HLNE - Earnings call transcript Q4 2020 | Hamilton Lane Incorporated

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Operator

Good morning. My name is Jason, and I will be your conference operator today. At this time, I would like to welcome everyone to the Hamilton Lane Incorporated Fourth Quarter Fiscal Year 2020 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator Relations may Investor your Manager, Oh, begin you conference. John

John Oh

virtually welcome Jason. call. Hamilton be Varma, Giannini, CFO; Good work and you, continue from Vice to Erik Today, by Hirsch, CEO; morning will as earnings Thank Atul XXXX our and the Pennsylvania Chairman; Mario QX, Lane I to we joined remotely fiscal Headquarter.

making business. current the results, to uncertainties you statements will to be remind expectations subject we that our differ on the to Before forward-looking want quarter's risks based we that These the discuss are may materially. for statements actual we and cause results

SEC. discussion of a XXXX risk Lane review the fiscal factors the included XX-K and For we risks, the reports Hamilton these in subsequent please with file

non-GAAP those non-GAAP will the to found We materials, website. we which the shown earnings referring that section will assessing in throughout be webcast. also view be measures of of important the be on Investor referencing our presentation Reconciliation in call we materials performance Lane available to measures GAAP Hamilton public can on also business. as of the Relations the be These are and will the

GAAP and advisory year of be products. Please fees million based Beginning full income. when based $XXX management GAAP sell XX% on on Slide this Lane's and into $X.XX income, year made million results XX-Q for approximately year. $XX $X.XX adjusted is solicitation our revenue to our fiscal of filed. a translated net EPS of of or on financial detailed the represents an Our EPS any net in from note grew Hamilton versus of will prior non-GAAP on nothing This to approximately that available call offer purchase the interest X,

XX.X% call per now a to our With Mario. $X.XX share, to per per has fiscal to share over I'll turn or Lastly, our the $XX.XX annual dividend approved quarter. increase Board that,

Mario Giannini

morning. good and John, you, Thank

others you you clients many the saying you us. as by Thank their good Thank Let before our in are of Thank me special me communities. so those those danger protect thank whose part to themselves of simply making the start you. frontlines. for done sacrifices to putting the have on thank to members of you many of And all frontlines. to a those to

in You're very all much our thoughts.

despite here Hamilton to serving is to work long situation all challenges that December, the our our remotely, and stating our Lane, us offices these the in Perhaps but work international remote some in standing I'm The have our well headquarters are report we to facing, service of For obvious, times. ability technology and while reopen. of had Pennsylvania. certain clients we've begun already continue a commitment to in offices offices to incredibly our pleased work majority our including is since and strong. data

We combination systems are benefit continue leaning and of purchased and proprietary our clients. heavily on a that to solutions

reading tips, employees teams hall the and updates also see town weekly and through concerts, working at related our from with and thank say, is pictures discomfort, Lastly, slack remain own A home also clients I'm channels, the And family Lane glance the is various updates by us every suggestions. of families. videos managing teams brings effort their work of our ensuring from transparent. you'd spirit exert keeping strong this the quick of that throughout uncertainty close communication and day, innovation find servicing What while time and and To you. them, firm, and would barbecue me, frequent very while aside together. Hamilton of they and lives our creativity proud simultaneously content, all video pets, featuring our I

of and this time, Our stronger a part through even I'm to getting firm. strong culture trying this is be already proud

Now you is. it company plenty heard public at tell point, this is you this and unprecedented, CEOs of environment

we're than start investors. rather perspective by on questions of you that we've answering give fielding this some to what our I'll till we been what some ground, simply point going that from don't. and same we So know at

how much versus fiscal XXXX business. a our continue First, our XX% fixed and with heavy of strong variable? revenue carried Even We accounted for fee interest, approximately management revenue. management of is year be to a fees year total advisory

protects In our advisory mark-to-market than fees from on temporary asset value, addition, and of our are management moves. revenue X% less based net stream which

expect LPs capital In the large carry defaults. commitments. level not penalties on defaulting. and any default are did experience XXXX, We binding for we These you did at meaningful limited of their Second, financial legally nor partners don't. LP to commitments industry

experienced that entire across recession, million partial entire client single Lane a our only LP $X Hamilton defaulting During base.

on drop here. we effect from will will the the values i.e. in back asset the In general, think LPs cause where Third, go markets here class? the depend pull plan denominator from the is no. this to partially Though answer

simply to seen we drop close, cause significant yesterday's of concern. enough haven't As a

clients While vintage no year and XXXX and have into find below we economic believe the there their are understand will we We what themselves until provide of downturns, and now next of there markets allocation. a pull few there buying XX our what a past feels also LPs times as But LPs determined seen strong are payments following interest opportunity. carried to again normalized. the that data things like number about interesting more of the said themselves will question and remember lean before, finding some carry. to may an they LPs private believe opportunity. have XXXX, around for for choosing of plenty lower reasons be performance correction, XXXX, markets various instances investment XXXX to be expectations target we with who a the back, who And way and following are be Well, examples months? that your stretched market Fourth, over of

represented earlier, of fiscal carry said I around last revenues as our XX% First, year.

