−Removed: We are a global private markets investment solutions provider with approximately $88 billion of assets under management (“AUM”), and approximately $631 billion of assets under advisement (“AUA”).
+Added: We are a global private markets investment solutions provider with approximately $106 billion of assets under management (“AUM”), and approximately $795 billion of assets under advisement (“AUA”) as of March 31, 2022.
We work with our clients to conceive, structure, build out, manage and monitor portfolios of private markets funds and direct investments, and we help them access a diversified set of such investment opportunities worldwide.
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While some maintain their own internal investment teams, our clients look to us for additional expertise, advice and outsourcing capabilities.
−Removed: We were founded in 1991 and have been dedicated to private markets investing for three decades.
−Removed: We currently have approximately 450 employees, including 121 investment professionals, operating throughout the United States and in Frankfurt, Hong Kong, London, Seoul, Singapore, Sydney, Tel Aviv, Tokyo and Toronto.
−Removed: A significant majority of our employees have equity interests in our Company.
−Removed: We offer a variety of investment solutions to address our clients’ needs across a range of private markets, including private equity, private credit, real estate, infrastructure, natural resources, growth equity and venture capital.
−Removed: These solutions are constructed from a range of investment types, including primary investments in funds managed by third-party managers, direct/co-investments alongside such funds and acquisitions of secondary stakes in such funds, with a number of our clients utilizing multiple investment types.
+Added: In addition to our institutional client base, we have a growing number of non-institutional clients stemming from the private wealth channel, which includes family offices and high-net-worth individuals, who utilize our products and services to gain access to the private markets.
+Added: We were founded in 1991 and have been dedicated to private markets investing for over three decades.
+Added: We currently have approximately 530 employees, including 180 investment professionals, operating across 20 global offices servicing our clients throughout the world.
+Added: We offer a variety of investment solutions to address our clients’ needs across a range of private markets, including private equity, private credit, real estate, infrastructure, natural resources, growth equity, venture capital and impact.
+Added: These solutions are constructed from a range of investment types, including primary investments in funds managed by third-party managers, direct investments alongside such funds and acquisitions of secondary stakes in such funds, with a number of our clients utilizing multiple investment types.
These solutions are offered in a variety of formats covering some or all phases of private markets investment programs:
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• Specialized Funds :
−Removed: We organize, invest and manage specialized primary, secondary and direct/co-investment funds.
+Added: We organize, invest and manage specialized primary, secondary and direct investment funds.
Our specialized funds invest across a variety of private markets and include equity, equity-linked and credit funds offered on standard terms, as well as shorter duration, opportunistically oriented funds.
−Removed: We launched our first specialized fund in 1997, and our product offerings have grown steadily, comprising approximately $19 billion of our AUM as of March 31, 2021.
+Added: We launched our first specialized fund in 1997.
+Added: Since then, our product offerings have grown steadily and now include evergreen offerings that primarily invest in secondaries and direct investments in equity and credit and are available to certain high-net-worth individuals.
+Added: Specialized funds comprised approximately $24 billion of our AUM as of March 31, 2022.
• Advisory Services :
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• Distribution Management :
−Removed: We offer distribution management services to our clients through active portfolio management to enhance the realized value of publicly traded stock they receive as distributions from private equity funds.
+Added: We offer distribution management services to our clients through active portfolio management to enhance the realized value of publicly traded stock they receive as distributions in-kind from private equity funds.
• Reporting, Monitoring, Data and Analytics :
−Removed: We provide our clients with comprehensive reporting and investment monitoring services, usually bundled into our broader investment solutions
−Removed: offerings, but occasionally on a stand-alone, fee-for-service basis.
−Removed: Private markets investments are unusually difficult to monitor, report on and administer, and our clients are able to benefit from our sophisticated infrastructure, which provides real-time access to reliable and transparent investment data, and our high-touch service approach, which allows for timely and informed responses to the multiplicity of issues that can arise.
−Removed: We also provide comprehensive research and analytical services as part of our investment solutions, leveraging our large, global, proprietary and high-quality database of private markets investment performance and our suite of proprietary analytical investment tools.
−Removed: In particular, the data and analytics provided by our Cobalt LP platform provides clients with more visibility into the private markets, enabling them to more accurately conduct market research, investment diligence, portfolio analysis and plan commitments.
−Removed: It allows us to provide a service for limited partners with whom we have not yet had any relationship and differentiates us from our competitors in the industry.
−Removed: Our client and investor base included over 500 institutions and intermediaries as of March 31, 2021, and is broadly diversified by type, size and geography.
+Added: We provide our clients with comprehensive reporting and investment monitoring services, usually bundled into our broader investment solutions offerings, but also on a stand-alone, fee-for-service basis.
+Added: We also provide comprehensive research and analytical services as part of our investment solutions, leveraging our large, global, proprietary and high-quality database for transparency and powerful analytics.
+Added: Our data, tracking over 47,000 funds and $19 trillion in commitments through March 31, 2022, as well as our benchmarking and forecasting models are accessible through our proprietary technology solution, Cobalt LP, on a stand-alone, subscription basis.
Our client base primarily comprises institutional investors that range from those seeking to make an initial investment in alternative assets to some of the world’s largest and most sophisticated private markets investors.
−Removed: As a highly customized, flexible outsourcing partner, we are equipped to provide investment services to institutional clients of all sizes and with different needs, internal resources and investment objectives.
+Added: As we offer a highly customized, flexible service, we are equipped to provide investment services to institutional clients of all sizes and with different needs, internal resources and investment objectives.
Our clients include prominent institutional investors in the United States, Canada, Europe, the Middle East, Asia, Australia and Latin America.
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labor union pension plans, and we serve numerous smaller public and corporate pension plans, sovereign wealth funds, financial institutions and insurance companies, endowments and foundations, as well as family offices and selected high-net-worth individuals.
−Removed: Our intermediary clients enable us to provide our investment products to an expanded range of high-net-worth individuals and families.
+Added: Our intermediary clients, which also include registered investment advisers, enable us to provide our investment products to an expanded range of high-net-worth individuals and family offices.
+Added: Historically, this segment of investors has had limited options for gaining exposure to the private markets.
We have a diversified revenue stream from a variety of client types in multiple geographic regions, with no single client representing more than 4% of management and advisory fee revenues.
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Initial Public Offering and Reorganization
−Removed: HLI was incorporated in the State of Delaware on December 31, 2007 and conducted its initial public offering (“IPO”) in March 2017.
+Added: HLI was incorporated in the State of Delaware on December 31, 2007 and conducted its initial public offering (“IPO”) in 2017.
HLI is a holding company with no direct operations.
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In connection with the IPO, we completed a series of transactions in order to effect a corporate reorganization, which we refer to collectively throughout this Form 10-K as the “Reorganization”.
−Removed: of the Reorganization, we changed our structure to what is commonly referred to as an “Up-C” structure, which provides our pre-IPO owners with the tax advantage of continuing to own interests in a pass-through structure and provides potential future tax benefits for both the public company and the legacy owners (through the tax receivable agreement) when they ultimately exchange their pass-through interests for shares of Class A common stock or, at our election, for cash.
+Added: As part of the Reorganization, we changed our structure to what is commonly referred to as an “Up-C” structure, which
+Added: provides our pre-IPO owners with the tax advantage of continuing to own interests in a pass-through structure and provides potential future tax benefits for both the public company and the legacy owners (through the tax receivable agreement) when they ultimately exchange their pass-through interests for shares of Class A common stock or, at our election, for cash.
HLI has dual-class common stock, the rights of which are described in more detail below.
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Holders of Class B common stock are entitled to receive only the par value of the Class B common stock upon exchange of the corresponding Class B unit pursuant to the exchange agreement.
−Removed: The exchange of a Class B unit will result in the redemption and cancellation of the corresponding share of Class B common stock.
+Added: The exchange of a
+Added: Class B unit will result in the redemption and cancellation of the corresponding share of Class B common stock.
Voting Rights
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Giannini both voluntarily terminate their employment and all directorships with HLA and us (other than by reason of death or, in each case as determined in good faith by our board of directors, disability, incapacity or retirement);
−Removed: or (iv) the occurrence of the later of March 31, 2027 or the end of the fiscal year in which occurs the fifth anniversary of the death of the second to die of Mr.
+Added: or (iv) the end of the fiscal year in which occurs the fifth anniversary of the death of the second to die of Mr.
Rogers and Mr.
A Sunset triggered under clauses (i), (ii) and (iii) during the first two fiscal quarters will generally become effective at the end of that fiscal year, and a Sunset triggered under clauses (i), (ii) and (iii) during the third or fourth fiscal quarters will generally become effective at the end of the following fiscal year.
−Removed: A Sunset pursuant to clause (iv) will become effective on the occurrence of the latest event listed in clause (iv), unless a Sunset is also triggered under clause (i) or (ii) that would result in an earlier Sunset, in which case the earlier Sunset will result.
+Added: A Sunset pursuant to clause (iv) will become effective on the occurrence of the event listed in clause (iv), unless a Sunset is also triggered under clause (i) or (ii) that would result in an earlier Sunset, in which case the earlier Sunset will result.
Rogers or Mr.
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Otherwise, a voluntary termination as to only one of them will result in a Sunset becoming effective on the timing set out in clause (iv).
−Removed: Because a Sunset may not take place for some time, or at all, certain of the Class B Holders will, by virtue of their voting control of us and the stockholders agreement described below, continue to control us for the near future.
