Hamilton Lane Global Private Assets Fund

The Hamilton Lane Global Private Assets Fund is an opportunity to access private equity and private credit within a simpler, more flexible and more liquid structure than normally associated with private market funds. 

Hamilton Lane is one of the world’s largest private markets investors, with $940.3 billion under management and supervision (June 2024). 

This fund, overseen by Hamilton Lane’s global investment committee, gives investors exposure to a portfolio of buyouts, venture and growth capital, and private credit. It has a bias towards the US, with exposure to Europe, Asia and the rest of the world.

Since its launch in May 2019, the fund has grown to £3.7 billion in assets and generated an annualised return of 12.1% (June 2024, in GBP) – past performance is not a guide to the future. 

The share class available via Wealth Club is the I-GBP share class, launched in January 2020. The main Hamilton Lane Global Private Assets Fund is denominated in US Dollars.

This is a semi-liquid fund: when you invest, you get exposure to the whole existing portfolio; you can also request redemptions once a month – although a long-term investment horizon is still encouraged.

• Monthly opportunities for subscriptions and redemptions
  
• Minimum investment: £26,000 – you can apply online
• The next subscription deadline is 15 October 2024 (5pm, cleared funds)

The manager

The fund manager is Hamilton Lane Advisors, LLC, part of Hamilton Lane Inc., a global private market investment management business founded in 1991. It is one of the world’s leading private market investors with over $940 billion under management and supervision. Hamilton Lane Inc. is listed on NASDAQ, with a market capitalisation of $5.0 billion (June 2024).

The Hamilton Lane Global Private Assets Fund is overseen by Hamilton Lane’s Evergreen Portfolio Committee, which consists of eleven senior investment professionals, and a 14 strong portfolio management team, supported by over 690 employees working across 22 offices across the globe.

The combination of Hamilton Lane’s global scale and local presence could be a key advantage when sourcing potential investments and deploying capital in our view. The investment team reviews thousands of investments a year and deployed $32.4 billion of capital across its discretionary managed and advisory mandates in 2023.

The Evergreen Portfolio Committee, which oversees portfolio allocation and risk management, consists of some of the firms most senior executives. It includes Co-Chairman Mario Giannini, Co-CEOs Erik Hirsch and Juan Delgado-Moreira, Richard Hope, the firm’s Co-Head of Investments, Brian Gildea, Head of Evergreen Portfolios, Tom Kerr, Co-Head of Secondary Investments and Drew Schardt, Co-Head of Direct Equity.

Investment strategy

The Hamilton Lane Global Private Assets Fund aims to provide investors with a diversified global portfolio of private equity, private credit, and secondary fund investments. 

It seeks to gain exposure to three core strategies: buyouts; growth and venture capital; and private credit, with a bias towards North America. 

The fund seeks to make four types of investment:

1. Direct private equity (target 35%-50% of portfolio) 

Direct co-investments where the fund invests directly in a company alongside another private equity or VC investor. The manager will target an IRR of 20-25% p.a. (gross of fees, not guaranteed). Direct equity transactions are expected to be a key driver of returns and have the advantage of not incurring additional annual management fees. 

2. Direct private credit (target 10%-20% of portfolio)

Direct investments in the senior, subordinated, or mezzanine debt of a private company, often alongside a larger investment from a private credit investor, targeting an IRR of 9-12% p.a. (gross of fees, not guaranteed). These transactions have the advantage of not incurring additional annual management fees and could provide downside protection and liquidity to the fund.

3. Secondaries (target 35%-50% of portfolio)

Transactions where the fund acquires a stake in an existing private equity fund or portfolio from an existing investor. Secondary transactions are generally entered into at a discount to net asset value and allow the fund to deploy capital faster than through primary investments. The manager expects secondary transactions to account for most of the fund’s venture exposure. 

4. Opportunistic (target 0%-10% of portfolio) 

Opportunistic investments provide the manager with the freedom and flexibility to invest in special situations as they arise.

Portfolio

The fund size is currently £3.7 billion, 12.1% of its net assets are held in cash. The fund has made commitments to new and follow-on investments and expects to fully deploy this capital within the next three months (June 2024). 

The fund has a large and well diversified portfolio with exposure to more than 190 investments across direct equity, direct credit and secondary fund investments. Of the invested assets, 71% is in buyouts, 14% in growth and venture capital and 15% in private credit. There is a bias towards North America (71%) with smaller positions in Europe (21%) and Asia Pacific (5%). Sector exposure is focused on information technology (24%), industrials (24%), health care (15%) and consumer discretionary (15%).

