HLNE - Earnings call transcript Q2 2022 | Hamilton Lane Incorporated

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Hamilton Lane Incorporated Second Quarter Fiscal Year 2022 Earnings Conference Call. At this time all attendees are in a listen-only mode. [Operator Instructions] Thank you.

Now, I would like to welcome Mr. John Oh, Investor Relations Manager. ahead. go please Sir,

John Oh

and Good XXXX welcome will Earnings Giannini, Vice by Gael. Lane be the QX Mario Chairman; Hirsch, Erik Fiscal Call. CEO; Varma, morning, you, CFO. to and Hamilton joined Atul Thank Today, I

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

discussion as a please filed the subsequent For these of review Lane’s we risk risks, Hamilton in fiscal factors with reports amended included the SEC. XXXX XX-K in

non-GAAP to the Shareholders important will the website. business. section made performance presentation be referring we those can Lane that our materials the in to found be non-GAAP measures We earnings available GAAP in assessing of as view on of Hamilton also of the measures Reconciliation

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

year to $X.XX the quarter. this per dividend Mario. I’ll now over targeted turn also the declared XXXX. a Equating that, share have per We With $X.XX share for fiscal call to of

Mario Giannini

another calendar year, Since and work I for good firm, Hamilton of overall and base employee hard growth we’ve supporting quarter their members are pleased growth proud pleased by and Thanks, morning. the our beginning the was number dedication, with increased XX, am success. of of the more the John, welcome of team a continued the our I’m and for It and new than we our franchise. strong to Laners. also clients and our

turn me our footprint, assets footprint define which stood assets of AUA, here our was and for asset Slide asset diversified for at X, $XXX as [Technical billion to our the specialized Let some $XX client under highlight or management quarter. across AUM be long-term total quarter represent came both the region. funds on Total we we XX% under Beginning sum continues type, growth results which the to AUM, advisement. growth client size geographic accounts consistent separate customized Difficulty] trend. our of from year-over-year, billion and and and

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

our in that type region. and AUA, similar As year-over-year, $XXX from or XX% was which at of geographic to came for our billion growth AUM across client

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

Let with having to now evergreen we talk our me gears are shift success continued the and platform.

open-ended on evergreen semi-liquid with platform those products, investors these private markets the less structures. through the exposure immediate call channels direct wealth our For the and to familiar private provides benefit with individual of and

X%, average over we and a a deal-by-deal on depending appreciate as at deal XX.X% interest across the a value. the where to portfolio in note important on permanent X% of management represents is it grow basis. rate or The us, management asset to net on fee-earning carried we points, as fees earn net inflows and For earn values type, either this are grow able assets basis fee hurdle XXX AUM, that of platform and

invested As exposure contain dollar eligible is every these are no and for vehicles exclusively carried interest. transaction-oriented, primary fund

additional availability [ph] of to their XXX,XXX aspects our the growth. appealing as wide see minimums fleet. these for of investment products broad important We XX,XXX the international of pillar investors. an One our is range Today, to this our accessibility U.S. for a fleet are and

this limited private access robust. to opportunity with $X platform access capitalizing billion and [Technical solid As believe established appears and The and to that vehicles private number demand on ability being the seen of XXXX. monthly the million with for segment Monthly to was market look this effectively. We have a tailwinds. in that momentum this platform inflows. continues managers very Difficulty] and attracted the positioned Difficulty] wealth small flows with and had in track well the reaction historically be remained continue date exposure. efficiently grow of remain as who’ve benefit [Technical We the record have who a from to market confirm general and end demand very to of size strong the this net and group to to investors There $XXX scale of from growing we into over as are to our market to very forward are head and exceeds markets

it Erik. turn over now me Let to

Erik Hirsch

you, morning. good and Thank Mario,

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

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

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

AUM new adding customized new two, clients; three, same specialized key and time raising in separately, continue Taken our two winning by came four platforms; of these to fund existing segments specialized came existing our period, be accounts, driven from funds. one, $X.X net fee-earning growing funds. over billion and from re-ups the our $X.X and four, separate components: our billion from clients; Growth

