Manulife Private Credit Fund Heavily Concentrated in Senior Loans

TL;DR

**Manulife's private credit fund is all-in on senior loans, making it a high-yield, high-risk play on industrial and healthcare growth.**

AI Summary

Manulife Private Credit Fund's 10-Q filing for the quarter ended June 30, 2025, reveals a significant portfolio concentration in senior loans, valued at $292,112,375, representing 170.6% of net assets. The fund's largest sector exposure is Industrials at 71.7% ($122,720,001), followed by Health Care at 35.3% ($60,462,444), and Consumer Discretionary at 31.1% ($53,327,820). Within Industrials, Commercial Services and Supplies accounts for 22.5% of the portfolio, while Health Care Providers and Services makes up 28.8% of the Health Care allocation. The fund primarily invests in floating-rate senior loans, with interest rates typically tied to CME Term SOFR plus a spread, ranging from 4.500% to 7.000%. Many loans include 'Delayed Draw Term Loan' and 'Revolver' components, indicating ongoing capital deployment and flexibility. The fund reported 8,256,380 common shares outstanding as of August 12, 2025, with no established public market for its shares.

Why It Matters

This filing highlights Manulife Private Credit Fund's aggressive strategy in senior loans, particularly within the Industrials and Health Care sectors. For investors, this concentration means higher potential returns if these sectors perform well, but also increased risk if they falter, especially given the illiquid nature of private credit. Employees and customers of the underlying portfolio companies could see stability from this funding, but also face exposure to the fund's performance. In a competitive context, this focus on private credit offers diversification from public markets but demands thorough due diligence on the fund's specific loan quality and management expertise.

Risk Assessment

Risk Level: high — The fund's portfolio is 170.6% invested in senior loans, indicating significant leverage or a substantial portion of assets beyond initial capital. This high concentration in illiquid private credit, particularly within specific sectors like Industrials (71.7%) and Health Care (35.3%), exposes the fund to substantial sector-specific downturns and liquidity risks, justifying a high-risk rating.

Analyst Insight

Investors should exercise extreme caution and conduct thorough due diligence on the underlying credit quality of Manulife Private Credit Fund's loan portfolio. Given the high concentration and illiquidity, this fund is suitable only for sophisticated investors with a high-risk tolerance and a long-term investment horizon.

Key Numbers

• $292.1M — Senior Loans Value (Represents 170.6% of the fund's total value, indicating high leverage or significant asset base.)
• 170.6% — Senior Loans as % of Net Assets (Highlights the fund's concentrated investment strategy in senior loans.)
• 71.7% — Industrials Sector Exposure (Largest sector allocation, indicating significant industry-specific risk.)
• 35.3% — Health Care Sector Exposure (Second largest sector allocation, contributing to sector concentration.)
• 8,256,380 — Common Shares Outstanding (As of August 12, 2025, with no public market.)
• 4.500%-7.000% — Interest Rate Spreads (Range of spreads over CME Term SOFR for senior loans, indicating potential yield.)
• June 30, 2025 — Quarter End Date (Reporting period for the 10-Q filing.)
• $0.01 — Par Value Per Share (Par value of the Registrant's Common Shares of Beneficial Interest.)

Key Players & Entities

• Manulife Private Credit Fund (company) — Registrant
• SEC (regulator) — Securities and Exchange Commission
• $292,112,375 (dollar_amount) — Value of Senior Loans as of June 30, 2025
• 170.6% (dollar_amount) — Percentage of net assets represented by senior loans
• Industrials (company) — Largest sector exposure at 71.7%
• Health Care (company) — Second largest sector exposure at 35.3%
• 8,256,380 (dollar_amount) — Number of Common Shares outstanding as of August 12, 2025
• CME Term SOFR (company) — Benchmark for floating-rate loans
• Capital Construction LLC (company) — Portfolio company in Diversified consumer services
• Steward Partners Global Advisory LLC (company) — Portfolio company in Capital markets

