Hamilton Lane has surpassed the initial target of its latest dedicated secondaries fund and expects to hold the final close for the vehicle by the end of March, a document presented to a US pension shows.
The Philadelphia-headquartered alternative investment management firm has raised $1.7 billion for Hamilton Lane Secondary Fund IV, according to a memorandum presented to Fresno County Employees’ Retirement System by consultant Versus for the pension’s 1 March board of retirement meeting.
HLSF IV has already invested $357 million in either closed or pending commitments across 11 transactions, the document shows.
The underlying deals are 75 percent funded and have generated a net internal rate of return for the fund of greater than 100 percent as a result of early distributions.
Hamilton Lane has another $2 billion of deals in its active pipeline, according to the document.
HLSF IV launched in July 2015 with a $1.25 billion target and held a second close on $573.3 million in January 2016, according PEI data. The fund has received commitments from limited partners including Public Employee Retirement System of Idaho and Employees’ Retirement Fund of the City of Dallas, which made $50 million and $30 million commitments, respectively.
The fund’s management fee is 85 basis points for commitments between $50 million and $99 million, and 75 basis points for commitments of at least $100 million, the Versus document shows. After the commitment period of three years, management fees decline by 10 percent per year. Carried interest is 12.5 percent with a preferred return of 8 percent.
Details of Hamilton Lane’s previous secondaries vehicles were also disclosed in the Versus document.
- Hamilton Lane Secondary Fund I (2005-vintage, $360 million) generated a 4.3 percent net IRR and a 1.2x net multiple
- Hamilton Lane Secondary Fund II (2008-vintage, $590 million) generated a 15.1 percent net IRR and a 1.5x net multiple
- Hamilton Lane Secondary Fund III (2012-vintage, $909 million) generated an 18.6 percent net IRR and a 1.3x net multiple
Overall, Hamilton Lane’s weighted average IRR for its secondaries fund investments is 18 percent. It is unclear which date the performance details are based on.
The firm’s secondaries strategy is to purchase high quality assets – single fund investments or small portfolios – managed by leading general partners at attractive prices, the document notes. Hamilton Lane has acquired assets at an average discount to net asset value of 22 percent.
For HLSF III, the firm screened $104 billion of deals, conducted full due diligence on 31 percent of those, submitted a bid on 8 percent and closed on less than 1 percent, according to the document.
Versus recommended FCERA commit $75 million to HLSF IV, the document shows.
Hamilton Lane declined to comment.