Additionally, remains rate our combined fee steady.

stood separate $XX.X XX% months. AUM accounts Slide the our to growing from XX at Moving past X. customized billion, Fee-earning over

We continue and institution across growth coming the type, size to geography. see

As it client of the this our last into months, base gross than remains from of over AUM. in of this client separate a fee-earning inflows XX existing XX% came Re-ups accounts achieved our customized relates the base segment key the more component existing to growth we’ve group. from

expand by a provide In a geographic investors our opportunities. invest that in to re-up re-ups, Mexico. From to I’m adding we for base we class. to proud this first in expand we continue addition from yet client our relationships, say who to winning global brand-new base standpoint, to future footprint and and asset turn, past which, client out quarter, continue this have our seek welcomed growing

Moving funds. specialized continues to Growth to here be our strong.

robust, rest We the demand investors of the from our like are executing globe. around the suite product business, diversified well remains coming and across our of

resulting XX% AUM. XX the in Over months, past fee-earning $X.X we in achieved of an inflows increase billion, positive

quarter, billion. million for brings the this direct this fund, our as fiscal fund approximately we $XXX $X.X close our commitments the co-investment for LP little fourth held close over and total fund, a a of raised During equity totaled to known formerly

globe being are shown the with demand date We pleased the success the this strong product. for around to and

market this have and product, raise through to We first closing XXXX. in of the so months to be we October XX from complete for expect the

number have are in equity funds many are direct market. currently aware, As to we fund you specialized our of a of that addition in

already closed are raises series of the in credit capital we collecting for in XXXX, direct of vintage that product Our recent every its the capital year, series. essentially most March and next given process

in raised a of size strength billion. and line overall a single interest. from additional across positioned our platform of a closings to providing well our great It lineup, we’ve by We $X.X to our subsequent announced to our of specialized to fund, end largest investor demand grow. interest future amount growing had look ever types our attracting and addition fifth just strategic the the continue section interest Lane almost secondary billion, fund was also infrastructure process be volume a secondary this solid Hamilton you to in And We show to also was announcing there continues launched of forward that specialized raising deal quarters. provider at to to have are is last transactions and be The fund and in continue I’ll morph product secondary second fund. lastly, space. That updates fund the fund fund, in testament as strong of Investors space. also previous newest the solutions the impact the high. and we sixth evolve $X this we occur our quarter is continues with

in close fund a the quarter prospects the about we excited holding are for sixth XXXX. of first anticipate and the first We

with first raising We we forward will updates. of the fund, the have providing from finish date XX that you to future and months look close to

access iCapital, The last our through XX, valued million Let this me billion. to round raised $XX well approximately update And now with investors global quarter strategy. sheet valued generating for that, million. from their strategic On our reminder to a investment. to The return XX original investments at announcement democratizing is as initial balance investments of is $XXX new opportunity gain the existing as flowed $XX investors, made July since recorded million financial now that announced an quarter’s $XX in on unrealized a had than I’ll alternative investment in provide platform, on Xx at with and continue new for about impact on a two partnerships. number we this where but begin million, quarter, results. individual this months technology iCapital, of approximately take an exciting growth our financial with $X leading less a we iCapital technology-related

in the financing had Canoe. of announced we participated February back XXXX, round in that Series we for Next, A

mediums our with venture learning is streamlines widely. customers. machine document Canoe refresher, a extraction an and a cloud-based data data joint Canoe in the class collection asset collection reporting S&P along with around can vary As complexities Hamilton and that PMC, are where Lane standards technology both

investments. we to their LPs helped Blackstone limited the out and systematic ways technology one solution In and both their grow like data and with portfolio Our general forecasting. KPIs. better to the September was Ultimately, to and GP of an Carlyle of now technology create completion partners. mission Cobalt Canoe Lane managing to benchmarking analytics, what called and early with underinvestment Series we XXXX, investment monitoring partner companies analytics for from key oversubscribed Canoe. capture and and that extension of diligence Hamilton exit beginning oldest in XXXX, both to our a Hamilton our who that set in was Shifting LP validated provided to fundraising SaaS-based GPs that performs in We are led offering. recent At has at on find Cobalt ability February of aimed us service address to further Lane markets. their fund performs control X was the private also purchased helps partnered the the had company and of And Lane LP data market by which a the clients to Bison, of flow with round platform. private providing Hamilton be with announced a a A believe analyze offering. develop Cobalt Cobalt process fully provides portfolio technology Bison goal cash

