Hamilton Lane pushes secondaries fund final close to January

The fund is the 'primary driver' of growth in fee-earning assets under management among the firm's commingled funds, vice-chairman Erik Hirsch said on an earnings call Wednesday.

Hamilton Lane has extended the fundraising period for its flagship secondaries fund, its vice-chairman has said.

Limited partners have given permission for the fund to stay in market until January 2021 due to “strong demand and a strong pipeline of investment opportunities”, Erik Hirsch said on the firm’s latest earnings call on Wednesday. The fund had been scheduled to close in October.

Hamilton Lane Secondary Fund V raised $250 million in the last quarter, bringing the total raised to $2.5 billion. Secondaries Investor reported in December 2018 that the Bala Cynwyd-headquartered firm was targeting $3 billion for the fund, more than twice the amount sought for its 2017-vintage predecessor.

On the call Hirsch described Fund V as the “primary driver” of growth in fee-earning assets under management among its specialised funds – commingled funds excluding separate accounts.

The fund generated retroactive fees – the management fee catch-up paid by investors that committed to the fund over the period – of $2.9 million in the quarter to 30 September and $6.1 million in the six months to that date, according to financial statements.

LPs in Fund V include Cathay Life Insurance which committed $200 million, and Public Employee Retirement System of Idaho and Fubon Life Insurance, which each committed $50 million, according to Secondaries Investor data.

In late 2018, Hamilton Lane’s EMEA head Richard Hope noted there was a $45 billion pocket of buyout funds of vintage 2005-08 that were at or near their hurdle rates. Many of these funds are likely to not make it through the GP catch-up period, which means that limited partners are unlikely to receive more distributions, making them prime targets for restructurings, he said.

“We’re not saying that it has got to have that 7-9 percent IRR in order to kick off a restructuring,” he said. “But we think it’s an area LPs should be thinking harder about rather than waiting and seeing what happens.”

Recent deals Hamilton Lane has backed include the restructuring of PEI Media owner Bridgepoint’s €4.8 billion 2008-vintage fund, led by HarbourVest Partners, and the $200 million restructuring of Legend Capital’s 2008-vintage China-focused buyout fund.