+Added: Because a Sunset may not take place for some time, certain of the Class B Holders will, by virtue of their voting control of us and the stockholders agreement described below, continue to control us for the near future.
Our Class B common stockholders collectively hold 81% of the combined voting power of our common stock.
−Removed: Certain of the holders of our Class B common stock who are significant outside investors, members of management and significant employee owners have, pursuant to a stockholders agreement, agreed to vote all of their shares in accordance with the instructions of HLAI, our controlling stockholder.
+Added: Certain of the holders of our Class B common stock who are significant outside investors, members of management and significant employee owners have, pursuant to a stockholders agreement, agreed to vote all of their shares in accordance with the instructions of HLA Investments, LLC (“HLAI”), our controlling stockholder.
The parties to the stockholders agreement control approximately 81% of the combined voting power of our common stock.
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The alternative investment industry has experienced significant and consistent growth, which we expect to continue and contribute to our future growth in the long term.
−Removed: Given our leading market position and strong reputation in investing and client service, our objective is to continue to leverage the following strategic advantages to exceed the industry growth rate.
+Added: Given our leading market position and strong reputation for investing and client service, our objective is to continue to leverage the following strategic advantages to exceed the industry growth rate.
+Added: Leverage our market leading position as one of the largest allocators of primary capital to the world’s leading fund managers.
+Added: Given the size and scale of the assets we manage and advise on, we are viewed as a crucial partner to the world’s leading private markets fund managers.
+Added: We believe we are one of the largest allocators of primary capital to these fund managers and as such, have established ourselves as a trusted partner whose relationships extend beyond just capital.
+Added: Our clients benefit from this positioning by way of unique investment opportunities and economies of scale.
Develop innovative private markets solutions .
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We believe that a broad range of solutions across almost every private markets asset class enables us to remain a leader in structuring private markets investment portfolios and to continue to provide the best solutions for our existing and future clients.
−Removed: We intend to continue to meet our clients’ demands for alternative investments via primary, secondary and direct/co-investment opportunities, which provide attractive return characteristics, as well as innovative specialized fund products, while at the same time allowing us to benefit from economies of scale.
−Removed: In addition, we intend to expand into adjacent asset classes, which will allow us to further broaden our solutions capabilities, diversify our business mix and allow us to benefit from growth in private markets asset classes, such as private debt.
−Removed: We believe we are uniquely positioned in the private markets as not only a solutions provider for our clients, but also as an important capital provider and partner to the world’s leading private markets fund managers.
−Removed: We intend to capitalize on this unique position and seek to partner with fund managers as they look to transition from private to public ownership assets that meet a select set of criteria.
−Removed: A special purpose acquisition company (“SPAC”) sponsored by us provides these fund managers with an alternative path to a public listing.
+Added: We intend to continue to meet our clients’ demands for alternative investments via primary, secondary and direct investment opportunities, which provide attractive return characteristics, as well as innovative specialized fund products, while at the same time allowing us to benefit from economies of scale.
+Added: In addition, we continue to expand into adjacent asset classes and newer strategies, which will allow us to further broaden our solutions capabilities, diversify our business mix and allow us to benefit from growth in private markets asset classes.
+Added: Examples of such expansion include asset classes such as private credit, infrastructure and real assets.
+Added: Newer strategies include investments in businesses with a focus on the core categories of environmental and/or social impact.
+Added: Diversify and grow client base.
+Added: We aim to continue to expand our relationships with existing clients and intend to capitalize on significant opportunities in new client segments globally, such as smaller institutions and high-net-worth individuals.
+Added: We believe these investors offer an attractive opportunity to further diversify and grow our client base because many of them have only recently begun to invest in, or increase their allocations to, alternative investments.
Expand distribution channels.
We continue to build a scalable, cost-effective global institutional sales organization, which provides us with a strong local presence in several markets.
−Removed: Our sales organization comprises our business development and product groups which are both dedicated to marketing our services and products globally.
−Removed: In addition, we intend to increase our profile with influential intermediaries that advise individual and institutional clients, particularly small and medium-sized institutions and high-net-worth families and family offices.
−Removed: We may also enter into strategic distribution partnerships with financial institutions in certain geographical regions and market sectors to gain access to their captive client bases.
+Added: Our sales organization comprises our client and private wealth solutions groups, which are dedicated to marketing our services and products globally.
+Added: In addition, we intend to increase our profile with influential intermediaries that advise individual and institutional clients, particularly small and medium-sized institutions and high-net-worth individuals and family offices.
+Added: We have also entered into strategic distribution partnerships with financial institutions in certain geographical regions and market sectors to gain access to their captive client bases.
As we continue to explore different ways to access alternative distribution channels, we are also acting as “sub-advisor” for financial intermediaries with significant distribution strength.
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In the context of these partnerships, the distribution partner often aims to provide its clients with products under its own brand, which we achieve by rebranding our existing offerings or by creating customized offerings carrying the distribution partner’s name.
−Removed: We anticipate increasing sub-advisory opportunities as we continue to target high-net-worth individuals and families.
−Removed: We made an investment for a minority stake in Russell Investments Group, Ltd.
−Removed: (“Russell”), a leading outsourced chief investment officer provider and global investment solutions firm.
−Removed: As part of the investment, HLA and Russell entered into a strategic partnership and intend to jointly develop and implement a strategy to engage in the global investment solutions outsourcing market.
−Removed: Diversify and grow client base.
−Removed: We aim to continue to expand our relationships with existing clients and intend to capitalize on significant opportunities in new client segments globally, such as smaller institutions and high-net-worth individuals.
−Removed: We believe these investors offer an attractive opportunity to further diversify and grow our client base because many of them only recently have begun to invest in, or increase their allocations to, alternative investments.
+Added: We anticipate increasing sub-advisory opportunities as we continue to target high-net-worth individuals and family offices.
+Added: Identify unique technology solution providers and strategic partners that we believe can help make us and the industry better and put our balance sheet capital behind them to form mutually-beneficial partnerships.
+Added: We view the implementation of technology into our workflows as critical to maintaining our market-leading position in private markets.
+Added: Given this status, we are often a sought-after partner for technology-oriented businesses that are developing cutting-edge and innovative solutions that will help grow and improve the industry.
+Added: We identify and develop strategic partnerships with, and/or opportunistically seek minority stakes in these companies and often, are either a client of these companies or share in a common vision that will provide strategic benefits to both parties.
+Added: Examples of these partnerships include Russell Investments Group (a leading outsourced chief investment officer function), Cobalt LP (benchmarking and diligence), Canoe Intelligence (document digitalization and processing), iCapital Network (high-net-worth fundraising portal), Fairwords (formerly known as Honcho) (governance/monitoring software), Novata (private company ESG data collection), TIFIN (tech-enabled wealth management platform) and ADDX (Singapore digital securities exchange).
Expand private markets solutions and products to defined contribution, retail and similar pools of investable assets.
−Removed: We believe we are pioneers in the creation, distribution, and management of products
−Removed: such as specialized secondaries, direct/co-investments and specialty credit strategies that are designed to serve defined contribution retirement plans and similar entities.
+Added: We believe we are pioneers in the creation, distribution, and management of products such as specialized secondaries, direct investments and specialty credit strategies that are designed to serve defined contribution retirement plans and similar entities.
Many of our defined contribution retirement plan clients are based outside of the United States, ranging across Australia, Europe, and Latin America, among other geographies.
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We have substantially grown our global presence, both in terms of clients and investments, by expanding our international offices as well as our client presence.
−Removed: We have built a significant presence to serve clients in Europe, Latin America, the Middle East, Asia, Australia and Canada, and we have offices in London, Frankfurt, Tel Aviv, Hong Kong, Seoul, Singapore, Tokyo, Sydney and Toronto.
+Added: We have built a significant presence to serve clients in Europe, Latin America, the Middle East, Asia, Australia and Canada, and we have offices in London, Frankfurt, Milan, Zug, Tel Aviv, Hong Kong, Seoul, Singapore, Tokyo, Sydney and Toronto.
In each of these places, we serve major institutional clients, and we review and commit capital to established local private markets funds on behalf of our clients.
−Removed: Our aim is to continue expanding our global presence through further direct investment in personnel, development of client relationships and increased investments with, and direct and co-investments alongside, established private markets fund managers.
+Added: Our aim is to continue expanding our global presence through further direct investment in personnel, development of client relationships and increased investments with, and direct investments alongside, established private markets fund managers.
We believe that many institutional investors outside the United States are currently underinvested in private markets asset classes and that capturing capital inflows into private capital investing from non-U.S.
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We expect that our data and analytical capabilities will play an important role in continuing to differentiate our products and services from those of our competitors.
−Removed: In addition to continually expanding our own database, we develop strategic partnerships with, and opportunistically seek minority stakes in, innovative solutions providers such as Private Market Connect (data collection and management), Cobalt (benchmarking and diligence), Canoe Intelligence (document digitalization and processing), iCapital Network (high-net-worth fundraising portal) and Honcho (governance/monitoring software).
Investment Types
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Primary investments are investments in private markets funds at the time the funds are initially launched.
−Removed: At the time we commit capital to a fund on behalf of our specialized funds or customized separate accounts, the investments that the fund will make are generally not known and investors typically have very little or no ability to influence the investments that are made during the fund’s investment period.
+Added: The investments take the form of a capital commitment, where the fund will call capital from investors over time as investments are made.