fully relationship as offer growing rate. service that part We and revenue double-digit contracted resources. team it as and a technology, Today, now supported millions clients. LP continue Cobalt customer and Cobalt at with sales dollars support as LP of internally includes dedicated to LP a is broader is is nicely has bundling stand-alone as by well of growing of a a both increasingly Cobalt

success thus there. with and for are holds what excited with We LP the the we’ve far pleased are future Cobalt achieved

with Novata we to in Now Novata. October of a the public and data markets S&P arrangement private being innovative rights Oman FactSet. October remained technology have and Lane announced. and solution Directors. a seen newly Foundation, the will announce for Bison their On closed, disclosed, of chain Hamilton of Yard store, the thesis analytics private driven entities XX, with shareholder after is that Cobalt built FactSet, Hamilton our to an data a and launch and And markets. the with on platform which consistently terms the important data I’m creating corporation the exclusive is that to represents to flow Across pleased GP Lane, announced Having provide still architecture value will Cobalt the their called independent, a including the ESG complex quarter. partner need our be is services Lane partners. software. new continue component Novata of are secure Network on of does of for Cobalt who the original on collection transaction key the FactSet to on X, important private formed market open investing LP move Bison selling that extremely more most Cobalt continued the growing benefit companies Hamilton world-class Ford LP and and transaction a now a data. result consortium initiatives $XX are to a report with Cobalt and creation allows continues GP, further metrics our through them, and transaction million meaningful as see gain, in the remain for unbiased markets, you such analytically we’ll problem. a companies lenders consisting shareholder and them it full software This of intuitive not an of around investors, based validates supply firm and joining ESG founding and investment. the to that and private purchased private two an in measure their Board standards, successful ESG Novata while financials flexible LP. exit collect and reporting data to platform benchmarking. may customers, I’ll next and GP have I’ll while our now begin to recently

about are we data successful choice and around it the offerings. We that another and partnership this new example remain in markets the serves believe partner excited investment of as private and building technology

newest for investors our experience the TIFIN managers, technological investment company TIFIN’s on wealth touch several portfolio and focused evolving are meeting investors. adviser advisers Answers Financial shaping data a unique on recognize companies companies MAGNIFY, platform and individual that individual called strategic TIFIN. a intelligent to or technology of investor me learning RIAs Their journey. and both including and utilize analytics future provide let arming solutions Totem fintech in needs of Lastly, support of that intelligence smart and the and their of operates individual investor. is distinctiveness the by financial each products the to power artificial with the the and tools, companies, on

Management includes the Board the will the JPMorgan, and CEO Lane CEO Broadridge. the Strategic of Hamilton investment, this of part As President join of Morningstar Advisory that already Asset of for

a As is for be early you in further that earlier, growth Management such our fuel the we ways Wealth to comment being priority private our into bolster reach with heard for Capital out will and to efforts of strategic a and to XXX distribution Wealth Mario Private space. brand acquisition the and U.S. continue to the continue in will TIFIN markets us, We’ve success deep extremely opportunity the deal investing believe and of private example had one channel and robust. great seek wealth our

good the turn excited and the partnership Atul to financials. cover forward that, company and with future. it around about newest more momentum are to sharing I’ll look in over news the now this And We to

Atul Varma

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

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

into to compared recognized quarter, $X.X was our the prior fees retro period, million fund secondary the driven in revenue $X.X of to latest will have million X% direct specialized evergreen by almost on relative year from latest or in $X.X along our direct Our current limited latest year raise our date our the funds the period with fee billion equity period $XXX to that million increased inflows platform given funds. be prior fund. from retro prior been turned Year-to-date, in year equity

