Hamilton Lane to raise first RMB secondaries fund

Hamilton Lane is planning to raise its first RMB fund following the launch of its Shanghai office last year, Secondaries Investor has learned.

The fundraising process will launch this year, according to two sources familiar with the matter. The target fund size is under discussion and is not yet final, according to one of the sources.

The fund will start deploying capital after the first close, which is expected by the end of the year, one of the sources told Secondaries Investor.

The RMB fund will target Chinese LPs, including banks, insurance companies, family offices and other financial institutions, Secondaries Investor understands.

Hamilton Lane opened its Shanghai office in February 2023 with the goal of expanding into China’s domestic secondaries market, affiliate title Private Equity International reported last year. The firm tapped Mingchen Xia, managing director and co-head of Asia investments, to lead the outpost.

“RMB secondaries are new to us and to the whole market,” Xia told PEI at the time. “It is the expansion of our experience and activities on the US dollar side.”

The asset manager headquartered in Conshohocken, Pennsylvania, has already been investing in RMB secondaries via the Qualified Foreign Limited Partnership programme, which grants international managers a quota for converting US dollars into the Chinese yuan, also known as renminbi, or RMB.

The firm gained QFLP pilot status in 2022, PEI reported last year. Xia declined to disclose the firm’s QFLP quota back then, noting that it would start small and increase the size “once the thesis is proven out”.

Both the QFLP programme and the new RMB fund have the flexibility to invest in LP-led and GP-led transactions, according to the sources. However, the QFLP programme has been mainly investing in LP-led deals due to its modest size, which limits its ability to participate in the typically larger and more structurally complex GP-led transactions. The firm is expected to explore more GP-led opportunities with the RMB fund, according to one of the sources.

Hamilton Lane isn’t the first to toy with the idea of a yuan secondaries strategy. Coller Capital opened its Beijing office in 2021 and launched a debut yuan-denominated secondaries vehicle, Coller Capital Secondaries RMB I Fund, last year. The fund has a 1.5 billion yuan ($205 million; €194 million) target, according to Secondaries Investor data.

Secondaries transaction volume in China reached 102.1 billion yuan in 2022, up 53 percent from 66.8 billion yuan in 2021, according to data compiled by Zerone, a Chinese secondaries marketplace and data platform.

Activity was driven in part by Chinese government investors keen to exit funds that were approaching the end of their life cycles, according to a Chinese-language white paper published by Zerone in 2023.

Hamilton Lane declined to comment on fundraising activities.

– Katrina Lau contributed to this report.