Opportunities in private credit are expanding as refinancing activity accelerates and borrower needs become more varied, according to Manulife | Comvest Credit Partners.

In its 2027 Private Markets Outlook, the private credit platform noted that much of the debt raised during the last “boom” is maturing into a higher-cost and more selective financing market.

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Manulife | Comvest Credit Partners identified direct lending, asset-based finance, and capital solutions as its “top ideas” for next year and suggested that the current market environment favours investors “with the ability to underwrite complexity and structure transactions with strong downside protection”.

In direct lending, refinancing activity, shareholder liquidity events, acquisitions, and capital structure optimisation initiatives are creating a broader range of financing opportunities, although sponsor-backed buyout financing remains a “core component” of the market.

The firm believes that lenders with the “flexibility” to underwrite complexity and structure customised solutions are particularly well positioned as borrower needs diversify.

In August, Manulife | Comvest Capital Partners raised $5.4bn (£4.1bn) at the final close of its North American direct lending strategy, making it the largest fundraise to date for the platform.

Meanwhile, demand for asset-based finance continues to grow across a range of income-producing assets as banks retreat from specialty lending markets.

“Attractive opportunities exist in specialised and less-trafficked asset classes, where deep underwriting expertise, proprietary sourcing, and disciplined structuring can create compelling risk-adjusted returns,” Manulife | Comvest Credit Partners stated, regarding asset-based finance.

It also pointed to the expanding opportunity set in capital solutions not being limited to “conventional lending”.

“Across the market, sponsors and management teams are increasingly utilising structured capital to address liquidity needs, bridge valuation gaps, support portfolio company growth, and create flexibility around realisation timelines. These solutions provide flexibility where traditional financing may be insufficient,” the firm stated in its outlook.

Across private credit, the firm suggested that downside protection comes from “careful attention” to leverage, collateral coverage, covenant protections, lender rights, and capital-structuring positioning.

“We believe we’re in the early stages of a multi-year shift toward more complex financing needs across the middle market,” said Robert O’Sullivan, global head of private credit at Manulife | Comvest Credit Partners.

“As the financing environment becomes more nuanced, the opportunity in private credit is broadening, increasingly defined by an investor’s ability to underwrite complexity and structure a wide range of tailored solutions.”

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