April separate and [ph]. due come that aware, fees year from customized new from subsequent increased the our of existing We clients. see expect management Revenue $X.X investors the as closes XXX several other and the close with of reporting quarter the into in to likely as period back to to direct which prior of fund in re-ups our prior are retro to we close. Capital by addition our funds have related additional acquired equity in from fee compared of million of period products offerings Therefore, increased to And dating closes to retroactive a the fund. XXXX. hold $X.X typically accounts by fund managed to many later we raise million first you the pay that spike incur subsequent driven the associated for latest of compared accounts year just funds Revenue generate pre-existing revenue fee to in many team you our reiterate,

increase fee. saw was period distribution compared The of $XX.X management revenue In or year-to-date we million total year final million component Incentive business. prior the $X.X of in our addition, a our revenue. in revenue to XX% incentive fee is

Moving Slide provide unrealized additional carry X, detail to our balance. on some we

the continued balance million Difficulty]. remind we to during prior as [Technical from control is fee Unrealized balance in positions positive thus million. year the Given even and valuations, up of stands period. XXX% don’t timing carry don’t now just trend that recognized $XX.X everyone, control incentive the at of And $XXX these we the

rent from period. expenses million million, benefits the compensation with total G&A and with growth were as fee-related prior versus expenses expenses, $X total earnings our result to the a In new increased with which expense $XXX earlier, the regard our the Capital decreased year margin. up were increased compared million. prior year $X.X we along associated Our with revenue $XX.X growth included XX% period along discussed of the in headquarters

balance Moving to sheet XX. our on Slide

separate clients specialized the largest investments is balance funds. alongside asset accounts in and on customized our sheet our Our

balance important to sheet continue term, we’ll clients. our long as rest liabilities, increase continued our questions. to regard the year. of continue to for And and In we of with growth, the debt joining invest the our our an fund investment investments even up open the the with more view call, we happy levered used for capital in alongside and to are this we that, Over in component earlier these be balance to thank

Operator

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

Your line open. is now

Ken Worthington

continues do to environment FRE starts morning. sort as for margins this look bumped to first questions. costs good and And the emerge? margins and up post-COVID over to as on grow? should the FRE new this one of fund Or quarter. other given margins guys, normalize dynamics, Maybe weigh normal and next Thank Hey T&E taking my the like business you say, margins. years? on Is we see the start to two what normalized T&E the fund

Erik Hirsch

Thanks, Ken, a we’re today. still take environment I mean clearly it’s that. non-normalized I’ll Erik. operating in

about think about think so I And I I when two look things. margin,

there. I think, one, some experiencing think and the it we’re expense non-normality is piece, I clearly

or when think, that I returns, determined. still so to if And is be

from rising I to that on in think you wages. pressure starting see the players thing clearly you’re market the other and other is have heard

while management managing our – that think done views team don’t I I think so that, job pressure expect good And I we’ve to is going a of that, that continue.

there. so associated with rising costs be best going the brightest out hire And the to sort of to and some there’s continuing

flip real future. specialized strength weighing to see would Now, mix of potentially of on that’s asset that funds. sort sort in flow of the side we margins continue on as is The what be the

fee both As, higher well margin. are with those higher levels as coming as

of we normal suggest business here pull overall, I running kind and up. tightly, I’d of today, new not say, at business, certainly wins have XX a for job to a our I or the we I a strong that as managing so doing the see new management back. it that’s us. some is think would benchmark of think But And sort helping

Ken Worthington

as of And sort that. for bigger bigger clients re-upping. noted, distributions suggests gross and that you Thank are you sort Great. of then sales

Like bad the two the seen do this mature existing to for committing of the maybe actually Given look? then how over from rule Are pace newer and see re-ups next thumb committing Like less? the like, their of of clients? what do what does we’ve margins environment? that compared there is of the terms ultimately, What as sort you they pre-COVID seasoning re-upping mean same of say, clients and does year your look and fees these committing they’re more, or more client indifferent? they re-up, parts good, what the spectrum. a Thanks. re-upping or in different base, of on And