The top 10 holdings account for 13.8% of the investment portfolio. 

Examples of portfolio holdings

Project Lincoln – secondary continuation fund, growth

Project Lincoln is an investment in a $360 million continuation fund anchored by Hamilton Lane. The fund is comprised of the 15 remaining assets within L Catterton’s Asia Fund III. The transaction completed in June 2022 at a 23% discount to net asset value.

L Catterton is the world’s largest consumer-focused private equity firm with around $34 billion under management. L Catterton is a partnership between Catterton, a consumer-focused private equity firm, LVMH and Groupe Arnault.

The continuation fund invests in a portfolio of beauty and personal care, consumer services, health and wellness, pet care, and specialist food and beverage categories. Hamilton Lane believes the portfolio is performing well, with most companies showing steadily growing revenue and EBITDA, benefitting from continued growth in consumer demand in Asia. 

The Hamilton Lane Global Private Assets fund has invested $24.8 million into the fund.

Authentic Brands – Direct/Co-investment 

Authentic Brands Group (“ABG”) is a brand management company. It owns a portfolio of over 50 brands, from Reebok to Sports Illustrated and Brooks Brothers, as well as the licensing rights of Marilyn Monroe, Muhammad Ali and Elvis Presley. It generates over $29 billion in annual retail sales. 

Authentic licenses the brands it owns by segment. When it buys a business, it breaks it down by category or market and licenses these segments out to different suppliers, from which it then collects performance-based royalties. 

The fund initially invested in ABG in January 2022. Since then the company has made a number of acquisitions, including brands Quicksilver and Billabong, as well as UK bootmaker Hunter and US clothing brand Champion. The company is now though to be clocking more than $32 billion of annual sales globally.

ABG is a top five holding within the fund, accounting for 1.4% of net assets.

Inmark – Direct private credit investment

Inmark designs and distributes specialist packaging. Set up in 1975, it began as a distributor of rigid container packaging and expanded into the design and distribution of life sciences packaging for clinical specimen transport, temperature-controlled, used medical device, and dangerous goods applications, with operations across North America, Europe and Asia.

In December 2020, the company was acquired by Kelso, the US focused mid-market private equity firm, and became part of Kelso-backed Novvia Group, a consolidator of packaging businesses. 

The acquisition of Inmark was in part financed by a first-lien senior secured loan from Benefit Street Partners, in which Hamilton Lane participated. Hamilton Lane had previously invested alongside Benefit Street Partners and recognised its track record. The loan was priced at Libor + 6%.

AmeriLife – example of previous exit

AmeriLife develops, markets, administers, and distributes life and health insurance, annuities, and retirement planning solutions across the US. It is a national leader in its sector with over 300,000 insurance agents and advisers. 

In February 2020, Hamilton Lane co-invested in the business alongside Thomas H Lee Partners (“THL”), a US private equity firm focused on mid-market growth investments. Hamilton Lane has a strong relationship with THL, having partnered with the firm on numerous primary fund commitments and co-investments since 1998. 

The fund invested $12 million and successfully exited the business in December 2023, generating realised returns of $32.5 million. 

Bright Health – example of previous failure

As is to be expected, not all investments work out. Bright Health is an example. 

Bright Health is a health insurance business offering low-cost healthcare plans and better communication between patient and healthcare providers. 

The Hamilton Lane Global Private Assets Fund invested in September 2020 alongside New Enterprise Associates and the business listed on the New York Stock Exchange in June 2021, raising $924 million at an $11.2 billion valuation.

However, the business, subsequently rebranded NeueHealth Inc, fell short of market expectations following its IPO and was unable to reach profitability or sustain its rate of losses. In Q1 2023 the business breached a minimum liquidity covenant on its credit facility. The share price has fallen by more than 99% since its IPO (March 2024).

The Hamilton Lane Global Private Assets Fund’s investment in the business is currently held at 0.0x investment cost (June 2024).

Performance

The fund is currently ahead of its stated target return objective of 10-12% per annum. 

Since its inception in May 2019, the fund has generated a total return of 78.8% (in sterling, June 2024), equivalent to an annualised return of 12.1%. Past performance is not a guide to the future. 

Hamilton Lane Global Private Assets Fund – Performance since inception

Tax treatment

There are no tax reliefs associated with this investment. 

Hamilton Lane intends to generate the bulk of any returns from the fund via capital growth. For UK taxpayers, any realised gains from the fund should be subject to Capital Gains Tax. Any income generated by the fund (whether distributed or not) will, however, be subject to income tax. Hamilton Lane will publish the amount of income earned within the fund within ten months of its annual reporting period. This should then be reported on your self-assessment return.

