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Hamilton Lane sees coronavirus opportunity in secondaries

Secondaries was the biggest driver of growth in AUM for the investment manager.

Secondaries was Hamilton Lane‘s biggest driver of asset growth over the last 12 months and will remain central to its performance, according to the firm’s chief executive.

Find Secondaries Investor‘s covid-19 coverage here.

Mario Giannini_Hamilton Lane
Giannini: Investors want better pricing in downturns

Speaking on the investment manager’s 2020 fiscal year results call last Thursday, Mario Giannini said that the market dislocation brought on by covid-19 will create a lot of secondaries opportunities “driven both by limited partners that are looking to rebalance portfolios or that might have some liquidity needs…and by general partners as they look to do things with their own portfolios”.

Giannini added that even though fundraising has been made more difficult by not being able hold in-person meetings with investors, limited partners are well-educated on the potential benefits of investing in secondaries during a downturn.

“In periods of dislocation [investors] want to be investing in places where you might be able to get assets at better prices than you did three, six months ago.”

Hamilton Lane’s specialised funds – commingled funds excluding separate accounts – had a 23 percent increase in fee-earning assets under management between 31 March 2019 and 31 March 2020, the main driver of which was its secondaries fund.

Hamilton Lane Secondary Fund V has raised $1.7 billion on the way to a target of $3 billion, Secondaries Investor reported in April. The fund can stay in market until October, vice-chairman Erik Hirsch said on the call. Limited partners include Public Employee Retirement System of Idaho, which committed $50 million, according to Secondaries Investor data.

The 2016-vintage Secondary Fund IV has returned a net multiple of 1.3x and net internal rate of return of 23.1 percent, the results note.

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.