Erik Hirsch

Sure. Thanks, Erik. that. stick It’s Ken. I’ll with

driven. I think is the it sort client-by-client the short answer of really is

our maturity of a clients markets each their different around level So private program. in is of

at Some target; are below are some them dramatically target. of

so X lockstep developing. their around I a a growing and means kind program re-ups the market are there clients where steady is in see denominator. want that’s growing largely see market private think markets, to pacing kind That program assets And you move on to real with in how positive, allocation a state how the public to you where their that a the think I denominator. macro people being about performance that think of very said, world is a And of in the mix of plan due and dependent numerator truisms even that of maintain needs to

to to few are have years, have a we’re So for as past and the say on that fair I think flows. generally, and that tends experiencing positive upwardly moving in now markets it’s that impact rising

are we that. seeing so And

positive the is Your sort margin question end rate from a on perspective. fee back of that

structured. business. we’ll costs margin is servicing stickiness very us because, the again, the our lot and heard that have The for You’ve part part. enhancement powerful I are to before of say, And already of important in baked to itself does client been that a lend of some continue say and a re-up sort a re-ups mean,

extent additional that’s to just you scale. of benefits that, is providing that client capital, so good providing the And

Ken Worthington

much. Great, very you thank

Operator

UBS. Adam Your of next question Beatty is from the line from

open. is now line Your

Adam Beatty

around a taking Hi on the just the good accounts. for you actually discussion questions. Maybe morning. Thank follow-up separate

marketplace newer in maybe market others? the allocated or if you chunks wanted market clients among, Just either under but of business up of or achieved allocation, how total to competitively? you. that you’re addressable from Are that that still they’ve a in general, around, large how institutional more of and allocations? more that among will, Thank get seeing your Or level there sense you stack that winning your just does you’re do find certain are maybe and

Erik Hirsch

to Sure. mean here. dominate It’s Erik. And I don’t

bit in of our microphone having room. a issue a conference We’re

So I’ll to best do the my he on X Mario channel because this. taking X this be would

as newer think surprising look and surprising, the the that’s we kind still I we’re them call, asset do simply we think the you think heard from, that to we to I continues the and One, entered number continue think, to of I say people, see not of now a to has but across helping been not I driver base, that that us realities. class, you’ve whether there yet a for client as a regulatory couple frankly, you many class, just to come noted – on of because that. the have yet or whatever they’re be us, be entities been, continue whether reasons to asset or into benefit of that’s entities finding are surprising

rise you the about asset show market think, as studies, and to continues one studies showing of is around the forecast sort that. think not our that to in targets, do but interest all are and think the and class sort of then addressable I studies I market macro

the segment underpenetrated don’t frankly, of equal hugely into noted, as product access market. equal I a segment, Mario success. management That, and where the everyone evergreen going a addressable think the of that think kind or in now big experiencing is getting market what growth situation I it’s channel. on, it’s wealth a we’re is have right massive to is

brand right right product we’ve execute. in success we’re and that sort to got fact build that have you’ve achieved the think, I ability do to continue the demonstrates short to and we future. positioned to I order, the in now clearly And think and think that the do of well that the I to have right the have the

just opportunities. of we’re I growth there, a think amount seeing tremendous so And

Adam Beatty

really That’s meaningful new basis? schedule Thank business that having step-ups it we’ve Mario just and a quarters, the the about Thank And Hamilton growth mean, and the stepped sustained And of up the re-up this with excellent. Erik. a like Is the rate, few around level given I launches of year-over-year additional the and in to and evergreen or of you, around just or a at seen fund last sustainable for then terms reasonable accounts level run product Lane. Is over gross on the basis? closings. success and separate close on us somewhere think and trajectory? rate new you. inflows organic

Erik Hirsch

I’ll there Erik. again. It’s stick Sure.

other of be across here. asset all public mean, I a I think in factors. will, including. there’s is of a to classes, that I that and couple denominators, expanded is kind growing one of markets, the ours rising you’re is environment flows earlier, forcing, macro which that mentioned again, tide Successful you if of kind

on think tide some rising level, I So a element. there’s

to think a most kind all pieces seeing I specifically, couple the us really of For notably, start cylinders. are But of I point hit to funds. of you specialized on puzzle the would

