Hamilton Lane leads on L Catterton $360m Asia strip sale

The transaction involves the asset manager and other institutional investors acquiring a structured minority interest in a portfolio of assets as part of the UBS-advised deal.

Hamilton Lane has led on a $360 million GP-led process involving assets from L Catterton’s third Asia-focused vehicle.

The transaction involved Hamilton Lane and other institutional investors acquiring a structured minority interest in most of the 15 to 20 investments in L Catterton Asia III portfolio companies, according to a source familiar with the deal. It does not include a handful of public companies and the most recent private companies it has acquired.

L Catterton Asia III closed on $1.44 billion in October 2019, surpassing its $1.25 billion target, according to PEI data.

The deal, which Secondaries Investor understands to be a strip sale, includes companies operating in beauty and personal care, consumer services, health and wellness, pet care and speciality food and beverage categories.

L Catterton declined to comment on elements of the transaction beyond its statement about the deal, which refers to the transaction being structured as a continuation fund.

UBS advised on the transaction, according to the statement. The investment bank’s private funds group’s secondaries advisory unit is led by Philip Tsai.

The transaction generates immediate proceeds for limited partners in L Catterton’s third fund “despite the volatile macro environment”, the statement said. Proceeds from the transaction will be redeployed into new investments in the third Asia fund, which is at a midpoint in its investment cycle.

L Catterton Asia managing partner Scott Chen said the firm’s research-led approach, global experience, operating capabilities and its network of relationships helped strengthen the fund’s performance over the past two years, despite the impacts of the global pandemic.

“The long-term growth prospects of Asia’s consumer industry remain intact, with the expansion of multiple categories underpinned by robust demand fundamentals, and we are well positioned to capitalise on further investment opportunities,” he added.

Hamilton Lane’s co-head of Asia investments, Mingchen Xia, said despite the relatively uncertain macro environment the firm continues to believe in the growth of consumer markets in Asia “and in particular the trend of consumption upgrade in emerging Asia driven by the rapid expansion of middle-class consumers”.

“The innovative structure of this deal also demonstrates Hamilton Lane’s expertise and competitive edge within the secondary market, and we look forward to exploring more unique and interesting opportunities across Asia,” he added.

Asia-Pacific-based seller volume reached approximately $7 billion last year, in line with the record for the region set in 2018, according to Greenhill’s Global Secondaries Market Review published in January. Volume for assets based in the region, including for both GP and LP transactions, reached $11 billion, compared with a record $15.7 billion seen in 2019. Globally, strip sales made up 4 percent of the $62 billion of GP-led transaction volume last year; that compares with 3 percent of the $26 billion of GP-led volume in 2020.

Giving its forecast for 2022, the investment bank expects to see more developed market GPs, such as those operating Pan-Asian, Korean, Japanese and Australian funds, to embrace secondaries market tools like their North American and European peers have.

Hamilton Lane launched its sixth secondaries fund in 2021, less than a year after closing its fifth. It is not clear what size the sixth programme will target.

The fifth fund, which closed on $3.9 billion in February, “was the largest single specialised fund we’ve ever raised… growing from a previous fund size of $1.9 billion”, Erik Hirsch, Hamilton Lane’s chairman and head of strategic initiatives, said in November.