grow month historical remain companies. this May. April a diversity. control well vehicles your underlying across But to essentially growth? this same answer into levels of have exits. XX tough the achieve our close the of our environment. as don't unprecedented are and We able incredibly thus unstable We timing sizes, optimistic spread to companies new a and as ability of Second, months result control you is see hedging diversified be business of It you two and of natural in carry of we our these and we know, don't different some continued a industries in the as we is geographies. is Fifth, with positions Today, question fiscal to thousands year re-ups about as to and will over as very

to Our active, challenges. see but clients, sales events remains are inability all to our our strong, remains team travel to host our pipeline

And While a we denominator environment. the very a the don't some different partners on inability with concern who timeframe, create our relationship through limited to did something grow will challenges. with should XXXX-XXXX with particularly maintain potential interact currently comfort current additional that some again, we provide investors,

size at prior assets Total asset Now, here assets continuing advisement. let as type, be $X on our continues the long-term our billion, from AUM our footprint which for for diversified growth a sum across Slide define me across to customized for board. to and our with growth turn to geographic the the and AUM, highlight year-over-year, strong the X, was X% was specialized Assets or the separate of and footprint AUA XX% client which both under total approximately we footprint the quarter under and represents quarters management quarter accounts, Consistent a came of we $XXX our stood results Beginning billion trend. region. increase year-over-year, over funds and client which

are business with lines the winning success. across Our we growing focus pleased remains and simply and both of

with type to growth in seen AUA, which at or from approximately geographic and across year-over-year, it AUM, billion Moving region. came as client we've X%, was $XX AUA

direct the emphasize increase exists that calls, on can with no mentioned changes. lockstep dollars AUA those continue between this fluctuate quarter-to-quarter necessarily reasons, quarter move of generation. to And a As for saw we while to we in variety an and relative the quarter, of but with associated revenue in previous revenue dollars AUA earnings not does the AUA AUA scale correlation prior will

area remains Continued advantages focus growth those our AUA and given over the dollars longer-term, bring. of the an scale of

scale between our will match our the disciplined and needs growth services not and supersede to However, approach the appropriate finding are particular ensure of we the that client.

Let me now to Erik. turn over it

Erik Hirsch

and Mario, you, good Thank morning.

working as to Let me to and also all clients. us, our begin thanks adding well protect as employees to my of by those hard

Moving on earning fee to our highlight AUM. X, we Slide

basis is earning funds our As AUM combination driven specialized and the a accounts point customized our separate reminder, with fees. management of fee

total of XX% from $X.X significant most business to emphasize stemming year customized fees. up the this earning positive our XX%, We our accounts. over flows and advisory our or makes will the to both as AUM that fee management grew continue prior period, separate specialized fund driver funds our Relative it across of and is billion

existing our three, new to raising you steady. winning also $X.X over from continues by time came and funds. new Growth fee adding our existing specialized $X.X here continue is our components: growing driven the nearly and fund our key same rates nearly four separately, fee accounts funds. net clients, billion clients, two, that four, AUM Taken separate earning came one, customized platforms, see re-ups and from What remain of to billion from period, specialized be our

X, months. the to from XX Slide stood approximately earning $XX.X last at over fee AUM accounts Moving growing separate customized our XX% billion,

of coming We see continue from growth to a avenues. variety

the base our As growth. in that you've us key a heard client existing past, of component from say re-ups remains

our adding to provide In a base by relationships, for which expand in brand new re-up winning turn continue opportunities. future addition, existing we base growing client and

strong. As growth funds our specialized for was

positive for growth net main nearly in total over held current on XX% March driver past now of specialized secondary that the XX dollars we continues earning $XXX This to over our of our the billion. our be million $X.XX, this product months, to commitments. XX, a Over fee on brings fund. increase AUM of in achieved $X.X funds. inflows resulting totaled a this We closed close The

XXXX fundraising. October, to until the have We complete

fund retro Given as prior The fees. did from semi-liquid next AUM product. were our that credit fees as well fundraising, generate in inflows the started quarter, closing our largest this of on drivers this continued

on question on the On an were detail to net $XX.X of million. flows quarter redemptions level is while saw the for of of this the are The flows we March, million. $XXX million that we not $X.X X, through from people's do we likely through ongoing May minds, the only XX? intend answer appreciate how And basis, provide approximately inflows April and being, ladder,

by the are we results the generating. it have as engendered, are investment We we believe as and speaks we this very trust to both encouraged dynamic, well

simply in U.S. our evergreen When and This never to in what challenges white we And believe do regulatory challenging can't success long-term us we to-date, largely various that say that this presents the and and type States, the label of you committed However, by the distribution Australia, look launch, investors continued while continue and across with certain have outside simply was we hurdles principally product not product. we environment experienced. the was encouraged will audience initiatives. be heard retail Europe, market announced a prospects product focused like. know progress strongly current out, stress, initially in partners but where we profile United growth made months our targeted due our help Asia. we based AUM will more this and the Rounding for raising to and the That the here remain said, the that coming

current have pursuing about as in excited However, undoubtedly still and we is we will we make long-term but evergreen focused launch and to this market the the state early U.S. here. in the harder this a offering obvious, important the Nonetheless, are stages marathon, we slower. currently to the an are is view a prospects and this not opportunity this process and an sprint, said milestone before, the are