It new as is both past, impact and we’ve which already products, had things effort really an add success of sixth time. biggest the third to point retail just to areas side. find brand-new the there said X would I as think into in example. with And out is, done to the growth. like infrastructure. there, try products again, that And doing the to for with the past is I back we’ve sort that to is now our our with then job as we’re secondary And our for we’ve franchise expand

traction. good of are those so And all gaining

investments We traction the these. us good gets a and data of and of technology. those are we’ve they’re all I supporting helping from of across this job apart think done They all business. the and separate kind kind to fueling of as view core of what’s business; with don’t those

strategic these different these So different investments. partnerships,

All of of together us I think, propel coming are sort and those, forward. to success help generate the

Adam Beatty

appreciated. Got great detail. Thank you. That’s it. Much

Operator

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

open. now is line Your

Michael Cyprys

ask to about Mike Great, Cypress, just SMAs. thanks. This the Morgan is I wanted Stanley.

coming I of geographies new about is think they SMA around of the able to elaborate new size, of clients the channels, clients, were what sort was these a hoping these mentioned I you what color you of on on flows XX% could share side. profile the Just the maybe had you’re from? sort any customers. are just from bit coming

I impacted coming had the in on new you that past, growth mentioned been think the the estimate clients in weighing has pandemic door. the by

for premier? if curious how is look kind of looks and subsided that that today out where Just new pipeline has that SMA stands as you relationships

Mario Giannini

Mario. I’m to going Mike, try. its

We technical the conference difficulty are having a room. in little

So hopefully..

Erik Hirsch

No, cut sorry, just Mike. the again, mic off

there. pick – I’ll tried, is I I but no the no is was success would That great think And news Erik. say it’s Mike, denominator. common up. we So there

the coming different the from are type, sizes. across institutional geographies, I think and different types different accounts institution separate

this emblematic geographies. business, I of the this asset and parts sort it’s by think NTCs to think desired us, needed built is shapes and sort I of network I internally. to positive all sizes speaks one, an the we’ve that institutions of different class would two to point that across being of Two, and very distribution of out

around the new offices. to to Today, We we’re globe. up continue XX open up

to And and so grow footprint that geographic expand. continues

since were invest we welcoming the in of that year. this of to We number resources. Laners continue firm the Hamilton new mentioned to a beginning Mario calendar

that distribution of making service and, course, reach whether all of there the of sort of that’s reach think we’re the those I that the investment to sure customers. to firm, continue reach, sort of designed is

as all So positives sort think industry the for that of both us for points of to specifically. as well I

Michael Cyprys

Great.

the here. bit Just question, I fee bit looking like a partner at a looked just follow-up on the if little P&L. down ticked It right. like more was rates a that they maybe little SMA looked two

the SMAs, just margins? how how versus you put today share the on any sort curious color we trending margin help numbers guess of revenue my that’s Any coming can about that the on around versus follow-up the around incremental that. Just should, pieces funds. on about history? How Ken SMAs is fee some in incremental think into the are there on the is of evolving know had you side? moving can asked But I SMA the then margin. I rates And FRE just

Erik Hirsch

Mike. Sure, It’s Erik.

you’re had SMA dynamic existing tranches. for think bit around little I a bit think re-up a that quarter. of there is I anomaly on some of fee an some caused the seeing little what the customers a with renegotiation We rate,

an it’s particular is occurring that I a simply that think in aberration time.

when that think basis, look you’re usual, at as no see there. there’s been to annualized that I going really an on you change business it’s and

on mean, that’s I we’ve margin, business, product. clearly, specialized better our higher true in are with retail fund and and the evergreen the this I margins particularly said before, think

of margin a that separate what the some pull to to And contribution firm. grow helping simply be of those sort to at happening rate, fund there’s But business across specialized benefit very I than higher is nothing so think that, accounts. significant positive margin driver of as the you’re new to continues tend a seeing that the is