FAQ

Risk Factors

• Concentration in Senior Loans [high — financial]: The fund has a significant concentration in senior loans, valued at $292,112,375, representing 170.6% of net assets. This high allocation indicates a concentrated investment strategy and potential leverage, increasing exposure to the risks associated with this asset class.
• Sector Concentration in Industrials [high — market]: The largest sector exposure is Industrials at 71.7% ($122,720,001). Within this, Commercial Services and Supplies accounts for 22.5% of the portfolio. Such a high concentration in a single sector exposes the fund to significant industry-specific downturns.
• Health Care Sector Concentration [medium — market]: Health Care represents the second-largest sector allocation at 35.3% ($60,462,444), with Health Care Providers and Services making up 28.8% of this segment. This further contributes to the fund's overall sector concentration risk.
• Floating-Rate Loan Exposure [medium — financial]: The fund primarily invests in floating-rate senior loans with interest rates tied to CME Term SOFR plus a spread ranging from 4.500% to 7.000%. While this can offer protection in rising rate environments, it also means income will fluctuate with benchmark rates.
• Illiquidity of Shares [high — financial]: The fund reported 8,256,380 common shares outstanding as of August 12, 2025, with no established public market for its shares. This lack of liquidity means investors may face difficulties selling their shares at desired times or prices.
• Delayed Draw and Revolver Components [medium — financial]: Many loans include 'Delayed Draw Term Loan' and 'Revolver' components. While these provide flexibility for ongoing capital deployment, they also represent potential future funding obligations for the fund.

Industry Context

The private credit market continues to be a significant source of financing for middle-market companies, offering flexible solutions beyond traditional bank lending. However, the sector is sensitive to interest rate movements and economic cycles. Increased competition and evolving regulatory landscapes are also key trends impacting fund managers.

Regulatory Implications

As a private credit fund, Manulife Private Credit Fund is subject to various regulations concerning investment management, disclosure, and investor protection. Compliance with these regulations is crucial to avoid penalties and maintain investor confidence. The lack of a public market for its shares also implies specific disclosure requirements for its private investors.

What Investors Should Do

1. Review sector concentration limits.
2. Assess interest rate sensitivity.
3. Evaluate liquidity of fund shares.
4. Monitor loan covenants and drawdowns.

Key Dates

• 2025-06-30: Quarter End Date — This is the reporting date for the unaudited consolidated financial statements, providing a snapshot of the fund's financial condition and investments.
• 2025-08-12: Common Shares Outstanding Record Date — Indicates the number of common shares outstanding as of this date, which is relevant for per-share calculations and understanding the fund's capital structure.

Glossary

Senior loans

Loans that have a priority claim on the assets of a borrower in the event of bankruptcy or liquidation, typically carrying lower risk than subordinated debt. (This is the primary asset class for the fund, representing 170.6% of net assets, highlighting the fund's core investment strategy and risk profile.)

CME Term SOFR

The Secured Overnight Financing Rate (SOFR) term rate, published by CME Group, which is a benchmark interest rate used for various financial contracts. (The fund's floating-rate loans are tied to this benchmark plus a spread, indicating how the fund's interest income will fluctuate with market interest rates.)

Delayed Draw Term Loan

A type of loan where the borrower can draw funds incrementally over a specified period, rather than receiving the entire amount upfront. (Indicates that the fund has commitments to deploy capital over time, suggesting ongoing investment activity and potential future funding needs.)

Revolver

A revolving credit facility that allows a borrower to draw, repay, and redraw funds up to a certain limit over a specified period. (Similar to delayed draw loans, revolvers represent a commitment of capital and provide flexibility for borrowers, impacting the fund's liquidity management.)

Par Value Per Share

The nominal or face value of a share of stock, as stated in the corporate charter. It is often a very low amount for common stock. (The par value of $0.01 per share is a nominal figure and does not reflect the market value or economic worth of the fund's shares.)

Year-Over-Year Comparison

Information comparing key metrics to the previous year (e.g., revenue growth, margin changes, new risks) is not available in the provided excerpt of the 10-Q filing. The filing focuses on the current period's financial statements and disclosures as of June 30, 2025.