Let topics. me now shift to strategic two

a of select acquisition technology the built opportunities position join of iCapital iCapital UBS participated March closing the has others. race Goldman round. group our we investors this We latest investment, balance on announced Blackstone, XX, Hamilton the iCapital Sachs, network First, Lane powerful and financing BlackRock, to of investment net that private believe include worth recently that among in now simple furthers strength. Making have of for Using marketplace [technical and private to access opportunities, their ability subscribe difficulties]. the investment to investors. announced premier asset and and opportunities and their they democratized Artivest sheet

investment about product and We are excited available excited we the about Hamilton iCapital are this is equally this Lane platform. currently on partnership.

behind unique technology another approach beneficial this mutually and capital partnership. our balance and before, our investing is simple, forming say of can again, providers a iCapital who As we us industry have believe solution positioning. sheet said will make to undoubtedly and identify strong example them, technology better, the we is

insight private on PMC. was PMC developed and to by Market XXXX. created called and progress Market Private all Lastly, to with reporting client. the straight ecomm I key information offering the with company which of some between of June wanted a collection focuses iLEVEL, managed streamlines a faced data serves partners through best partners, venture iLEVEL in update limited the the help providing general space market, to a automating provide remain for monitoring, solve Connect an market. data We processing. and our Connect IHS and primarily drives and this challenges Private and segment market joint players partners, the as goal or normalizing exist investor PMC practice were limited information [ph]. flow address efficiencies the data valuation existing analytics, SaaS private data the ultimate of we throughout scaling, types the early that on services in and in

background focused solely reporting. data team some on maintained and prior of a the PMC, to formation Hamilton dedicated For Lane entry

two Lane, the office back cost that, The service the formed, is provided G&A card. Market One, PMC As cost via the provider was is own with either technology entry team the captured IHS jointly in shareholders. cash, a market excess functions rate iLEVEL has from benefit in moved with IHS these rate data market. Two, business party PMC. Lane, executives we exclusively as here employees card IHS potential threefold. relationship When its declining out approved line. for a two the Since the and as third business of market company Lane payment or Board of of benefits. through this compensation from offering PMC Hamilton three Lane. of a its captured from the dividend. pays dividend scales to a it PMC, and available Hamilton and the Hamilton implied JV and formation two customers support now includes reporting The to contributed sales economic our force, the we and XXXX, by which with to and adjustments, a was linking sales And Hamilton generates IHS contributed

of with we to we to market speaks to at to remain IHS PMC, Atul markets as cover with look Lane. have the updates the presence they I encouraged growth financials. private combined will now continue We and over to Hamilton of witnessed it turn providing additional the the We unfold. and feel that, the power And forward you with call

Atul Varma

everyone. year shows Erik, XXXX. financial and presentation X you, the good fiscal the of Thank morning highlights for Slide

continue XX% and prior We in see our very management year. to business up solid with fee versus advisory growth the

over over fees recognized fiscal the year, fiscal periods We in or for and in co-investment $X.X million $XXX driven co-investment Our fund fund our from specialized fiscal in by million, XX% XXXX. year, billion compared between the latest revenue million funds in fund. increased raised $X.X secondary retro latest the prior million for XXXX, $XX.X to current to $X.X compared raised

we saw The the for lastly, clients. accounts from an to of revenue. the quarter vehicles. carried compared Incentive Revenue prior is sources year. new approximately realized fee. incentive addition for interest, was performance, related closings our offerings many into you you revenue re-up customized a to likely this a fund fee Revenue fundraise spike year, fee period aware, advisory position, positive of continues and closes approximately management come the aging that from relatively component for million Therefore, existing incentive of As to additional our for flat dating that close. subsequent total generating the six to later trend move compared of from its diversified million increased and vehicles of that several or account XX% of $XX.X in strong back overall which fees the year our typically Noteworthy carry to show in fund investors occur. increasingly were final our prior the the separate the reporting products fees which are and of for to paid was into $X.X many see retroactive the due

fiscal saw this we unrealized additional even Moving from some growth million X, on recognized to fee quarter Slide with provide carry our XXXX. balance detail year, strong of incentive XX% balance. prior We the we in as of the $XX.X

both the came As in existing new you slide, can from carry funds the generating growth vehicles. see as from as well adding appreciation

and would we exit. distributions positions, earlier, current the of we market mentioned And control control the to slowdown. timing Mario given As the thus, see don't we don't expect conditions,

fund from out to acquisition expenses, by fee prior earnings, to commissions increased regard the a compared primarily Total fee the XX, of real over million earlier. our expense related earnings total we growth year. included period by to increases earn year current as primarily in expense, Slide our from our XX% In year to the $X.X compensation the non-recurrence increased which expenses was in Turning related year. from closings consulting professional salary in increased profiles due compared technology of year-over-year assets expenses, This additional $X.X due discussed revenue million up partially headcount our to current the offset benefits in the and period. slightly the year. and were million, increased prior result and $X.X G&A prior the with

Slide business. our our able March, in to facility. alongside our fixed extend term we comprehensive our existing successfully of which credit secure our rate be our and of Moving lower borrowing a increased largest balance through capacity regards $XX a added We maturity reflects liabilities, rate, the account increase interest date XX% million prior package separate announced to out were our open clients asset debt is year year which the it up specialized loans, thank The that, In amendment may call senior In XX, after compared the you to we liability. for growth funds. drawn discretion to happy to and largest joining the to for to investments sheet at our our and a this growth customized up questions. in closing. And on our balance with are asset our our sheet is

Operator

first from question [Operator Instructions] of JPMorgan. Your from line Worthington the Ken comes

Your line is open.

