Hamilton Lane unveils new ownership structure

Cascade Investment, the family office of Bill Gates, is part of an investor group acquiring a large stake in US alternative investment adviser Hamilton Lane as part of a long-expected equity restructuring at the firm.

Hamilton Lane, the Bala Cynwyd, Pennsylvania-based investment adviser, today unveiled significant changes of its ownership structure, concluding a process that began in early 2002.

In a letter sent to Hamilton Lane clients, Les Brun and Mario Giannini, chairman and CEO respectively, announced that a group of new investors would acquire approximately 40 per cent of the firm’s shares.

One of the investors is Cascade Investment, the family office managing the personal wealth of Bill Gates, co-founder and chairman of software giant Microsoft.

Several individuals also participate in the transaction including Hartley Rogers, who orchestrated the deal and will join the firm as vice chairman. Rogers, a former co-head of Credit Suisse First Boston’s US private equity department, will work closely with Brun and Giannini and “take an active role in various aspects” of the business.

Commenting on the significance of the agreement, Rogers said Hamilton Lane was now well positioned to take advantage of a growing appetite among increasingly sophisticated institutions that considered private equity an attractive absolute return strategy.

No details regarding the valuation of the business have been disclosed.

Brun and Giannini, whose roles and responsibilities will not change under the deal, will between them hold 35 per cent of the company. Brun confirmed in an interview that his personal interest in the firm would be reduced as a result of the transaction, while Giannini was purchasing additional shares. Brun, one of Hamilton Lane’s founders in 1991, remains the largest individual shareholder in the business.

The position of Crédit Lyonnais, the French bank which acquired a 24.9 per cent economic interest in Hamilton Lane in 2000, will not change as a result of the restructuring.

Hamilton Lane also advised clients that 20 per cent of the firm’s equity would be allocated as options to a newly established employee ownership programme that will benefit 'key members of management.' This programme would have a dilutive impact on all of the firm’s current shareholders going forward, said Brun.

In the letter, Brun and Giannini said: “This alignment of employee interests with the firm’s gives everyone at Hamilton Lane a personal as well as professional stake in the firm’s continued success.”

Marty Nelson, a senior member of the alternative assets group at Cascade, will join the firm’s board of directors. Griffith Sexton, an investment banking veteran who spent much of his career at Morgan Stanley, will also take a seat on the board.

Today’s announcement brings to an end a process that clients of Hamilton Lane and other market practitioners have been following with interest. There has been speculation in the market as to Hamilton Lane’s future ownership structure, Crédit Lyonnais’ involvement in the business and the specific roles of key individuals including Brun and Giannini.

Brun emphasised in the interview with PrivateEquityOnline that the firm’s clients had been kept abreast of developments throughout the process.

Earlier this year, talks regarding a possible tie-up between Hamilton Lane and Partners Group, the Switzerland-based fund of funds manager, ended before an agreement was reached.

In March, a group of investment executives, which sources close to the situation described at the time as 'disgruntled' left the firm to set up a new business named Franklin Investment. 

Today, Hamilton Lane has a total staff of 50 and manages $4.7bn dedicated to private equity. The firm is one of the most influential advisers of institutional investors active in the private equity asset class.