There is enough secondaries dealflow to soak up the large amounts of capital being raised for the strategy, according to Hamilton Lane‘s chief executive.
Speaking on a 29 May quarterly earnings call, Mario Giannini said the growing use of the secondaries market as a portfolio management tool and the rise of GP-led restructurings ensure that demand is keeping up with supply.
“At least right now, there is an enormous amount of dealflow,” he said in response to a question about whether big capital inflows had changed the “competitive dynamics” of the market.
Responding to a question about the biggest barriers to entry for competitors, Giannini said a track record of putting capital to work and having enough data to be able to know “almost instantly” what you think a fund is worth are the strongest incumbent advantages.
Head of product management for North America Jackie Rantanen said Hamilton Lane Secondary Fund V, which was launched in late 2018, would be in market “well into 2020”. Secondaries Investor reported in April that the fund had raised $700 million so far on the way to a target of $3 billion.
Predecessor Fund IV raised $1.9 billion by final close in 2017 against a target of $1.25 billion, according to Secondaries Investor data. Fund IV delivered a 1.24x total value multiple and net internal rate of return of 34.04 percent as of 30 September, according to data compiled by Idaho Public Employee Retirement System.
Secondaries fundraising declined 73 percent year-on-year in the first quarter, with several mega-fund closes expected later this year.