Ken Worthington

my talk the next the taking potentially least for as well question. just probably have gross vulnerability. thinking you you at new state funds government commitments, as there's fund such might a your if fund And few some Thank and clients next various places have might morning. that need on seems few be finances Hamilton good for Maybe the have as sovereign municipal can couple generally, impact at the money years. quarters, Hi, where the Lane cash inflows it where was about over I skipping payments. wealth to might that one pension don't not

So then a any maybe to new there? day are, just wealth funding. funds or sovereign what thoughts contributing which be least many funds, would not And which down drawn get rainy another at is might

So any guess on what exposure you might have there? Thanks.

Mario Giannini

It's Ken. Hi, Mario.

Let it me in parts. two take

terms municipalities, In pressure those they made future governments, or or by may that whatever local not pressure would and may state funds, of pension on states of be that are. the contributions any be

you would in think similar ‘XX. I saw and at, as what be look ‘XX we it to

existing affects you pension if the assets, book at that look there's you their will. nothing If funds, of

in of on which from assume four growth position assets book will then today. a real the just you debt alternatives three in, infrastructure, for when I interest it. or And for low equity about is into that than And their put we the normally environment, so think wherever predicated we And rate need the longer be increases. that, the side, months the really they're perspective, on think higher have return whether you really on assets, lend anticipated ago, might or I their desire,

of don't now we into to anticipated, in timeframe have So impact the or in pension assets grow might terms have I saying, rate that at sorts the will year think will years I any of they you're might think five say. put private from funds any hard three XX five But it markets. to if

a be felt little assets them, in some of more come this. Sovereign of and investments of because in a out. portion our cash wealth so be look are of day have are in you funds they and to or are funds knew used structured, like the way their in the client said, situations may base, at basically or different most some assets you that they them have certainly bit always they liquid safe as wanted had they to But put rainy if them

affect So I again, private they that really a that dynamics pension funds think terms markets of anything same are needing And looking put impact that doesn't impact higher today. to the in into return. them

have of publicly what some them look that do. to seen markets looking they and little probably they a in do want you've So announced at private more are to

you pension if five sovereign three going the they're kinds to out at or either look of don't think So, two year by those that be wealth feeling. just the either impacted dynamics pressures to fund the I timeframe, are

Ken Worthington

you Thank very great. Okay, much.

Operator

comes next Morgan of line Michael Stanley. from question from Cyprys Your the

is open. line Your

Michael Cyprys

good thanks for the Hey, and question. taking morning,

in about on I secondary funds are potential to complete the -- growth look to and Just fund the for How be terms October, certain thinking pension the maybe more class raising and implications that environment have cash XXXX, you to with in there, may curious, the now, little in potential market, I of just monetize know additional and the the already Ken's think you're investors for fund positions the a raised? be until that given you exit investors asset question that. strapped. bit falling secondary may

or alongside any on the to top the the there's Just the timeframe raising in home? on the thoughts that of environment from any given extend out and raising ability that vehicle fund, around curious work if on thoughts sizing another

Mario Giannini

market market or very terms the any side by market think while it of own ones and some one. the history we going dislocation. of for Both a is apart had developing, liquidity And to again, was a the think that the also I think rebalance portfolios to was on Well, guide to is with way general if more one said is, work got portfolios I and secondary we partners with interesting downturn we secondary in first opportunity opportunity from just the that do by even might question, the things that interesting driven limited their limited needs, are look looking partners but as around on or be partners a driven have they the that.

that this generate is amount So of fair growing. of market And period, flow. will kind whole I think a deal have time clearly when you it

So encouraging. that remains

of fundraising, as it did you ago. in In doing side, the in They and in we understand investing to before, out with movie side. I talked they people they are understand you that But it think around in there the in where have fund pointed our terms dislocation better be if market of Zoom. with seen going question, want on understand secondaries. fundraising it we're They six challenges will, you investors they've other might assets the about prices opportunity get months set. and on I places three, periods as the And Ken's understand discussion, than able this by out the to be credit

sign. the is So very And for are investors an us that's secondary encouraging interested in market.

Michael Cyprys

U.S. just then the a to like Look, as on And just evergreen pursue sounds in question strategy. the you're follow-up maybe that looking

to is may just share able the implication versus recent this bit it of around world? the looks you could the easily act rest bring a or look differences what structure how changed color any to there little like it the anything's makes if more U.S. from what U.S.? that of sort in any around the any And curious Just safe

Erik Hirsch

Eric, that. I has take a say that been a happy there's would Mike, Sure. to big nothing I'm been it's of sort change.

an has is in Again, tremendous that. through can't complicated, this the sort something But pursuing the amount lot is way just we're in and us this pursue give U.S. on similar a view that to effort of our going our that very and kind a of to processes process part of this the U.S. of since of been just standpoint, are here. outside just what partners from we're is details filing to work think I the our investment

So being see we that fundamentally as from this different don't really perspective.