+Added: At the time we commit capital to a fund on behalf of our specialized funds or customized separate accounts, the investments that the fund will make are generally not known and investors typically have very little or no ability to influence
+Added: the investments that are made during the fund’s investment period.
Primary funds usually have a contractual duration of between 10 and 15 years, with the capital typically deployed over a period of four to six years.
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The private secondary market is a non-regulated private market in which buyers and sellers directly negotiate the terms of transactions.
−Removed: The secondary market has grown dramatically in the last 20 years and today provides a reliable liquidity option for owners of private markets interests as well as attractive buying opportunities for secondary investors.
+Added: The secondary market has grown dramatically in the last 20 years and today provides a reliable liquidity option for owners of private markets interests across the entire spectrum of strategies as well as attractive buying opportunities for secondary investors.
Institutional investors utilize the secondary market for strategic portfolio rebalancing, rationalizing overlapping positions resulting from mergers and acquisitions or providing liquidity when facing cash constraints.
−Removed: The market continues to evolve beyond purchases of existing limited partner interests.
−Removed: Today, secondary transactions typically fall within the following categories:
−Removed: ◦ Single Funds:
−Removed: These transactions are often too small for the larger secondary funds and brokers and can be accessed through proprietary or less competitive sourcing methods.
−Removed: ◦ Subset Portfolios:
−Removed: In these transactions, we typically target a multi-fund portfolio with limited information and/or transfer restrictions.
−Removed: ◦ Structured/Direct Transactions:
−Removed: These transactions typically involve the direct purchase of companies alongside an existing or new manager, including fund manager spin-outs and fund manager restructurings.
−Removed: • Direct/co-investments.
−Removed: Direct/co-investments are direct investments alongside private markets funds in underlying portfolio companies.
−Removed: Our direct/co-investment strategy starts with actively soliciting the managers of private markets funds in which we have made investments to offer our specialized funds and customized separate accounts all direct/co-investment opportunities that may arise from their investment operations.
−Removed: The investment team analyzes and considers each deal to select those opportunities that best suit the direct/co-investment funds’ investment objectives and create an appropriate diversity of investment type, industry, geography and manager.
−Removed: We generally make direct/co-investments on a parallel basis with the private markets funds and managers leading the investments, by purchasing similar securities on similar terms with exit provisions that allow the direct/co-investment funds through which we invest to realize their investments at the same time and on a pro rata basis.
−Removed: • Strategic Opportunities Funds:
−Removed: Our strategic opportunities funds are short duration, private markets funds that seek to create a portfolio of opportunistically oriented, private markets investments that generate attractive risk-adjusted returns through a flexible and diversified investment strategy.
−Removed: The funds seek to invest across the entire capital structure and primarily utilize credit direct/co-investments, as well as tail-end secondary investments, to create a portfolio biased toward shorter-duration exposures and downside protection, including a current yield
−Removed: The strategic opportunities funds also may seek to layer into the portfolio construction opportunistic investments, including unique equity positions and investments in areas of market dislocation.
−Removed: These funds leverage our existing platform to generate additional attractive deal flow.
−Removed: • Evergreen Funds:
−Removed: Our evergreen funds primarily invest in secondaries and direct/co-investments and are designed to provide qualified clients, including certain high-net-worth individuals and their wealth advisors, periodic liquidity.
−Removed: These funds provide investors with an opportunity to access a diversified, institutional-quality portfolio of private equity and private credit assets through a single investment.
+Added: As private markets have evolved, so too have the needs and objectives of both limited partners and general partners.
+Added: Today, the secondary market extends beyond purchases of existing limited partner interests and now includes a number of liquidity solutions that include, but are not limited to, continuation funds, single-asset purchases and strip sales.
+Added: • Direct investments.
+Added: Direct investments (formerly referred to as “co-investments”) are direct equity or credit investments alongside private markets funds in underlying portfolio companies.
+Added: This strategy aims to partner with leading fund managers to invest capital directly into the companies, generally on the same terms as the lead general partner.
+Added: Our direct investment strategy starts with actively soliciting the managers of private markets funds in which we have made investments to offer our specialized funds and customized separate accounts all direct investment opportunities that may arise from their investment operations.
+Added: The investment team analyzes and considers each deal to select those opportunities that best suit the direct investment funds’ investment objectives and create an appropriate diversity of investment type, industry, geography and manager.
+Added: We generally make direct investments on a parallel basis with the private markets funds and managers leading the investments, by purchasing similar securities on similar terms with exit provisions that allow the direct investment funds through which we invest to realize their investments at the same time and on a pro rata basis.
Investment Process and Monitoring
−Removed: Our investment team is divided into five dedicated teams for primary investments, secondary investments, direct/co-investments, real assets and research.
−Removed: Primary investments, secondary, direct/co-investments and real assets have their own discrete investment committees, although there is significant overlap among committee members.
−Removed: Our investment process has six key steps:
−Removed: investment origination;
−Removed: preliminary screening;
−Removed: due diligence evaluation;
−Removed: financial analysis;
−Removed: investment evaluation and decision-making;
−Removed: and negotiation, documentation and closing.
−Removed: Each step is described below:
−Removed: • Investment Origination .
−Removed: Fund managers raising new funds and seeking institutional investors typically market their funds directly to us.
−Removed: For secondary investments and direct/co-investments, we aggressively pursue attractive opportunities through our network of fund manager relationships, consultants and, to a lesser extent, third-party distributors.
−Removed: • Preliminary Screening .
−Removed: For primary fund investment opportunities, including real estate, the screening process consists of a formal review of any private placement memorandum that we receive from a prospective fund manager.
−Removed: A screening memo is prepared by the fund investment team and the investment committee makes a decision whether to proceed to due diligence or decline the investment opportunity.
−Removed: For secondary and direct/co-investment opportunities, each investment is evaluated by the respective investment teams and the most attractive opportunities are reviewed in a formal screening process by the investment committee.
−Removed: • Due Diligence Evaluation .
−Removed: For primary fund investments that proceed past the initial screening process, we meet in person with the fund manager (conditions permitting).
−Removed: A meeting memo prepared by the investment team based on the meeting is presented to the investment committee for a formal vote.
−Removed: If we elect to move forward, we issue a detailed questionnaire to the fund manager.
−Removed: We subsequently conduct a site visit at the fund manager’s office.
−Removed: Lastly, we prepare a final investment report, which provides details on the manager’s performance, merits and issues, as well as an in-depth analysis of the portfolio.
−Removed: Among the direct/co-investment opportunities we review, only the most attractive move to more intensive due diligence.
−Removed: The initial due diligence may include meeting and interviewing management and company personnel, multiple meetings and discussions with the lead sponsor, review of materials and reports developed by the private markets fund manager and external consultants to evaluate the investment and engaging additional advisors when appropriate.
−Removed: In addition, we conduct industry and competitive analyses and a risk analysis on the opportunity.
−Removed: • Financial Analysis .
−Removed: All investment opportunities that pass the initial due diligence review undergo a quantitative, rigorous financial and valuation review.
−Removed: For primary investments, financial analysis includes a thorough review of the fund manager’s historical track record, in which we seek to identify the drivers of return.
−Removed: Our secondary investment analysis involves both a bottom-up and a top-down analysis of each potential investment.
−Removed: The bottom-up analysis calculates individual values for each
−Removed: underlying portfolio company within the fund.
−Removed: The top-down analysis focuses on assessment of the markets, both public and private, as well as a rigorous review of the fund manager.
−Removed: This review includes historical returns, average holding periods, investment style and risk profile.
−Removed: These two separate analyses are then combined and weighted in order to calculate an offering price for the portfolio.
−Removed: For direct/co-investments, the company financial projections are studied, as well as the prospective capital structure and credit risk, and sensitivity analyses of the direct/co-investment’s projected returns.
−Removed: • Investment Evaluation and Decision-Making .
−Removed: Throughout the due diligence process, the investment team meets periodically with members of the investment committee in an iterative, dynamic “give and take” process leading to the investment decision stage.
−Removed: For primary investments, the investment committee votes on each opportunity three times before it is formally approved:
−Removed: (i) at the screening stage;
−Removed: (ii) after the initial meeting;
−Removed: and (iii) when the final due diligence report is completed.
−Removed: At each stage, the investment team prepares a memorandum to the committee summarizing the diligence efforts to that point.
−Removed: The investment is then discussed formally by the investment team and the investment committee members to determine if it is attractive enough to move forward or, in the last stage, make an investment.
−Removed: For secondary investments and direct/co-investments, the investment committee processes are more iterative.
−Removed: Opportunities are reviewed in investment committee meetings, and the discussion among the investment teams and the committee guides the diligence process.
−Removed: As the diligence process progresses, the investment committee makes the decision of whether to continue working on the transaction or to decline.
−Removed: At the final decision stage, a formal vote is required from the investment committee to make an investment.
−Removed: • Negotiation, Documentation and Closing .
−Removed: Upon recommendation of an investment, we attend to all aspects of the negotiation, documentation and closing processes.
−Removed: Our in-house legal team is mobilized to review the transaction documents, including, in the case of direct/co-investments, the governing documents of the direct/co-investment vehicle and stockholders or comparable agreement setting forth the rights of the direct/co-investors.
−Removed: Throughout the documentation and closing process, the investment team and the legal team work closely together to maximize economic terms and legal rights and protections for our clients and our specialized funds.
−Removed: Investment Performance
−Removed: The following tables present information relating to the historical performance of our discretionary investment accounts.