Michael Cyprys

Great. question Maybe could. another to speak here, in if I

broader Just of secondaries marketplace. secondary platforms. number firms We’ve firm’s seen a on the acquire these

think other this you the perhaps have into of what are as and sort bring these and look curious, the on are do I Just funds channel, you focused retail competition more think the don’t landscape looking firms, could secondaries they to happen impact firms marketplace, particularly SMAs. as today, at

Just the SMAs broadly from across on into playing see shift funds fuse of that curious landscape, out? sort the you how your

Erik Hirsch

secondaries more the class. think and fact overall of to becoming important what part that asset Well, more is speaks I an the that are increasingly

said space acquiring the some we’ve market. with. been This note, growth So the that I franchises not already But there overall new acquiring. These into coming competing would cases, has had and are they’re is been in are it, you already in entrants and that significant. just

the all those exist continued where we’ve and that to have date the of already I to So franchises landscape exist. been achieved success has in think

pool that what it’s there. you is of really tells a capital big think I So that’s out

sort to have will We grow, of continues business. we the the or believe that. all to of being we’re and to our share really impactful of capital hopeful that that that share our grow. both don’t that pool But see as acquisitions noteworthy continue We

Michael Cyprys

you. thank Great,

Operator

Your from from is Blostein the next question of Sachs. Goldman line Alexander

Your is now line open.

Alexander Blostein

was little those space of management for du more retail been jour couple a season expand maybe Hi, a hoping question. you the channel. one, well. in quarters for for the the in as bit topic a Obviously, morning. earnings everybody. Good I Thanks prior the on could it’s wealth

house independent broker of on kind the you details What on the could the of frame seeing guys guys just the zone you dealer wire in terms if opportunity set platforms opportunity to you’re some of U.S. or yourself Specifically, number the distribution on? on platforms. are as side, side in help give more that us you set us see for and you get

Thanks. there. start could we maybe So

Erik Hirsch

start. the I’m this that basically been Sure. we’ve of It’s less U.S. to as and mean, two Erik, we we And resources to I that market XXX to team in to an at and noted, happy as of we already the years effort total, the our capabilities, kind added have. for direct bolster as acquired we’ve kind

I today houses. of it’s what that is the from is from coming entities. not note coming funds But coming is what large it’s I big would number of wire think, not from flow a

of we’ve and so yet testimony already built the And real the have we’ve sort a the had fact that, in that the I brand this to to that is building. success of scale tap that think, we’re into resources and we level

view really a is here ground this is that Our game.

some a big they us, you at to of ground look food sort and very if now how at And some that up chain. of sort operating sort sort those of have And effort, think out, kind of into way with our come that continue so you’d – different that very they’re with to that similarities I I have and built think started see scale. before we’ll we work of

model good the feel that. following, And sort a that and on so path of we we’re we’re that’s to

Alexander Blostein

a And earlier. Got question to then it. Great. maybe follow-up Mike’s

from a business, maybe secondaries co-invest. the about similar the talked just lineup You question just

position yourself you lack traditional for of some that the kind alts, co-investment core and players As on see term, is have does competitive we’ve a advantage dated do seen the over fund for better sort the co-investment time? about Lane of, you larger of some Hamilton that products that a for some of lineup guys? think of How Where you longer of some the opportunities. in the that of lot as marketplace the focus more guess, I

Erik Hirsch

that fund Sure. think commodity the think, precious you’re to them an a you get partner, flow that of when for good looking co-investments bring bog someone own a as a so in managers as to of approach a in to – mean can of who the you manager not down control think is your going what of sort of. or mirror And sort look, are for I as I team, if looking way. resources co-investor you’re fund I kind think

portion And equity bios, tremendous backgrounds at and manager so business. come But direct the fund actually from we’ve a team a in-house. look of the got them large if you

deal of that of choice So the professionals, primary we allocators piece, the stacks in a been access up a one of want fund remain and there, candidly, largest of done that, makes market and they’re primary the position as and experienced to important relationship obviously, more is of the think think, base world. the and continuing fund more relationship choice. well us and the other and their looking of wielding that partner base think more grow, and customer very is it managers we But sort us important sort capital further makes I that capital, just us. to kind to market to to managers to capital those capital and in that And fund deepen I with fund of absolute sort of having

Alexander Blostein

so Thanks much. Awesome.