Michael Cyprys

you. thank Okay,

Operator

from Sachs. next the line Alex from comes of Your question Blostein Goldman

is line open. Your

Alex Blostein

the the of Hey, do. question. you like Thanks on hoping part activity next be you the front and talk taking changes sounds anticipate piece model? could meaningful for business, what can it's appetite pretty secondary years. about little guys also for co-invest But quarters couple the over co-investment the you meaningful guys the good It morning. a in bit any the was of of I guys

Erik Hirsch

Sure. Alex, it's Eric, I'll take that.

a one co-investment secondary think have amount it's that frankly, of is our tremendous the nice whether things vehicles, of vehicle we about I the credit or flexibility.

point in partners clients in at to right our time. think I right the the right deals have really entrusted the us sort of with work

Same growth and while up, been to we into performing new strategies. extent the have we've vehicles already vehicles we in to the don't we But move in historically again, the market opportunity to rescue credit So of equity pivot thing place that. that largely turnarounds, start performing or nonperforming oriented credit start primarily to serves have and us do to the see like, extent has the co-investment; have ability that. been to emerge, to buyouts investing co-investing our go the do kind credit the create on space. financing We today, to-date, to that

for its is to moved with holds whatever opportunity separate The is time. rather investment true into our something conditions. again us we can have that on of a one that penned accounts. clients pivot things the in take And at of market set lot but adjusted that point and sort allocation based rigid the strategic policies, not current to very in adjust And be also strategies and simply so step can really that deal further, that

what we good clients opportunity that. echo the understand opportunity are all So I set said, to set feel looks And think Mario clients grow, what like. the of the to smart, about as the continues

set opportunity grows, so And so demand. the it's that too client the we think does

Alex Blostein

tactical Got And just question a Thanks. near-term. it. maybe

curious expenses over to around get of couple your quarters. next the Just thoughts

kind obviously, be model. and going they're fact no there's the Given to some there's savings, running travel through of the natural

near-term So thoughts will the of any expense be around guidance kind helpful.

Erik Hirsch

Yes. Alex, it’s Erik again.

think right. I that's exactly

So continue I company invest to in to growth a want ourselves fundamentally as growth. view think while that we and

to still say, spend, by defensive make way, you're is seeing would not good us So offensive which the continue spend, spend. technology we

We long in haven't systems capital to obviously a from be to place time. We've those to get to had people for home. go work spend had able

will the we So reduced I of continue. or want spend think it of the some But spend is to whether those things kinds being not. on

us a fairly substantial T&E that down. that come to we part start of and So has just And our expect budget obviously way, way again. rise way, for is will

said see back we that face-to-face to have beginning, level in normality, not doing return some Middle kind offices East As Mario begun all to parts of people reemerging of Asia, the certainly meetings. the beginning But to way some the going are to at and we have normal. in of and

certainly result. see that And the through numbers expense those a in so and near-term, down flow I think will you'll the as

Alex Blostein

Thanks much. very Great.

Operator

Fargo. comes from Harris next question from Your Chris Wells the line of

line is Your open.

Chris Harris

guys. Hey, Thanks.

So another question fundraising. on

things through able get still other you're virtually. to mentioned some You activity Zoom that done and

the by, potentially percent not you clients say So lack what Or new able fundraising to is fundraising I the being potentially funds? Is impacted guess it for trying also, to would that being meetings your is do regarding of by I'm existing travel? have person impacted in potentially customers? activity being wondering, new you're of like, it

Erik Hirsch

it's that, I'll Chris, Thanks for start. Erik. Yes.

both and have had we have new as combination as I think, April, that been existing closed a Mario well relationships. we business -- in we in of closed said business May, have it has

is to in that time. important takes whole our that's thing dating industry process one recognize think quite the some I

on then of So of process up meet on sort sign locked Monday and the while. Big capital, and don't you amounts clients a a contract long-term Friday. so takes relationship

both bad that's think good and here. I

developing the So that and that of relationship have a frankly I for is think been you have pipeline, good that that people last several the in number nurturing you months. with

comments macro think Mario feels our I I for in view very out think line, so is in reasons that to finish bringing all them is pointed doable. the challenge his the that the

is finding that would if meeting simply of our harder. the I Doing they brand talk new just think growth business part sales is and it's our I today, you challenge that to say people. think in team, our

had a agree of get a start of offices sort tires. we and kicking industry and you, our and the together one relationship, an a on, doing ultimately meeting call I introduce, I for culminating start visit typically kind coming likely to Our on-site of dialogue to you of been based kind

be would say Being better said, in about brands tough. that are to of think who office, what's All kind really of going environment, single That better going new to of to you harder. kind is that is we I really, if benefits. small be going that be this think a party

a much lower competitors world So were sometimes in having costs smaller things who before of where you your easy, were and nipping at perhaps were kind heels.

absolutely think that. I and are like gravitate this, to think going going are forward towards we the names we times in household in industry, people

be sort But here, of is there. is none to that we'll again, beneficiary this think normal today. strength more is a that be we And which of going kind of other we the strength. So think is creating benefit

Chris Harris

Okay.

least In you terms couple of of much last at specialized years your funds, a AUM accounts. in have growth, separate relates to it versus fee faster growth had on AUM as guys

persist look necessarily might pipeline, case? will that Or guys going you forward? likely not your you As say be would trend the at that