−Removed: The data for these investments is presented from the date indicated through December 31, 2020 and have not been adjusted to reflect acquisitions or disposals of investments subsequent to that date.
−Removed: When considering the data presented below, you should note that the historical results of our discretionary investments are not indicative of the future results you should expect from such investments, from any future investment funds we may raise or from an investment in our Class A common stock, in part because:
−Removed: • market conditions and investment opportunities during previous periods may have been significantly more favorable for generating positive performance than those we may experience in the future;
−Removed: • the performance of our funds is generally calculated on the basis of the net asset value (“NAV”) of the funds’ investments, including unrealized gains, which may never be realized;
−Removed: • our historical returns derive largely from the performance of our earlier funds, whereas future fund returns will depend increasingly on the performance of our newer funds or funds not yet formed;
−Removed: • our newly established funds may generate lower returns during the period that they initially
−Removed: deploy their capital;
−Removed: • in recent years, there has been increased competition for investment opportunities resulting from the increased amount of capital invested in private markets alternatives and high liquidity in debt markets, and the increased competition for investments may reduce our returns in the future;
−Removed: • the performance of particular funds also will be affected by risks of the industries and businesses in which they invest.
−Removed: The historical and potential future returns of the investment funds we manage are not directly linked to returns on our Class A common stock.
−Removed: Therefore, you should not conclude that continued positive performance of the investment funds we manage will necessarily result in positive returns on an investment in our Class A common stock.
−Removed: As used in this discussion, internal rate of return (“IRR”) is calculated on a pooled basis using daily cash flows.
−Removed: See “—Performance Methodology” below for more information on how our returns are calculated.
−Removed: Specialized Fund Performance
−Removed: We organize, invest and manage primary, secondary and direct/co-investment funds.
−Removed: Our funds invest across a variety of private markets and include equity, equity-linked and credit funds offered on standard terms, as well as shorter duration, opportunistically oriented funds.
−Removed: Below is performance information across our various specialized funds.
−Removed: Substantially all of these funds are globally focused, and they are grouped by the investment strategy utilized.
−Removed: Gross Returns — Realized
−Removed: Fund size ($M) Realized
−Removed: invested ($M) Realized
−Removed: multiple Realized
−Removed: IRR (%) Realized Gross
−Removed: S&P 500 PME Realized Gross
−Removed: MSCI World PME
−Removed: Primaries (Diversified)
−Removed: PEF I 1998 122 117 1.3 5.4% 378 bps 322 bps
−Removed: PEF IV 2000 250 238 1.7 16.2% 1,302 bps 1,170 bps
−Removed: PEF V 2003 135 133 1.7 14.2% 841 bps 950 bps
−Removed: PEF VI 2007 494 497 1.6 12.0% 107 bps 443 bps
−Removed: PEF VII 2010 262 244 1.6 14.7% 51 bps 454 bps
−Removed: PEF VIII 2012 427 69 1.4 13.8% 130 bps 469 bps
−Removed: PEF IX 2015 517 19 4.1 58.4% 4,356 bps 4,672 bps
−Removed: PEF X 2018 278 N/A N/A N/A N/A N/A
−Removed: Pre-Fund — — 362 1.5 17.1% 1,330 bps 1,172 bps
−Removed: Secondary Fund I 2005 360 353 1.2 5.2% 113 bps 341 bps
−Removed: Secondary Fund II 2008 591 596 1.5 20.0% 463 bps 880 bps
−Removed: Secondary Fund III 2012 909 579 1.6 20.4% 678 bps 1,075 bps
−Removed: Secondary Fund IV 2016 1,916 185 2.2 41.5% 2,563 bps 2,867 bps
−Removed: Secondary Fund V 2019 3,058 8 1.8 119.3% 10,224 bps 10,498 bps
−Removed: Co-investments
−Removed: Pre-Fund — — 244 1.9 21.3% 1,655 bps 1,600 bps
−Removed: Co-Investment Fund 2005 604 521 1.1 1.2% (457) bps (208) bps
−Removed: Co-Investment Fund II 2008 1,195 849 2.5 21.5% 914 bps 1,292 bps
−Removed: Co-Investment Fund III 2014 1,243 310 2.4 43.4% 2,969 bps 3,309 bps
−Removed: Co-Investment Fund IV 2018 1,698 78 1.9 40.6% 2,539 bps 2,891 bps
−Removed: year Fund size ($M) Realized
−Removed: invested ($M) Realized
−Removed: multiple Realized
−Removed: IRR (%) Realized Gross
−Removed: CS HY II PME Realized Gross
−Removed: Strategic Opportunities (Tail-end secondaries and credit)
−Removed: Strat Opps 2015 2015 71 52 1.3 17.2% 755 bps 1,123 bps
−Removed: Strat Opps 2016 2016 214 134 1.3 18.4% 1,099 bps 1,322 bps
−Removed: Strat Opps 2017 2017 435 235 1.2 16.2% 1,210 bps 1,242 bps
−Removed: Strat Opps 2018 2018 889 242 1.2 16.2% 1,458 bps 1,702 bps
−Removed: Strat Opps 2019 2019 762 25 1.1 13.9% 1,266 bps 1,520 bps
−Removed: Gross Returns — Realized and Unrealized
−Removed: year Fund size ($M) Capital invested
−Removed: ($M) Gross multiple Net Multiple Gross IRR (%) Net
−Removed: IRR (%) Gross Spread vs.
−Removed: S&P 500 PME Net Spread vs.
−Removed: S&P 500 PME Gross Spread vs.
−Removed: MSCI World PME Net Spread vs.
−Removed: MSCI World PME
−Removed: Primaries (Diversified)
−Removed: PEF I 1998 122 117 1.3 1.2 5.4% 2.5% 378 bps 76 bps 322 bps 16 bps
−Removed: PEF IV 2000 250 238 1.7 1.5 16.2% 11.2% 1,302 bps 828 bps 1,170 bps 708 bps
−Removed: PEF V 2003 135 133 1.7 1.6 14.2% 9.6% 841 bps 364 bps 950 bps 467 bps
−Removed: PEF VI 2007 494 512 1.6 1.6 11.7% 8.8% 62 bps (182) bps 398 bps 147 bps
−Removed: PEF VII 2010 262 285 1.5 1.5 12.8% 8.8% (137) bps (516) bps 260 bps (126) bps
−Removed: PEF VIII 2012 427 411 1.4 1.4 9.9% 7.2% (383) bps (670) bps (56) bps (343) bps
−Removed: PEF IX 2015 517 456 1.6 1.6 19.8% 17.7% 432 bps 202 bps 734 bps 499 bps
−Removed: PEF X 2018 278 127 1.2 1.1 19.3% 14.0% (218) bps (1,000) bps 29 bps (787) bps
−Removed: Pre-Fund — — 362 1.5 N/A 17.1% N/A 1,330 bps N/A 1,172 bps N/A
−Removed: Secondary Fund I 2005 360 353 1.2 1.2 5.2% 3.8% 113 bps (62) bps 341 bps 158 bps
−Removed: Secondary Fund II 2008 591 596 1.5 1.4 20.0% 13.6% 463 bps (178) bps 880 bps 226 bps
−Removed: Secondary Fund III 2012 909 830 1.4 1.4 14.6% 11.9% 113 bps (185) bps 496 bps 204 bps
−Removed: Secondary Fund IV 2016 1,916 1,966 1.5 1.4 21.0% 21.9% 409 bps 526 bps 720 bps 827 bps
−Removed: Secondary Fund V 2019 3,058 974 1.4 1.5 74.6% 143.8% 4,824 bps 9,725 bps 4,982 bps 9,471 bps
−Removed: Co-investments
−Removed: Pre-Fund — — 244 1.9 N/A 21.3% N/A 1,655 bps N/A 1,600 bps N/A
−Removed: Co-Investment Fund 2005 604 577 1.0 0.9 0.2% (1.3)% (569) bps (745) bps (319) bps (500) bps
−Removed: Co-Investment Fund II 2008 1,195 1,139 2.0 1.8 17.9% 14.2% 557 bps 168 bps 937 bps 544 bps
−Removed: Co-Investment Fund III 2014 1,243 1,259 1.9 1.7 20.2% 16.8% 582 bps 253 bps 907 bps 570 bps
−Removed: Co-Investment Fund IV 2018 1,698 1,407 1.3 1.3 20.9% 19.4% 122 bps (224) bps 365 bps (4) bps
−Removed: year Fund size ($M) Capital invested
−Removed: ($M) Gross multiple Net Multiple Gross IRR (%) Net
−Removed: IRR (%) Gross Spread vs.
−Removed: CS HY II PME Net Spread vs.
−Removed: CS HY II PME Gross Spread vs.
−Removed: CS LL PME Net Spread vs.
−Removed: Strategic Opportunities (Tail-end secondaries and credit)
−Removed: Strat Opps 2015 2015 71 67 1.3 1.2 14.0% 10.7% 531 bps 208 bps 851 bps 523 bps
−Removed: Strat Opps 2016 2016 214 214 1.2 1.2 11.3% 8.9% 453 bps 227 bps 651 bps 426 bps
−Removed: Strat Opps 2017 2017 435 445 1.3 1.2 12.8% 10.2% 774 bps 502 bps 896 bps 641 bps
−Removed: Strat Opps 2018 2018 889 844 1.2 1.1 11.1% 9.2% 567 bps 317 bps 847 bps 606 bps
−Removed: Strat Opps 2019 2019 762 522 1.1 1.1 12.6% 10.0% 315 bps (405) bps 695 bps (36) bps
−Removed: Performance Methodology
−Removed: The indices presented for comparison are the S&P 500, MSCI World, Credit Suisse High Yield II (“CS HY II”) and Credit Suisse Leverage Loan (“CS LL”), calculated on a public market equivalent (“PME”) basis.
