Hamilton Lane revenues boosted by secondaries, SMAs

The firm is nearing a final close on its largest secondaries programme, which has thus far raised $2.2bn out of a $3bn target.

Repeat investors committing to separately managed accounts and specialised funds, including its latest secondaries vehicle, boosted Hamilton Lane’s fee earning assets under management in the three months through June.

Speaking on the firm’s fiscal year 2021 first quarter results call on Tuesday, vice-chairman Erik Hirsch said growth in these two key segments were driven mainly by “re-ups from existing clients, winning and adding new clients, growing fund platforms and raising specialised funds” including its debut impact fund and fifth secondaries vehicle.

Hamilton Lane’s assets under management and fee-earning assets under management were approximately $68 billion and $39 billion, respectively, as of end-June. These represented increases of 6 percent and 12 percent respectively from the equivalent period in 2019, according to its results materials.

Total revenues increased by 8 percent to $70 million as of end-June, from $65 million in the prior equivalent period, driven by recurring management and advisory fee growth across core offerings, chief among which was its latest secondaries vehicle.

In the quarter to June, the firm raised an additional $486 million for Hamilton Lane Secondary Fund V, bringing the total capital raised thus far for that vehicle to approximately $2.2 billion.

“At this level we have surpassed the size of our previous secondary fund which was approximately $1.9 billion,” Hirsch said. “It is already the single largest commingled fund we have ever raised.”

The firm has until October this year to complete fundraising for the vehicle and it remains “optimistic to continue to add capital”, he added.

Hamilton Lane chief executive Mario Giannini also said on the call that “the secondaries market today is where some of the most interesting things are happening in PE, infrastructure and private credit”.

He noted that two separate paths – limited partners selling interests and GP-led transactions – are developing and combining, which will only lead to more growth in secondaries.

“Both of those markets are very large and what you have is a confluence of a market developing and a great deal of investor interest around both of those paths.”

On the fund investment side, Hirsch said activity was up even amid a tougher market environment.

“You wouldn’t know there is a pandemic going on. The number of managers seeking capital is at or near record levels, so our fund investment team is as busy if not busier than they’ve ever been before.”

Specialised funds accounted for close to half, or $32.2 million, of the firm’s management and advisory fees in the three months ended June. Customised separate accounts contributed 35 percent or $23.5 million, while advisory, reporting and distribution management contributed 17 percent or $11.4 million.

Hirsch noted the firm was in a “growth mode”, adding that “the focus of management today is not how to get margins higher … but to continue to reinvest aggressively back into the business to open up for new areas of growth”.

Hamilton Lane had approximately $516 billion in assets under management and supervision as of end-June.