Mario Giannini

Chris, it's guess trend that persists. Mario. My is

do the either to look changed we talk haven't about by If you see -- but a of it's things changed. at what number investors in driven need trend mean, harder the is for person, hasn't that I is people you don't going I Clearly, advantaged environment, separate to account in the fundamentally separate invest tremendously And will the they're of this or how that accounts. is nature be because have change. know products re-ups. to in the

You have the relationships. client

the And believe But is the versus impediment investing we world at there. in breakout is in don't certainly, shift terms out so, not accounts at people people fundamentally invest products And the that seeing an Zoom separate believe how market I going any the in is fundamentally look that of way markets, to in that not of today. want all unless in we're to private changing.

going lead that just there. a there's there's shift nothing fundamental to on will that us say So,

Chris Harris

you. great. Okay, Thank

Operator

Chris from comes line question from the next Kotowski of Oppenheimer. Your

Your line open. is

Chris Kotowski

Yes. Good morning. Thank you.

we mean, we in re-ups I that AUM of during a from two to for about or follow-up go near-term the the new if versus If because your mid-teens, was low away think last just clients a growth that As think lockdown one. period. how quarter about presumably to the much from existing clients clients new right? could

Erik Hirsch

that. Eric, It's I'll take Chris.

always we've base the our in so that because past coming installed our bulk the base, installed is is growth, of from existing big. So just said as

hearing sort generally the new. on so flows goes think of then new that sort that we completely I typically, existing about don't the of that are XX% you're or from separate and the So XX% us away. say think side sort new account of from

are laid already make of to that need going folks think going find think and class, to to into started I as folks starting, out do the or allocation compelling of strategic cause why that. the sort decided this. if just going you're this Mario that to to you've don't you reasons asset get kind we to are is to change continue I And

In set to to again, low where fact, are environment be And returns to you. might by allocation cause hard the as accelerate. interest opportunity you a tends your model rate again, pivot better, asset might come in it

them class, working on out. the environment to does opposed us. to So of installed not is presumably, sort we're do for scenarios And But as convincing growth to to then new, this folks more the come we're the the convincing the from of with into our certainly current those in have could laid base. that been see work bulk with us And come that -- people somebody asset where we you else. again, often reasons decide

point, tactically asset brand, better So you we market now as class, would I player to question of be sort positions in you've decision think partner the of my relationship. who are if go us the a of kind big to simply made that the again, the that, to that being is the big And back earlier going want with. you LP in to be recipient the an

Chris Kotowski

are I of on reasonable mean Yes, disruption air equity terms hit mean, but it's two travel longer-term of assume I And next new start, year that private investing an to to timeframe. in then guess going or all kind I and of to we're the just pocket between Okay. say, here, that XX mean, a also just kind of know, -- I there investing, that major and fundraising kind is XX are than I markets the dynamic? and [ph] private acting does what world the don't has valuations pause private in the been markets. of upside a public if month to to the very down, differently rolled equity do

Mario Giannini

for there's you activity say Mario. no if private to think in there's Well, months, markets questionable. Sure, XX urgency to the be I then think But investing. be for XX that Chris, the no it's I premise anyone may

of at, If months number ’XX, disclosed one biggest you that timeframe in ‘XX of and -- now differences to have even the deals discussed. look being are two the is the publicly from been

process. I deals environment have are that in There say, are there disclosed. at actively are the look been and So deals that

that. partners general limited and and both So that see know partners

certainly it and to whether say to really to an be for six where activity of at XX have volume a to can that scenario something's the given and in timeframe. next we're be don't kind going activity months. going happen not of a on looking two So timeframe. discussions disagreement is going might that seeing there anything's next over think going to seem month saying, going this happen the to happen something's in People I environment that deal But fundamentally doesn't XX anyone the on today, different you months,

Chris Kotowski

me. Okay. it for Thank Alright. That's you.

Operator

comes of question Lee the Robert next from from line Your KBW.

KBW. next line open. of comes the from Your Once from line is again, question your Robert Lee

Your line open. is

Robert Lee

for fundraising topic, a Maybe Thank my Hope questions. theme, everyone's questions. Thanks doing sticking with the taking popular of well. that. you. about couple Sorry

I you now fund, fund, think would funds, between Or quarter, larger your one quarter closing of be specialized then you you have a secondaries when move if still you kind next investing. of So, just kind part And would the expect of guess or that, October quarter? guess a this quarter? would first is the co-invest and beyond I anticipate to

this. investing be obviously You'll

say, then in fundraising just year? fund credit am of for And trying beginning what follow-up. what get we the sense funds, marketplace. I have should the maybe a to next we end strategies year this thinking, have thinking I specialized year, ahead within the a You to be the as the of move and a

Erik Hirsch

Yes. Thanks Rob, it's Erik.

that. tackle me Let

closing. so market fund, tend October in those do as is your with said, have to what So to first tend we we comment the XXXX, rolling, until we that just on secondary

