Hamilton Lane plots family of SPACs via new business line

The asset manager expects to raise multiple successors to its $276m Hamilton Lane Alliance Holdings I, according to the vehicle's chief executive Andrea Kramer.

Hamilton Lane is planning a new business line dedicated to special purpose acquisition companies as interest in launching such vehicles increases.

Speaking on the firm’s latest earnings call on 2 February, Andrea Kramer, chief executive of its debut SPAC, Hamilton Lane Alliance Holdings I (HLAHU), said the firm was likely to raise successive vehicles.

“You will notice with this first SPAC, we have assigned the number one to it,” Kramer said. “That is purposeful as our goal is to raise additional SPACs in the future and create a new business line for Hamilton Lane.”

The Pennsylvania-based asset manager raised $276 million for HLAHU in January, according to a statement. The SPAC, which will not be limited to a particular industry, will avoid highly cyclical sectors including upstream and midstream energy, commodities and real estate.

Hamilton Lane’s SPAC does not generate traditional management fees or carried interest, Kramer added. The sponsor’s income will typically come via promote shares and warrants, which it can monetise subject to certain lock-up restrictions.

“We’ve used SPAC as a natural extension of our existing investment activities,” Kramer added. “We intend to bring to bear our access and dealflow via a number of longstanding important relationships with private markets fund managers, which we believe will be vital when searching for a business combination.”

SPACs have taken the US by storm over the past year. Some 248 of these vehicles raised $83 billion at IPO in 2020, six times the sum raised across 59 SPACs the prior year, according to SPAC Data. More than $28 billion has been raised across 100 SPAC IPOs this year alone.

A confluence of events is pushing the SPAC phenomenon, sister title Buyouts reported last year. Tailwinds include strong equity markets; covid-19 shrinking if not eliminating, at least temporarily, the window for conventional IPOs; increasing familiarity with SPACs; and the allure caused by fear of missing out.

Private equity firms, including Apollo Global Management, TPG, Neuberger Berman and Thoma Bravo, are among those with SPACs of their own.

De-SPACs – whereby the vehicle merges with an unlisted company – also present an exit opportunity for private equity funds. Blackstone portfolio companies Paysafe and Alight Solutions have both gone public this way in recent months. SoftBank-owned WeWork is mulling offers from at least two SPACs, The Wall Street Journal reported last week.

“Because of the volume of this over the last several months, you’re seeing many [established] organisations getting involved here,” Kramer told sister title Private Funds CFO in January. “In many ways, that is a sign that the market is making some real changes to make the public offering a more efficient process, both from an implementation standpoint and a cost standpoint.”