Operator

Your question [Operator from Robert Instructions] of KBW. from line Lee is the next

line now open. Your is

Robert Lee

morning. them asked, my of but question. Thanks competitive the maybe taking following-up Good were environment. Most on for

So about comp talked pressures. you

but carry competitors specifically I the and down road. skewing, have changing larger some that that things towards mean You everyone comp been is comp, going your retaining as of skewing of think seeing, structure, larger proportions

alter partly out partly as evolve compensation of structure see is comp large having some need carrying impact? do current you larger are any maybe proportions retention, or any So that’s if competitors your paying to

Erik Hirsch

very I a on what Yes. model in kind we sure is we out Erik. kind a can run Look, retain. Thanks, player said, employees I than both think to attract different to making think Rob, keeping like we’re and the a of attractive other its number market think that market, dynamics every eye I of there. around That of smart close firms

you’re is not of partial model bases. what of are you lot a it of across That’s ownership and model. a sort their do sort where, you the think seeing our I and fragmented where own a is see businesses what employee increasingly

each We think the the only importantly, more with powerful shared aligns very equally with not one with model really it Our importantly, a but firm, for is other. us that’s one compensation the advantage pool, organization. economics aligns clients, our across employees because employees

And our change don’t a so dramatic see today, philosophy. we of kind comp need to

wage would are we we we that point is simply we do the environment. are see think a continuing – I in to and make see rising

think And change to responsive to don’t to need we’ll be a sort that. so necessitates wholesale But of I philosophy. that compensation

Robert Lee

That thank my was Appreciated. you. Great, question.

Operator

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

now is Your open. line

Michael Cyprys

venture a Thanks follow-up. growth parts equity If today, markets question. taking private and a have the private of the big the of at markets. More we for picture been fastest-growing look some of

view out to fastest and the next guess relatively think do still fast-growing might be amongst you ones the you which question resource very the think industry? years, of allocation which And to the growing? over And strategic the part within going private And subsectors do are growing be [indiscernible]? a actions does as we slower within three strategies on and look so and how your that I is, five markets but inform how

Erik Hirsch

Erik. Mike. with It’s Sure, stick I’ll that.

favorable growth environments space today allowing hard by predict take occurring that growth I that to those look are think that spaces mean it’s I see are operate growth and venture the you’re think equity filled to where I successfully. economic very out to that’s and going because

nonexistent like you of things and become XX sudden you the If that we areas. all have I’ll today, will much downturn, one basically faster-growing which tell in market space, distressed interesting now, they months more from a significant tell and that me are correction a a of debt, become

to slowdown going you’re massive pickup a a you tell If Asia, big in to and then that a GP. see for a Asian of in explosion me see for GPs Europe European you’re and growth slowdown going

happening and is economy. simply on that sort of based of part think I the with So economics what’s

deep I categories so predict. however, got makes expertise From and all all those And think channels. difficult those that of perspective, our domain of that to across we’ve

Similarly, open credit starts our the spend is go sector just all team big making and underlying we as into their have areas of we continue us if geographic why across credit group tell is those make geographic right a elsewhere. resource or across regions side and because jour not years you’ve resources from kind now. as it know your time why toggle nonperforming who you the on for this different going do you you nonperforming and got why sure and spend of time that to side, I is doing if offices and mean, If So performing of that a the the versus and do resources you credit. you du now, just to tomorrow the up to what world, we as depth become – the us team equity resources have both of investment investment five

Michael Cyprys

Great, thanks Erik.

Operator

Presenters, There are questions. no continue. please further

Erik Hirsch

we’ll our to soon. a Okay. appreciate very We quarter you Have speak day. time, strong support, from perspective. nice the Again, a the and for thanks everyone

Operator

with conference call. And attending. for you today’s concludes Thank this that,

now You disconnect. may

Hamilton Lane (HLNE) 2 Nov 212022 Q2 Earnings call transcript