We'll up be we [Indiscernible] and obviously investing. in transactions is comment investing So running made, that retrofit capital. already actively given continue fund that has invested capital. the to now

we'll period. that as in And of decide so pacing we to opportunity what kind will the decide ultimately into start set capital time to the clients for really what take

just from on right credit, vehicle other vehicle, XXXX a perpetually essentially into the The piece the that the because we essentially XXXX vehicle. remains slide just open

kind clients of understand there getting spending, know, on of Mario's close the But as there increasingly into. depends kind raising to you close depending earlier so opportunity just is interesting, spending. the going the we And client think we're again, And can raising you and up more you or when comment, to on want as set that. what end sleeve

been and seeing not again, market of of So pockets there. distressed a some of There's you're the dislocation different certainly opportunity past. sort than this capital. in has And it lack

is there looking of for So capital lot opportunities. a

the now you're capital And matchmaking basis so right just opportunities. game matching with of playing

In the to year, continue up we of we usual, deploying of that sort in it's next as past, as just those going And as restart fundraisings. again, sort finish of inevitably capital, on the we we finish an particular vehicle for fundraising have happens as whatever series basis terms of ongoing for will the I of business what the as think to be rest is.

Robert Lee

accounts. of the kind on some trends Okay. maybe And separate parse there. If we maybe the then of

the can I be so keeping intending may I they're the -- is from re-up, then them, the mean to think coming clients’ time? how growth color of to is over flat? new growth maybe of much from increase as And any incremental just re-ups, are difficulties]. how much to upsizing? to much of So commitments you they coming compare an trying think their maybe existing committing opposed does if there provide size to that maybe just of commitments when kind how What [technical client of I'm also clients of So

Mario Giannini

out existing I Erik mean, client earlier, some of the XX% pointed growth Mario. as from our it's of is Rob, base.

clients So the months really two it's as of on we of The downturn. It's shift in for number it's creating we've that seen don't is them with in down have sitting more process, the or a any shifting, discussions the re-ups, a than in and seeing are terms invest a multiyear and see private significant with you account this same. what early that market much other substantial in not But a pretty how before. think to want the you they separate of beauty markets. client either staying increasing framework we're and

response trigger point not event market a some So oh say, down a that have do when planning in it to And really they their gone the enough assume recall, a would downturn alter to take have of at And that it. a everyone significant process. I simply them markets many lot. revisit to as to have

that. So, in portfolios that the illiquid account of program And illiquid, separate investing clients structure around most assets. know they're the are and and so world they these their their

to secondaries investing think depending XXX% So XXX% a or lean, lean But opportunity credit more just oh of in there. alter because rather any go not even saying I it's of to from profile. terms not that's alter saying, and change on they fundamental shift a in where now in a here better really may going that. or that's terms clients there They is I'm fundamental I'd my more

Robert Lee

maybe It that kind Any were looks this you may they kind that were due when a that upsizing slightly are down. to kind about hit range of the maybe a rates do Maybe increased AUM years seeing be calculation. that, or the is of in that of before business modestly of overly in kind clients then last making pre-crisis? simplistic, we around competition? color two part would accounts environment, fee what over trending but we thinking trends follow-up, obviously, just separate commitments, like if the the And the this second missing be in simplistic great. sizes, as Is fund that

Erik Hirsch

Erik. Rob, data, years of the just and think us, are that it’s How Look, us, you it's private like. driven sort been you and big market it's and last and industry pretty seen I of not look allocation this growing which assets, couple higher. has class the over to kind at of driving models Sure. we commitment their look can have it's higher any what by showing really to of factors. When two also you think their about asset substantially, what what does size drives is plan their obviously pool allocation desired allocations

So both of those rising. be have been to things causing

a XX% on all if is giving seen But our fee compression getting we're is doing remember, dollars. side, fee from then existing have little coming of you account on separate On us incremental bit the again, side. of client clients, more side certainly the the growth the

their And their paid frankly, total increasing. is to and so account, us revenue

we're folks that that shouldn't managing So it's would to of that's those want our down, in accept not the pool assets growing. place, place. systems From to a the surprising. thing fee as place, coming surprising is the from see It already rate actual fine the to provide perspective, and because the in in frankly a team's the managing customer, processes already relationship for perspective, the are are already be

talking relationship. we're flowing that as a dollars is of result about So in all incremental

that from our perspective, a so completely And acceptable off. is, trade

Robert Lee

for Thanks stays hope taking my well. everyone questions Great. and

Erik Hirsch

Rob. Thanks,

Operator

comes from of William Blair. from Chris question the Shutler next Your line

Your line open. is

Chris Shutler

us morning. know early a us the as or big Good result about But any first days more maybe permanent expense on budget how guys. side I you're thinking here. crisis? on travel there just expenses, sense the are the Maybe impacts remind of a it's And that Hi, is? give general

Erik Hirsch

I'll the for Erik. turn a it's the Yes. T&E. actual I'll then and to on specifics Chris, tool start

more not a this. sort around no, level, we're permanent at think much anything I seeing So of macro

that sort certainly to like are get offices that the employee our a that gauge environment, for while. with we're work stabilizes, of have highly everyone base I one work want increasing to as that is is a into say a environment, continue environment. situation frankly We and people to in I to will to not some offices from some with home foreign of believe ultimately, seeing return work we're return seeing non-U.S. think as we'll that particularly back certainly a culture if want ours our what collaborative. That's believe our any people part But a will

clients valuable, fact the goes about around again, in The to a real customers change by we've to dividends, And think investor we only to Mario time permanent you is, piece enormously mentioned tech and huge comfort. those is is basis know in to the saying, as absolutely not work not the off like a we're long systems a to I the lot that. a information because continue answers around way provide piece. of data provide them, but providing this been, who asking what to mean, seeing not have that So happening. kind or been is actually is from granular I that ability earlier, misinformation has home it culture you I the any as the the paying are in something as see connectivity, And kicked from there a on of

still in again, mode kind usual. we're say So as growth I would And of here. business

again, be strategic how up to And capital, thinking other spend we so thinking hires. whether other about opening tactically we're about offices, should

thinking still frankly advantage. use are how environment market expand, our this about to continue and to and We grow to to

to piece you that answer. on specific early T&E the the get to Atul For over turn

