Hamilton Lane launches impact strategy

The asset manager joins the likes of Partners Group, KKR and Bain in offering a dedicated vehicle.

Hamilton Lane has become the latest private equity firm to launch a dedicated impact investment strategy.

The Pennsylvania-headquartered asset manager completed its first sale for the Hamilton Lane Impact Fund on 2 October, according to a filing with the US Securities and Exchange Commission. It has raised at least $7.5 million so far, the filing noted.

It is unclear how much the firm is targeting. Hamilton Lane declined to comment.

Hamilton Lane is known as a private equity fund of funds, investment advisor and separate account manager for limited partners. The firm had around $54 billion in assets under management and approximately $397 billion in assets under advisement as of 31 March, according to its latest annual report.

It is unclear whether the Hamilton Lane Impact Fund will invest directly in impact assets or as an LP in impact vehicles.

A host of blue-chip private equity shops have launched impact offerings in recent years. Switzerland-headquartered Partners Group is understood to be seeking $1 billion for PG LIFE, which will invest in line with the UN Sustainable Development Goals.

KKR registered its debut impact fund in Luxembourg this year, joining Bain Capital, TPG and Goldman Sachs in targeting social and environmental areas with a dedicated vehicle.

The International Finance Corporation published a draft of nine operating principles for impact management earlier this month. The principles include conducting exits with continued impact in mind and ensuring impact is progressing in line with expectations.

A former chief investment officer at the IFC voiced concerns last week over whether compensation for impact managers should be tied to their social and environmental results.

“I’m cautious about giving people financial incentives based on the impact numbers,” David Wilton, chief executive of US-based impact consultancy Zheng Partners, said during a panel at EMPEA’s Sustainable Investing in Emerging Markets Summit in London.

Wilton pointed to one instance during his time at the IFC where an impact manager had been offered an incentive based on job numbers at the portfolio company level.

“They were reporting very good job numbers, so then you go to do some diligence on the ground and you find out that a lot of these jobs are pretty meaningless,” he said.

“I’d rather not cause that sort of distortion. You’re going to get the impact results anyway if you meet the financial targets, so you might as well keep things simple and just give people financial-based incentives.”

Private Equity International is holding its Global Impact Investing Network Investor Forum  on 30-31 October at the Marriott Rive Gauche Hotel in Paris.