Hamilton Lane: China macro has no material effect on fundraising

Secular trends in fundraising are more dominant than macro themes, said chief executive Mario Giannini on the firm’s third quarter fiscal 2020 earnings call.

Investors want to allocate more capital to alternatives regardless of any macro-economic slowdown across markets, or more specific threats such as the spread of coronavirus, according to Hamilton Lane chief executive Mario Giannini.

“If Chinese GDP went down 1 percent, I think we would be sitting here saying, we’ll have virtually no impact on fundraising,” Giannini said on the firm’s third quarter fiscal 2020 earnings call on Tuesday.

Giannini said Hamilton Lane and most PE firms would not be impacted in a material way by macro issues because investors want more alternatives and wouldn’t hold back based on “any news or anything that is happening in the markets”.

The firm’s chief executive noted secular trends in fundraising, “whether it’s equity or debt or real assets”, were more prevalent than macro themes.

“The trend toward having more alternatives in portfolios, again across all the different kinds of alternatives is something that we see continuing on into ’21 and a few years more.”

Erik Hirsch, vice-chairman and head of strategic initiatives, also said on the call that the uplift in the firm’s fundraising was seasonal, driven by the product cycle mix.

Hamilton Lane’s specialised funds saw a $2.5 billion year-over-year increase in fee-earning AUM as of the third fiscal quarter ending 31 December 2019, according to the firm’s presentation materials. It had raised an additional $265 million for its fifth flagship secondaries vehicle during the third fiscal quarter, bringing the total amount raised thus far to $1.4 billion against a $3 billion target.

“I think for us on the secondary side, the fact that we’re at the $1.4 billion number and are sort of sitting here in the middle, we think bodes well for where that is,” said Hirsch. “The secondary fund is the big flagship we are focused on.”

The firm’s customised separate accounts, meanwhile, saw a $2.1 billion year-on-year increase in fee-earning AUM, with existing clients accounting for more than 70 percent of gross contributions during the last 12 months.

Growth in Hamilton Lane’s assets under management came from re-ups from existing clients, adding new clients, growing existing platforms and raising new specialised funds, Hirsch said.

The firm’s total AUM grew 13 percent year-on-year to approximately $66 billion, and fee-earning AUM increased 14 percent to approximately $37 billion over the same time period.