Atul Varma

Atul. it's Chris, Hi,

little has So expect that seen I think our quarter. T&E you the And of our G&A. just a as is way to peers would it's with this reporting, think you have down as T&E XX% would come about and under

not depends and like from But so said, markets very overall all it's it how scheme open things, And the up. in go the a things Erik big on where here of number.

Chris Shutler

to companies? kind of able are the the to on for space. private -- to of market portfolio equity firms? Maybe it's just powder large will their Thanks just And one. Thanks. firms, that. being smaller out what your there thoughts one just middle then in self-help great. about firms Okay, small updated more provide guys and Clearly, dry the other what equity middle I'm private be particularly fine, with market the but all some

Erik Hirsch

It's chime kind a unlike capital is in constraint not that where Erik. crises I'll might issue kind would and start been say that here. certainly there's on prior then We of of today. Mario the

dry look you of entire kind at the if of number across powder at kind about across all asset So rounding that class $X and trillion of is capital. running geographies,

all has do But everybody know, want. not that general the mean doesn't of powder in lack partners you that as that creativity. dry they Now,

The And actually new to of are to being distributions kind easy, use requested has seeing ability been opportunities. of times so borrow we're and amend extend amendments very periods, rates variety investment or or ability like go to this to in a relatively create the investment obviously friendly. actually

so see fund that that the question a business no rather think access mean the or going strategic be, inability to we're manager there's So of an but that decision not decision because to to those that we away, think go -- model going we that makes, tactical companies it's some but not they result are believe I is capital, a viable.

me Let Mario wants on. and there stop add see to if

Mario Giannini

and the the thing is, different larger managers. from would small use is mid-managers yes, that set, I toolkit the [technical But difficulty]. on Chris, Yes. the add skill

Operator

the for interruption. Mr. Oh Pardon disconnected. has

We reconnect. will attempt to

Erik Hirsch

happened just not must've down. still so what that It's I'm sure line here. gone Erik, I'm

miss that. going my was or So wasn't I we're to line My for his line. Mario's on apologies. add sure it if

add to those. question, if no a I'm So, there's happy on there. follow-up But take

Chris Shutler

No, I'm good, Erik. lot. a Thanks

Erik Hirsch

you. Thank Okay.

Operator

the Cyprys Morgan next Your comes of Michael question from line from Stanley.

open. is line Your

Michael Cyprys

of you firms taking about brands follow-up. Hey, thanks face challenges earlier some and had for the smaller the industry. that of spoken may Erik, the power the in

sort that what So on ago? are set you you or front versus having And today impacting the dialogue inorganic say for just that XX curious see months of six how opportunity growth?

Erik Hirsch

sales lightly. prospects again, the months could we part and this nature our are and again, is, take our that that sort think or some again, it's large stage had finish years. the it dated, and years Because them they months industry our two is of -- again talking about months. taken and get amounts three of And have measured early of contracts In in we're sales of measured line. it cases in that of don't those to talking we're across is be cycle this long team kind capital of -- just so I questions very about

some some to opposed go new or something I gets world, together That as about number think And that is it's driven a pre-COVID institutional world, to I shortened the a going they I driven wanting of to because going relationship getting dating, and et people, said, by think cetera. issue time a already early. need have relationship think up So that the in again, person a perhaps what have bond again pattern. world pre-COVID try by meetings, mechanics this bit trust price, still you're that a try there decisions well get is okay, thing. to offices, else looks going perhaps do other lots make our don't to who perhaps all you choice were doing who And in of form formed, if the is kind In a post-COVID were strategic how that bit. are cycle in little doing people, world, that the of But was for like you to and months think around to investors that. newer little belief of a of to of a again a in around,

substantially we ‘XX showed makes through to to to ‘XX I and trusted data reputation and we diligence I ‘XX, kind get think provider timeframe, our think easier know grew of it sort of us. because partly in of mentioned that that us that the

we actually of sort shown and sort that providing times brands that people us think, to big of has of in that. And So certainty. early of stability trends, history to we a specific but sort point crisis, little and certainly to think again, flock we're

Michael Cyprys

Thanks. Great.

Operator

back any closing no are questions at to There I time. this further comments. for the call the presenters turn

Erik Hirsch

stays Erik taking us. is all appreciate stays engagement. just time the I join healthy. This to you everyone much. the Thank wishing well We to thank appreciate We care. you again. very Take want for and the questions. We're Great.

Operator

today's concludes call. conference That

disconnect. may You now

Hamilton Lane (HLNE) 28 May 202020 Q4 Earnings call transcript