−Removed: We believe these indices are commonly used by private markets and credit investors to evaluate performance.
−Removed: The PME calculation methodology allows private markets investment performance to be evaluated against a public index and assumes that capital is being invested in, or withdrawn from, the index on the days the capital was called and distributed from the underlying fund managers.
−Removed: The S&P 500 Index is a total return capitalization-weighted index that measures the performance of 500 U.S.
−Removed: large cap stocks.
−Removed: The MSCI World Index is a free float-adjusted market capitalization-weighted index of over 1,600 world stocks that is designed to measure the equity market performance of developed markets.
−Removed: The CS HY II Index, formerly known as the DLJ High Yield Index, is designed to mirror the investable universe of the U.S.
−Removed: dollar denominated high yield debt market.
−Removed: Prices for the CS HY II Index are available on a weekly basis.
−Removed: The CS LL Index is an index designed to mirror the investable universe of the U.S.
−Removed: dollar denominated leveraged loan market.
−Removed: Loans must be rated 5B or lower and the index frequency is monthly.
−Removed: Our IRR represents the pooled IRR for all discretionary investments for the period from inception to December 31, 2020.
−Removed: Gross IRR is presented net of management fees, carried interest and expenses charged by the general partners of the underlying investments, but does not include our management fees, carried interest or expenses.
−Removed: Our gross IRR would decrease with the inclusion of our management fees, carried interest and expenses.
−Removed: Net IRR is net of all management fees, carried interest and expenses charged by the general partners of the underlying investments, as well as by us.
−Removed: Net IRR figures for our funds do not include cash flows attributable to the general partner.
−Removed: Note that secondary portfolio IRRs can be initially impacted by purchase discounts (or premiums) paid at the closing of a transaction, the impact of which will diminish over time.
−Removed: The “Realized IRR” represents the pooled IRR for those discretionary investments that we consider realized for purposes of our track record, which are investments where the underlying investment fund has been fully liquidated, has generated a distributions to paid-in capital ratio (“DPI”) greater than or equal to 1.0 or is older than six years and has a residual value to paid-in capital ratio (“RVPI”) less than or equal to 0.2.
−Removed: Hamilton Lane Secondary Realized includes investments that have been fully liquidated, have a DPI greater than or equal to 1.0 or a RVPI less than or equal to 0.2.
−Removed: Hamilton Lane Realized Co-Investment and Hamilton Lane Realized Strategic Opportunities include investments that have been fully liquidated or have a DPI greater than or equal to 1.0.
−Removed: “Unrealized” includes all investments that do not meet the aforementioned criteria.
−Removed: DPI represents total distributions divided by total invested capital.
−Removed: RVPI represents the remaining market value divided by total invested capital.
−Removed: “Capital Invested” refers to the total amount of all investments made by a fund, including commitment-reducing and non-commitment-reducing capital calls.
−Removed: “Multiple” represents total distributions from underlying investments to the fund plus the fund’s market value divided by total contributed capital.
−Removed: “Gross Multiple” is presented net of management fees, carried interest and expenses charged by the fund managers of the underlying investments.
−Removed: Specialized fund and pre-fund performance does not include ten funds-of-funds that have investor-specific investment guidelines.
−Removed: Certain of our specialized funds utilize revolving credit facilities, which provide capital that is available to fund investments or pay partnership expenses and management fees.
−Removed: Borrowings may be paid down from time to time with investor capital contributions or distributions from investments.
−Removed: The use of a credit facility affects the fund’s return and magnifies the performance on the upside or on the downside.
+Added: Our investment team is generally organized by investment type (primary, secondary and direct investment).
+Added: The direct investment team is further specialized with separate teams that focus on equity or credit.
+Added: We also have a specialized team that analyzes all investment types related to real assets opportunities.
+Added: Our evergreen investment team utilizes the same investment process and allocation priority as our institutional single-strategy funds.
+Added: Lastly, our private market analytics team draws upon data analysis to form views at the industry level.
+Added: Each of these teams, with the exception of private market analytics, has its own discrete investment committees, although there is significant overlap among committee members.
+Added: Regardless of the investment type or strategy, our investment process remains generally consistent, detailed and thorough from sourcing to closing.
+Added: Throughout the years, we have invested heavily and prioritized the ability to share data and information efficiently amongst all of our investment teams.
+Added: The teams leverage our technology systems to guide the investment decision process.
+Added: Each of our investment teams incorporates an investment committee that is composed of select senior professionals from the organization who collectively review, opine and make the ultimate decision as to the opportunities in which we will invest.
+Added: Our operational due diligence (“ODD”) team is empowered with separate voting rights on each of the firm’s fund investment opportunities, which means that we will only proceed with investments that are approved by both our investment committee and our ODD team.
+Added: Each review completed by our ODD team results in a full report documenting each risk area and any existing
+Added: mitigating factors, our recommendations to each manager and our proprietary risk-rating system.
+Added: As investments are approved by the relevant investment committees, our allocation committee reviews each opportunity in light of the policies and procedures of the accounts that will be investing.
+Added: This committee generally serves to help ensure that investment opportunities are treated in accordance with our contractual obligations and fiduciary duties to our clients and are consistent with our allocation policy.
+Added: The allocation committee is composed of senior professionals throughout the organization.
+Added: We have worked to institutionalize our approach to responsible investment.
+Added: Since 2008, we have been a signatory to the UN-backed Principles for Responsible Investment (“PRI”).
+Added: Responsibility for oversight, strategy and guidance on ESG rests with our Responsible Investment Committee (“RIC”), which includes senior members of the firm.
+Added: RIC members are also present at every investment committee meeting to monitor investment compliance.
+Added: Today, we fully integrate ESG into all of our due diligence processes, ensuring that ESG issues are taken into account when making investment decisions.
+Added: We employ a proprietary rating system that seeks to benchmark the fund managers with whom we invest to best practices, which means that the standards we expect from our general partners are continuously increasing.
+Added: Included in our overall approach to ESG is our ongoing focus on diversity, equity and inclusion (“DE&I”) both at the general partner and underlying portfolio company level.
+Added: For more information on ESG and our investment process, see “—Corporate Responsibility” below.
Assets Under Management and Advisement
22 unchanged sentences
Diversification of Assets
−Removed: Given our goal of achieving strong investment returns and portfolio diversification for clients, investments are made across multiple private markets sub-asset classes, including corporate finance/buyout, growth equity, venture capital, mezzanine, distressed debt and other special situation funds (e.g., industry-focused funds and multi-stage funds).
+Added: Given our goal of achieving strong investment returns and portfolio diversification for clients, investments are made across multiple private markets sub-asset classes, including corporate finance/buyout, growth equity, venture capital, senior credit, mezzanine, distressed debt, real estate, real assets, infrastructure and other special situation funds (e.g., industry-focused funds and multi-stage funds).
Because we have a considerable volume of investment opportunities globally, we selectively invest not only across sub-asset classes, but also across all major geographic regions, including North America, Europe, Asia, Australasia, Latin America, the Middle East and Africa.
1 unchanged sentence
Fee-earning AUM is a metric we use to measure the assets from which we earn management fees.
−Removed: Our fee-earning AUM comprise assets in our customized separate accounts and specialized funds from which we derive management fees.
+Added: Our fee-earning AUM comprise assets in our customized separate accounts and specialized funds from which we derive management fees that are generally derived from applying a certain percentage to the appropriate fee base.
We classify customized separate account revenue as management fees if the client is charged an asset-based fee, which includes the majority of our discretionary AUM accounts but also includes certain non-discretionary AUA accounts.
5 unchanged sentences
As of March 31, 2022, our fee-earning AUM was approximately $49 billion compared to $106 billion in AUM.
−Removed: The difference is due primarily to $29 billion of discretionary AUM earning a flat fee or fee on
−Removed: number of funds for which we categorize revenue as advisory and reporting.
+Added: The difference is due primarily to $35 billion of discretionary AUM earning a flat fee or fee on number
+Added: of funds for which we categorize revenue as advisory and reporting.
This was partially offset by $3 billion of fee-earning AUM from customized separate accounts clients with non-discretionary AUA.
2 unchanged sentences
* Amounts may not foot due to rounding
−Removed: Our client base primarily comprises institutional investors that range from those seeking to make an initial investment in alternative assets to some of the largest and most sophisticated private markets investors.
−Removed: As a highly customized, flexible outsourcing partner, we are equipped to provide investment services to institutional clients of all sizes and with different needs, internal resources and investment objectives.
−Removed: Our clients include prominent institutional investors in the United States, Canada, Europe, the Middle East, Asia, Australia and Latin America.
+Added: Our client base primarily comprises investors that range from those seeking to make an initial investment in alternative assets to some of the largest and most sophisticated private markets investors.
+Added: As we offer a highly customized, flexible service, we are equipped to provide investment services to clients of all sizes and with different needs, internal resources and investment objectives.
+Added: Our clients include prominent investors in the United States, Canada, Europe, the Middle East, Asia, Australia and Latin America.