Remember, tax rules can change and tax benefits depend on your circumstances.

Risks – important

This, like all investments available through Wealth Club, is only for experienced investors happy to make their own investment decisions without advice. 

Private equity investments are high-risk so should only form part of a balanced portfolio and you should not invest money you cannot afford to lose. 

Investments in private equity are sensitive to changes in the global economic outlook. An economic slowdown or drop in investor confidence is likely to have an impact on the value of private market investments. 

Private equity investments are long-term and should not be considered as readily realisable. The fund invests in companies or instruments which are denominated in currencies other than the fund’s respective currency – such investments are exposed to currency fluctuations.

Unlisted investments can be difficult to price and value. Certain investments are valued based on estimated prices and therefore subject to potentially greater pricing uncertainties than listed securities.

Redemptions are available on a monthly basis, however, net redemptions may be limited to 5% of NAV, to manage liquidity in the fund. The manager reserves the right to charge a 5% redemption fee in periods of market stress. A short-term redemption fee of 3% is applicable to new shareholders who sell within 12 months of investing. 

Before investing, you must be an elective professional client of Wealth Club. You must be able to understand the fund’s strategy, characteristics, and liquidity profile. You must also be comfortable with the potential for periods of illiquidity.

Before you invest, please carefully read the Risks and Commitments and the offer documents to ensure you fully understand the risks. 

Charges 

A summary of the main charges for the fund is shown below: please note, any underlying investments may have additional charges. These will not be paid directly by you but will have an impact on returns. Wealth Club investors will invest using a nominee structure. This service is provided by Wealth Club’s subsidiary companies Wealth Club Asset Management Limited (authorised and regulated by the FCA) and Wealth Club Nominees Limited and is governed by the Terms and Conditions of the Wealth Club Services. Please refer to the schedule of Wealth Club charges for more detail on fees paid by investors to Wealth Club, and the Private Placement Memorandum and Key Information Document for more details on the charges. 

Deadlines and dealing process 

The fund accepts investor subscriptions and redemptions once per month.

Subscriptions

The next subscription deadline is 15 October 2024 (5pm, cleared funds).

Settlement will take place 18 business days after the dealing date (the dealing date is at the end of each month).

Redemptions 

Investors can request redemptions once per month. The deadline for redemptions is on the same day as subscriptions. Settlement occurs 18 business days after month end. 

Investors will be able to submit redemption instructions by using the Wealth Club secure message portal. 

Please note, for any redemption by a new shareholder who has been invested for less than 12 months, there is a short-term redemption fee of 3%, payable to the fund. 

5% of NAV net redemption cap 

Net redemptions (redemption requests received within a given quarter minus subscriptions received over that same quarter) will be limited to 5% of the fund’s Net Asset Value as at the relevant calculation day at the end of the preceding quarter. 

If redemptions are above 5%, these will be processed on a pro-rata basis. Investors will be informed of any redemption amount not processed on the relevant settlement date. Any redemption amount not processed on any dealing day will be deferred until the next dealing day unless cancelled by the investor.

Our view

The Hamilton Lane Global Private Assets Fund is designed to provide investors with exposure to a private markets portfolio spread across several investment strategies: buyout, growth and venture capital, and private credit. The fund is globally diversified with a bias towards North America and buyouts. 

The fund is managed by Hamilton Lane, one of the world’s leading private markets investors. The global scale, influence and resources of Hamilton Lane are a key feature of the fund’s investment strategy, and a core attraction of the offer, in our view. It may provide investors with preferential access to compelling private market opportunities, which private investors would be hard-pressed to emulate. 

The semi-liquid fund structure is also compelling, in our view. It could provide more flexible access to this area of the market compared to traditional closed-end private equity funds.

Private equity and credit are areas that may be underrepresented within a typical investor's portfolio. In our view this could be a compelling opportunity to gain access to both asset classes via one of the world’s leading private market investors – you should form your own view. 

Wealth Club aims to make it easier for experienced investors to find information on – and apply for – investments. You should base your investment decision on the offer documents and ensure you have read and fully understand them before investing. The information on this webpage is a marketing communication. It is not advice or a personal or research recommendation to buy any of the investments mentioned, nor does it include any opinion as to the present or future value or price of these investments. It does not satisfy legal requirements promoting investment research independence and is thus not subject to prohibitions on dealing ahead of its dissemination.