictions. Additional information about Manulife Investment Management may be found at manulifeim.com/institutional

Australia: : Manulife Investment Management Timberland and Agriculture (Australasia) Pty Ltd, Manulife Investment Management (Hong Kong) Limited. Canada: Manulife Investment Management Limited, Manulife Investment Management Distributors Inc., Manulife Investment Management (North America) Limited, Manulife Investment Management Private Markets (Canada) Corp. Mainland China: Manulife Overseas Investment Fund Management (Shanghai) Limited Company. European Economic Area: Manulife Investment Management (Ireland) Ltd. which is authorised and regulated by the Central Bank of Ireland Hong Kong: Manulife Investment Management (Hong Kong) Limited. Indonesia: PT Manulife Aset Manajemen Indonesia. Japan: Manulife Investment Management (Japan) Limited. Malaysia: Manulife Investment Management (M) Berhad  200801033087 (834424-U) Philippines: Manulife Investment Management and Trust Corporation. Singapore: Manulife Investment Management (Singapore) Pte. Ltd. (Company Registration No. 200709952G) South Korea: Manulife Investment Management (Hong Kong) Limited. Switzerland: Manulife IM (Switzerland) LLC. Taiwan: Manulife Investment Management (Taiwan) Co. Ltd. United Kingdom: Manulife Investment Management (Europe) Ltd. Which is authorised and regulated by the Financial Conduct Authority United States: John Hancock Investment Management LLC, Manulife Investment Management (US) LLC, Manulife Investment Management Private Markets (US) LLC and Manulife Investment Management Timberland and Agriculture Inc. Vietnam: Manulife Investment Fund Management (Vietnam) Company Limited.

Manulife, Manulife Investment Management, Stylized M Design, and Manulife Investment Management & Stylized M Design are trademarks of The Manufacturers Life Insurance Company and are used by it, and by its affiliates under license.

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