We believe we are a leading provider of private markets solutions for U.S.
−Removed: labor union pension plans, and we serve numerous smaller public and corporate pension plans, sovereign wealth funds, financial institutions and insurance companies, endowments and foundations, as well as family offices and selected high-net-worth individuals.
+Added: labor union pension plans, and we serve numerous smaller public and corporate pension plans, sovereign wealth funds, financial institutions and insurance companies, endowments and foundations, as well as family offices and high-net-worth individuals.
As of March 31, 2022, our client and investor base included over 800 institutions and intermediaries and is broadly diversified by type, size and geography.
−Removed: Our intermediary clients enable us to provide our investment products to an expanded range of high-net-worth individuals and families.
+Added: Our intermediary clients enable us to provide our investment products to an expanded range of high-net-worth individuals and family offices.
We have a diversified revenue stream from a variety of client types in multiple geographic regions, with no single client representing more than 4% of management and advisory fee revenues.
3 unchanged sentences
Sales and Marketing
−Removed: Our business development group consists of employees around the world, including in the United States, United Kingdom, Hong Kong, Japan, Singapore, South Korea, Brazil, Israel, Australia, Canada and Germany.
+Added: Our client and private wealth solutions groups consist of employees around the world, including in the United States, United Kingdom, Hong Kong, Japan, Singapore, South Korea, Israel, Australia, Canada and throughout continental Europe.
We intend to grow our global sales force as we seek to continue to build our client base and pursue growth opportunities in less developed private equity markets such as Asia and Australia.
1 unchanged sentence
To enhance our access to markets where we do not currently have a local presence or that are dominated by captive client relationship models, we selectively engage highly respected third-party organizations to market our products and services.
−Removed: For example, we use third-party distributors in Asia and Latin America (other than Brazil).
−Removed: Our business development group is responsible for identifying and contacting prospective clients for our products and services.
−Removed: Our sales people also work directly with consultants that advise smaller and medium-size institutional investors, which often rely on the consultants for advice in the alternative investment area.
+Added: For example, we use third-party distributors in Asia and Latin America.
+Added: Our client and private wealth solutions groups are responsible for identifying and contacting prospective clients for our products and services.
+Added: Our sales people also work directly with consultants and financial advisers that advise smaller and medium-size institutional investors and high-net-worth individuals, who often rely on advice in the alternative investment area.
Following the initial round of meetings and presentations, prospective advisory and customized separate account clients and specialized fund investors that wish to learn more about us often visit our offices with a team to conduct in-depth due diligence of our firm.
−Removed: Our business development people lead this process, coordinate meetings, and continue to be the prospective client’s principal contact with us through the decision-making process.
+Added: Our sales people lead this process, coordinate meetings, and continue to be the prospective client’s principal contact with us through the decision-making process.
Client Service
Our client service group includes employees located in the United States, United Kingdom, Japan, Hong Kong, Brazil, Israel, South Korea, and Australia.
−Removed: At the beginning of the engagement for each advisory account and customized separate account, a member of the relationship management group is assigned as the principal contact person with that client.
+Added: At the beginning of the engagement for each advisory account and customized separate account, a relationship manager is assigned as the principal contact person with that client.
The relationship managers take primary responsibility for working with the clients to design their strategic plans and to implement those plans in accordance with investment guidelines agreed to by us and the clients.
1 unchanged sentence
The relationship managers communicate and meet regularly with their clients to discuss potential investments that we are currently considering, funds expected to be raised in the next 12 months, the current status of the clients’ portfolios, investment strategies and overall market conditions.
−Removed: Within the client service group, our portfolio management services group is dedicated to tracking and reporting on primary investments, secondary investments and direct/co-investments that we manage for our clients.
+Added: Within the client service group, our client operations group is dedicated to tracking and reporting on primary investments, secondary investments and direct investments that we manage for our clients.
This group also uses the services of third-party administrators and analysts, particularly with respect to specialized funds.
8 unchanged sentences
We provide clients with comprehensive and customized quarterly and annual reports.
−Removed: iLevel, our online, interactive client
−Removed: reporting platform, affords clients always available, secure, Internet-based access to their portfolios.
−Removed: Clients can download timely information on cash flows, adjusted valuations, adjusted capital account schedules, underlying portfolio company information and other data provided by private markets fund managers or developed internally by our in-house reporting team.
+Added: iLevel, our online, interactive client reporting platform, affords clients always available, secure, internet-based access to their portfolios.
+Added: download timely information on cash flows, adjusted valuations, adjusted capital account schedules, underlying portfolio company information and other data provided by private markets fund managers or developed internally by our in-house reporting team.
Fees and Other Key Contractual Terms
14 unchanged sentences
These fees often decrease over the life of the contract due to built-in declines in contractual rates and/or as a result of lower net invested capital balances as capital is returned to clients.
−Removed: For some customized separate accounts, we charge clients annual fixed fees, and, in certain cases, we earn an incentive fee based on realized gains, particularly when the investment strategies include secondary investments and direct/co-investments.
+Added: For some customized separate accounts, we charge clients annual fixed fees, and, in certain cases, we earn an incentive fee or carried interest based on realized gains, particularly when the investment strategies include secondary investments and direct investments.
In certain cases, we also provide advisory and/or reporting services and, therefore, we also receive fees for services such as monitoring and reporting on a client’s existing private markets investments.
−Removed: In addition, we may provide for investments in our specialized funds as part of our customized separate accounts, and therefore we also receive incentive fees based on realized gains of investments in our specialized funds and/or management fees under the terms of such funds.
−Removed: We generally reduce the management and/or incentive fees on customized separate accounts to the extent that assets in the accounts are invested in our specialized funds so that our clients do not pay duplicate fees.
+Added: In addition, we may provide for investments in our specialized funds as part of our customized separate accounts, and therefore we also receive incentive fees or carried interest based on realized gains of investments in our specialized funds and/or management fees under the terms of such funds.
+Added: We generally reduce the management and/or incentive fees or carried interest on customized separate accounts to the extent that assets in the accounts are invested in our specialized funds so that our clients do not pay duplicate fees.
Duration and Termination.
8 unchanged sentences
jurisdiction, such as the Cayman Islands or Luxembourg, in accordance with the client’s specifications.
−Removed: In certain cases, we have formed
−Removed: investment vehicles utilizing other forms, including Delaware limited liability companies, Cayman unit trusts and/or Luxembourg companies.
−Removed: Our capital commitment to such an investment vehicle is generally 1% of total capital commitments but in certain cases may be higher or lower.
+Added: In certain cases, we have formed investment vehicles utilizing other forms, including Delaware limited liability companies, Cayman unit trusts and/or Luxembourg companies.
+Added: Our capital commitment to such an investment vehicle is generally 1% of total
+Added: capital commitments but in certain cases may be higher or lower.
We manage these investment vehicles under an investment management agreement between the investment vehicle entity and us, and we manage all aspects of the vehicles, utilizing the services of third parties as needed, including administrators and custodial banks.
Specialized Funds
−Removed: Since 1997, we have sponsored 29 primary funds, five secondary funds, eight direct/co-investment funds, six strategic opportunities funds, one social and environmental impact fund and one Small Business Investment Company fund.
+Added: Since 1997, we have sponsored 29 primary funds, six secondary funds, eight direct investment funds, seven strategic opportunities funds, two social and environmental impact funds and two Small Business Investment Company funds.
The terms of each fund vary.
We have described below the key terms of these funds.
−Removed: In addition, we sponsor funds designed to provide investors periodic liquidity, which primarily invest in secondaries and direct/co-investments (the “evergreen funds”).
+Added: In addition, we sponsor funds designed to provide investors periodic liquidity, which primarily invest in secondaries and direct investments (the “evergreen funds”).
One evergreen fund is marketed to investors outside of the United States on a private placement basis, and in the United States, we offer a similar vehicle for U.S.
3 unchanged sentences
The commitments are generally available for investment for three to six years, during what we call the commitment period.
−Removed: However, our strategic opportunities funds have one- to two-year commitment periods and, in the case of one of our direct/co-investment funds, the investors do not commit capital at the commencement of the fund but rather have the right to make their own investment decisions as to each investment opportunity that we present to them.
+Added: However, our strategic opportunities funds have one- to two-year commitment periods and, in the case of one of our direct investment funds, the investors do not commit capital at the commencement of the fund but rather have the right to make their own investment decisions as to each investment opportunity that we present to them.
We typically have invested the capital committed to our funds, other than our strategic opportunities funds, over a three- to five-year period.
12 unchanged sentences
The limited partners often have the right to remove the general partner for cause or effect an early dissolution by supermajority vote, or in certain cases by a simple majority vote.
−Removed: In addition, the governing agreements of our funds typically require the suspension of the
−Removed: commitment period if, depending on the fund, between two and ten designated principals of the Manager cease to devote sufficient professional time to or cease to be employed by the Manager, often called a “key man event”, or in connection with certain other events discussed under “—Duration, Redemption and Termination.” See “Risk Factors—Risks Related to our Business—Our ability to retain our senior management team and attract additional qualified investment professionals is critical to our success” included in Part I, Item 1A of this Form 10-K.
+Added: In addition, the governing agreements of our funds typically require the suspension of the commitment period if, depending on the fund, between two and ten designated principals of the Manager cease to devote sufficient professional time to or cease to be employed by the Manager, often called a “key person event”, or in connection with certain other
+Added: events discussed under “—Duration, Redemption and Termination.” See “Risk Factors—Risks Related to our Business—Our ability to retain our senior management team and attract additional qualified investment professionals is critical to our success” included in Part I, Item 1A of this Form 10-K.