Key Financial Figures

• $0.01 — hares of Beneficial Interest, par value $0.01 per share Indicate by check mark whet

Filing Documents

• d916910d10q.htm (10-Q) — 3800KB
• d916910dex101.htm (EX-10.1) — 12KB
• d916910dex311.htm (EX-31.1) — 7KB
• d916910dex312.htm (EX-31.2) — 7KB
• d916910dex321.htm (EX-32.1) — 3KB
• d916910dex322.htm (EX-32.2) — 3KB
• g916910g11f48.jpg (GRAPHIC) — 6KB
• 0001193125-25-178880.txt ( ) — 14619KB
• ck0001988280-20250630.xsd (EX-101.SCH) — 1113KB
• d916910d10q_htm.xml (XML) — 4269KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION 1

Consolidated Financial Statements (Unaudited)

ITEM 1. Consolidated Financial Statements (Unaudited) 1 Consolidated Schedule of Investments as of June 30, 2025 (Unaudited) and December 31, 2024 1 Consolidated Statements of Assets and Liabilities as of June 30, 2025 (Unaudited) and December 31, 2024 19 Consolidated Statements of Operations for the three and six months ended June 30, 2025 and June 30, 2024 (Unaudited) 20 Consolidated Statements of Changes in Net Assets for the three and six months ended June 30, 2025 and June 30, 2024 (Unaudited) 21 Consolidated Statements of Cash Flows for the six months ended June 30, 2025 and June 30, 2024 (Unaudited) 22

Notes to Consolidated Financial Statements (Unaudited)

Notes to Consolidated Financial Statements (Unaudited) 23

Management's Discussion and Analysis of Financial Condition and Results of Operations

ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 38

Quantitative and Qualitative Disclosures about Market Risk

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk 49

Controls and Procedures

ITEM 4. Controls and Procedures 50

OTHER INFORMATION

PART II. OTHER INFORMATION 50

Legal Proceedings

ITEM 1. Legal Proceedings 50

Risk Factors

ITEM 1A. Risk Factors 50

Unregistered Sales of Equity Securities and Use of Proceeds

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds 50

Defaults Upon Senior Securities

ITEM 3. Defaults Upon Senior Securities 50

Mine Safety Disclosures

ITEM 4. Mine Safety Disclosures 50

Other Information

ITEM 5. Other Information 51

Exhibits

ITEM 6. Exhibits 52

SIGNATURES

SIGNATURES 53 Table of Contents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Consolidated Financial Statements (Unaudited)

ITEM 1. Consolidated Financial Statements (Unaudited) Manulife Private Credit Fund Consolidated Schedule of Investments 6-30-25 (Unaudited) Rate (%) Maturity date Par value^ Value Non-controlled/Non-affiliated Senior loans (A)(B) 170.6 % (Cost $ 292,028,474 ) $ 292,112,375 Consumer discretionary 31.1 % 53,327,820 Distributors 6.7 % All Glass & Window Holdings, Inc., Delayed Draw Term Loan (C) — 03-26-31 1,282,051 1,262,821 All Glass & Window Holdings, Inc., Revolver (C) — 03-26-31 769,231 757,692 All Glass & Window Holdings, Inc., Term Loan (1 month CME Term SOFR + 5.000 %) (D) 9.321 03-26-31 3,634,139 3,579,627 Eastern Communications Solutions, Inc., Revolver (C) — 12-30-30 1,031,519 1,016,046 Eastern Communications Solutions, Inc., Term Loan (3 month CME Term SOFR + 5.000 %) (D) 9.296 12-30-30 4,943,639 4,869,484 Diversified consumer services 10.1 % Capital Construction LLC, 3rd Amendment Term Loan (3 month CME Term SOFR + 5.750 %) (D) 10.196 10-22-26 411,614 405,440 Capital Construction LLC, Add-On Delayed Draw Term Loan (1, 3 and 6 month CME Term SOFR + 5.750 %) (D) 10.068 10-22-26 497,059 492,088 Capital Construction LLC, Add-On Term Loan (1 month CME Term SOFR + 5.750 %) (D) 10.174 10-22-26 324,911 321,662 Capital Construction LLC, Delayed Draw Term Loan (1 month CME Term SOFR + 5.750 %) (D) 10.174 10-22-26 1,128,082 1,116,801 Capital Construction LLC, Delayed Draw Term Loan A (C) — 10-22-26 217,241 215,611 Capital Construction LLC, Delayed Draw Term Loan B (C) — 10-22-26 628,855 624,138 Capital Construction LLC, Revolver (C) — 10-22-26 508,039 502,958 Capital Construction LLC, Term Loan (1 month CME Term SOFR + 5.750 %) (D) 10.174 10-22-26 832,203 823,881 Impact Climate Technologies LLC, Delayed Draw Term Loan (C) — 04-04-30 711,718 697,484 Impact Climate Technologies LLC, Term Loan (3 month CME Term SOFR + 6.

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