Management Fees .
2 unchanged sentences
In the case of certain funds, we charge management fees on capital commitments, with the management fee increasing during the early years of the fund’s term and declining in the later years.
−Removed: Management fees for certain funds are discounted based on the amount of the limited partners’ commitments or if the limited partners are investors in our other funds.
+Added: Management fees for certain funds are discounted based on the amount of the limited partners’ commitments, whether the limited partner commits early in the offering period or if the limited partners are investors in our other funds.
Management fees would be reduced in the event that any monitoring, consulting, investment banking, advisory, transaction, directors’ or break-up or similar fees are paid to the fund’s general partner, the Manager or any of their affiliates or principals.
Incentive Fees.
+Added: Incentive fees comprise carried interest earned from our specialized funds and certain customized separate accounts structured as single-client funds in which we have a general partner commitment, and performance fees earned on certain other customized separate accounts.
The incentive fees charged by our specialized funds are generally referred to as “carried interest.” Our primary funds invest the majority of their capital in other private markets funds on a primary basis, and certain of our primary funds earn carried interest on these investments.
−Removed: To the extent that our primary funds also directly make secondary investments and direct/co-investments, they generally earn carried interest equal to a fixed percentage of net profits, subject to a compounded annual preferred return in respect of those investments.
+Added: To the extent that our primary funds also directly make secondary investments and direct investments, they generally earn carried interest equal to a fixed percentage of net profits, subject to a compounded annual preferred return in respect of those investments.
Carried interest from these primary funds is earned on a “full return” basis when all invested capital and the applicable preferred return has been received or on a “deal-by-deal” basis when all capital invested and the applicable preferred return has been received either on all realized investments or on each individual investment.
−Removed: For each of our secondary funds, direct/co-investment funds, strategic opportunity funds and evergreen funds, we generally earn carried interest equal to a fixed percentage of net profits, subject to a compounded annual preferred return that varies based on fund type.
+Added: For each of our secondary funds, direct investment funds, strategic opportunity funds and evergreen funds, we generally earn carried interest equal to a fixed percentage of net profits, subject to a compounded annual preferred return that varies based on fund type.
In our secondary funds, we generally earn carried interest on a full-return basis.
−Removed: In the case of certain of our direct/co-investment funds, strategic opportunity funds and evergreen funds, we earn carried interest on a deal-by-deal basis.
−Removed: If, upon the final distribution of any of our specialized funds from which we earn carried interest, we and our affiliates have received cumulative carried interest in excess of the amount to which we would be entitled from the profits calculated for such investments in the aggregate, or if the limited partners have not received distributions equal to those to which they are entitled, the general partner will return such part of any carried interest to the limited partners as is necessary to ensure that they receive the amounts to which they are entitled, less taxes on the carried interest.
+Added: In the case of certain of our direct investment funds, strategic opportunity funds and evergreen funds, we earn carried interest on a deal-by-deal basis.
+Added: If, upon the final distribution of any of our specialized funds from which we earn carried interest, we and our affiliates have received cumulative carried interest in excess of the amount to which we would be entitled from the profits calculated for such investments in the aggregate, or if the limited partners have not received distributions equal to those to which they are entitled, the general partner will typically return such part of any carried interest to the limited partners as is necessary to ensure that they receive the amounts to which they are entitled, less taxes on the carried interest.
We refer to these provisions as “clawbacks.” Most of our funds that provide for carried interest require a full return of capital and expenses to investors before any carried interest is paid to us, which minimizes the risk of a clawback obligation.
+Added: Performance fees are based on the aggregate amount of realized gains earned by the applicable customized separate account, subject to the achievement of defined minimum returns to the clients.
+Added: Performance fees are based on a fixed percentage of net profits, subject to a compounded annual preferred return that varies by account.
+Added: We do not generally recognize performance fees unless the risk of clawback or reversal is not probable.
Duration, Redemption and Termination .
Our specialized funds, other than our strategic opportunities funds and evergreen funds, generally terminate 10 to 14 years after either the first or last date on which a limited partner is admitted to the fund, or, in the case of certain funds, terminate on a specified anniversary date.
−Removed: Our main primary, secondary and direct/co-investment funds have an average term of approximately 12 years.
+Added: Our main primary, secondary and direct investment funds have an average term of approximately 12
Certain of our strategic opportunities funds terminate five years after the last date on which a limited partner may be admitted to the fund.
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Interests in our specialized funds, other than our evergreen funds, are not subject to redemption prior to termination of the funds.
−Removed: Termination or dissolution of the funds and the suspension of their commitment periods, however, can generally be accelerated upon the occurrence of certain customary events, including key man events, bankruptcy and similar events and the occurrence of fraud, willful malfeasance or gross negligence and other similar events.
+Added: Termination or dissolution of the funds and the suspension of their commitment periods, however, can generally be accelerated upon the occurrence of certain customary events, including key person events, bankruptcy and similar events and the occurrence of fraud, willful malfeasance or gross negligence and other similar events.
Such funds also may be terminated upon the affirmative vote, depending on the fund, of 75% to 85% of the total limited partner interests entitled to vote.
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The RFP procedures prohibit communications between bidders and the issuer of the RFP relating to the proposals during the bidding process.
+Added: Clients of our Cobalt LP technology product are generally charged an annual subscription fee, which includes provisions for renewal, or notice of cancellation generally at least 60 days prior to renewal, and escalation of fees for an increasing number of users.
+Added: In some circumstances, we may waive or offset the Cobalt LP subscription fee for clients who pay management fees to us for other services.
Distribution Management
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The remaining portion of any positive balance in the notional account is carried forward to the following year.
−Removed: If the incentive fee calculation results in a negative amount in a given year, that amount is applied to reduce the balance in the notional account.
+Added: If the incentive fee calculation results in a negative amount in a given
+Added: year, that amount is applied to reduce the balance in the notional account.
We are not required to repay any negative balance in the notional account.
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We compete in all aspects of our business with a large number of asset management firms, commercial banks, broker-dealers, insurance companies and other financial institutions.
−Removed: With respect to our specialized funds, we primarily compete with the alternative asset management businesses of a number of large international financial institutions and established local and regional competitors based in the United States, Europe and Asia, including managers offering funds-of-funds, secondary funds and direct/co-investment funds in the private markets.
+Added: With respect to our specialized funds, we primarily compete with the alternative asset management businesses of a number of large international financial institutions and established local and regional competitors based in the United States, Europe and Asia, including managers offering funds-of-funds, secondary funds and direct investment funds in the private markets.
Our principal competition for customized separate accounts is mostly other highly specialized and independent private markets asset management firms.
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We believe that the “Hamilton Lane” trade name, logo and website are material to our operations.
−Removed: We have entered into licensing agreements with other companies for several of our technology solutions, including Black Mountain and iLevel, which expire in 2021 and 2025, respectively.
−Removed: The iLevel license will automatically renew for additional one-year periods thereafter, unless terminated by either party.
Legal and Compliance
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Our attorneys are embedded in our legal corporate, customized separate accounts, commingled funds and investment teams.
−Removed: Most of our customized separate account clients and certain of our advisory clients rely on us to review, analyze and negotiate the terms of the documents relating to primary, secondary and direct/co-investments.
−Removed: Working together with our investment teams, our attorneys negotiate directly with fund managers and deal sponsors and their counsel the terms of all limited partnership agreements, subscription documents, side letters, purchase agreements and other documents relating to primary, secondary and direct/co-investments.
−Removed: Our attorneys also review and make recommendations regarding amendments and requests
−Removed: for consents presented by the fund managers from time to time.
+Added: Most of our customized separate account clients and certain of our advisory clients rely on us to review, analyze and negotiate the terms of the documents relating to primary, secondary and direct investments.
+Added: Working together with our investment teams, our attorneys negotiate directly with fund managers and deal sponsors and their counsel the terms of all limited partnership agreements, subscription documents, side letters, purchase agreements and other documents relating to primary, secondary and direct investments.
+Added: Our attorneys also review and make
+Added: recommendations regarding amendments and requests for consents presented by the fund managers from time to time.
In addition, our legal team is responsible for preparing, reviewing and negotiating all documents relating to the formation and operation of our funds.
We utilize the services of outside counsel as we deem necessary.
−Removed: Our compliance team is led by our chief risk officer, who reports to our chief executive officer.
−Removed: Our chief risk officer has day-to-day management responsibility for the compliance team.
−Removed: The compliance team is responsible for operational due diligence and overseeing and enforcing our policies and procedures relating to compliance with the Investment Advisers Act and related rules and regulations and our code of ethics, as well as the compliance policies and procedures and laws and regulations that apply to our non-U.S.
+Added: Our compliance team is led by our chief compliance officer, who reports to our chief risk officer.
+Added: Our chief compliance officer has day-to-day management responsibility for the compliance team.
+Added: The compliance team is responsible for overseeing and enforcing our policies and procedures relating to compliance with the Investment Advisers Act and related rules and regulations and our code of ethics, as well as the compliance policies and procedures and laws and regulations that apply to our non-U.S.
subsidiaries and operations.
−Removed: In addition, the compliance team is responsible for all regulatory matters relating to Hamilton Lane Securities, LLC, our SEC- and FINRA-registered broker-dealer affiliate through which we offer interests in our specialized funds.
+Added: In addition, the compliance team is responsible for all regulatory matters relating to Hamilton Lane Securities, LLC, our SEC- and Financial Industry Regulatory Authority (“FINRA”)-registered broker-dealer affiliate through which we offer interests in our specialized funds.
+Added: Risk Management
+Added: Risk management oversight and direction across the firm is provided by the Risk Management Committee.
+Added: This committee is responsible for the governance of risks across our operations globally and is composed of some of the most senior professionals at the firm across the spectrum of departments.
Regulatory Environment
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The failure of HLA to comply with the requirements of the Investment Advisers Act or the SEC could have a material adverse effect on us.
−Removed: Most of our customized separate accounts and specialized funds are not registered under the Investment Company Act because we generally only form customized separate accounts for, and offer interests in our specialized funds to, persons who we reasonably believe to be “qualified purchasers” as defined in the Investment Company Act.
+Added: Most of our customized separate accounts and specialized funds are not registered under the Investment Company Act because they fall outside the scope of the Investment Company Act or qualify for an exemption thereunder.
ERISA-Related Regulation
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Individual member states of the EU have imposed additional requirements that may include internal arrangements with respect to risk management, liquidity risks, asset valuations, and the establishment and security of depository and custodial requirements.
−Removed: The application of some of these requirements and regulations to our business will likely change in connection with the exit of the U.K.
+Added: The application of some of these requirements and regulations to our business changed with the exit of the U.K.
from the EU (“Brexit”), which became official in January 2020.
For example, our subsidiaries that are authorized and regulated by the U.K.
−Removed: Financial Conduct Authority could potentially lose “passporting” privileges under certain EU directives, such as the AIFMD and the Markets in Financial Instruments Directive II (“MiFID II”), which certain of our specialized funds and customized separate accounts rely upon for access to markets throughout the EU.
−Removed: In preparation for this, we worked with a third-party alternative investment fund manager (“AIFM”) based in Luxembourg to replace, prior to Brexit, our U.K.-based AIFM for our funds and certain customized separate accounts for the EU.
−Removed: We are also in the process of obtaining a MiFID II license for one of our EU-based (non-U.K.) subsidiaries in the event that the MiFID II license currently held by our U.K.-based subsidiary is no longer valid after Brexit.
+Added: Financial Conduct Authority no longer have “passporting” privileges under certain EU directives, such as the AIFMD and the Markets in Financial Instruments Directive II (“MiFID II”), which certain of our specialized funds and customized separate accounts rely upon for access to markets throughout the EU.
+Added: In preparation for this, we engaged with third-party alternative investment fund managers (“AIFM”) based in Luxembourg to replace, prior to Brexit, our U.K.-based AIFM for our funds and certain customized separate accounts for the EU.
+Added: We have also obtained a MiFID II license for one of our EU-based (non-U.K.) subsidiaries to replace the MiFID II license held by our U.K.-based subsidiary, which is no longer valid after Brexit.
While we believe that taking these steps will help to ensure that we are able to continue to conduct business in the U.K.
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vis-à-vis other countries and the economic outlook in the U.K.
−Removed: See “Risk Factors—Risks Related to Our Business—Operational risks and data security breaches may disrupt our business, result in losses or limit our growth”, “Risk Factors—Risks Related to Our Business—Our international operations are subject to certain risks, which may affect our revenue” and “Risk Factors—Risks Related to Our Industry—Regulation of investment advisors outside the United States could adversely affect our ability to operate our business.” included in Part I, Item 1A of this Form 10-K for more information on the risks we face in connection with Brexit.
+Added: See “Risk Factors—Risks Related to Our Business—Our international operations are subject to certain risks, which may affect our revenue” and “Risk Factors—Risks Related to Our Industry—Regulation of investment advisors outside the United States could adversely affect our ability to operate our business.” included in Part I, Item 1A of this Form 10-K for more information on the risks we face in connection with Brexit.
Our Culture and Focus on Diversity, Equity & Inclusion
−Removed: We believe diversity and inclusion are a core part of our corporate mission to enrich lives and safeguard futures, and we leverage our status as a global leader in the private markets to promote diversity and inclusion to the benefit of employees, clients, the community and our industry overall.
−Removed: Our organization is focused on acting with integrity, pursuing excellence in all that we do and promoting equity and inclusion from within.
−Removed: This starts with a commitment to our employees to create a workplace
−Removed: environment where they can thrive both professionally and personally, and where our employees feel comfortable bringing their whole selves to the workplace.
+Added: Fostering a diverse, equitable and inclusive environment is core to our corporate mission to enrich lives and safeguard futures, and we leverage our status as a global leader in the private markets to promote diversity and inclusion to the benefit of employees, clients, the community and our industry overall.
+Added: Our organization is focused on doing the right thing, acting with integrity, pursuing excellence in all that we do and promoting equity and inclusion from within.
+Added: This starts with a commitment to our employees to create a workplace environment where they can thrive both professionally and personally, and where our employees feel comfortable bringing their whole selves to the workplace.
Formed in 2016, our Diversity, Equity & Inclusion Council (“DE&I Council”) aims to raise awareness about the importance and benefits of fostering an inclusive work environment and culture.
We know that smart teams do great things, but diverse teams can do truly incredible things, and the way to affect change is to help create it.
−Removed: That is why in 2020 we announced the adoption of a new corporate value, “Promoting Equity and Inclusion from Within.”
+Added: That is why one of our corporate values is “Promoting Equity and Inclusion from Within.”
We believe that our strong culture is a key factor driving our success in developing and maintaining high-quality relationships with current/prospective employees, clients, prospects, business partners and the communities within which we live and work.
−Removed: In early 2021, we became a signatory to the Institutional Limited Partners Association’s newly announced Diversity in Action Initiative.
+Added: In early 2021, we became a signatory to the newly announced Diversity in Action Initiative of the Institutional Limited Partners Association (“ILPA”).
This effort focuses on foundational actions that limited partner and general partner organizations are taking to advance diversity, equity and inclusion, both internally and throughout the industry more broadly.
−Removed: With approximately 450 employees worldwide as of March 31, 2021, we are proud that our culture has been recognized annually by Pensions & Investments (“P&I”) magazine, a leading investment publication, as a “Best Place to Work in Money Management” since P&I created their list in 2012.
−Removed: We are one of just five firms to hold this distinction.
−Removed: In addition, Hamilton Lane has been recognized by the Central Penn Business Journal as a “Best Place to Work in Pennsylvania,” also for the last nine consecutive years.
+Added: With approximately 540 employees worldwide as of March 31, 2022, we are proud that our culture has been recognized annually for the last 10 years by Pensions & Investments (“P&I”) magazine, a leading investment publication, as a “Best Place to Work in Money Management” since P&I created their list in 2012.
+Added: We are one of just six firms to hold this distinction.
+Added: In addition, Hamilton Lane has been recognized by the Central Penn Business Journal as a “Best Place to Work in Pennsylvania,” also for the last 10 consecutive years.
Talent Acquisition and Retention
−Removed: In 2020, our Human Resources Department, in conjunction with the firm’s DE&I Council, introduced a new strategic plan aimed at expanding upon existing efforts to intentionally embed diversity, equity and inclusion into the fabric of the firm’s values, culture, and recruiting and retention practices.
−Removed: The plan outlines enhanced recruiting and retention efforts, including an emphasis on ongoing training, accountability and inclusivity.
−Removed: As of March 31, 2021, 51% of our employees were minorities or women and 48% of departments were led by minorities or women.
−Removed: As of March 31, 2021, approximately 40% of our employees were women and 32% of senior leadership roles were held by women.
+Added: In 2020, our Human Resources Department, in conjunction with the firm’s DE&I Council, introduced a new strategic plan, called HL All, aimed at expanding upon existing efforts to intentionally embed diversity, equity and inclusion into the fabric of the firm’s values, culture, and recruiting and retention practices.
+Added: HL All outlines enhanced recruiting and retention efforts, including an emphasis on ongoing training, accountability and inclusivity.
In recognition of our efforts, we were designated by the Private Equity Women Investor Network as International LP of the Year for 2020.
This award is given annually to an outstanding institutional limited partner who has demonstrated a commitment to encouraging and supporting female investors in the private equity industry.
+Added: As of March 31, 2022, 49% of our employees were minorities or women and 44% of departments were led by minorities or women.
+Added: As of March 31, 2022, approximately 40% of our employees were women and 28% of senior leadership roles were held by women.
We believe that our culture and commitment to fostering a truly diverse workforce will continue to play an important role in supporting our future growth.
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Furthermore, employees have the opportunity to participate in our formal Mentoring Program, which is designed to help less tenured employees foster relationships with more experienced colleagues and/or peers in different departments with the goal of enhancing professional and personal development and growth.
−Removed: In addition to formalizing a diversity, equity and inclusion strategy with clear objectives and aspirations for increasing the diversity of our workforce, we focused on a number of other human capital initiatives during fiscal 2021.
+Added: In addition to formalizing a DE&I strategy with clear objectives and aspirations for increasing the diversity of our workforce, we have recently focused on a number of other human capital initiatives.
For example, we completed the implementation of pay-for-performance, which involved the introduction of a common set of job competencies providing each individual job profile with a clear understanding of expectations for the role, a new performance measurement and reporting process, a standardized compensation structure and various training modules to facilitate these transitions.
−Removed: Finally, we completed the final implementation phase of a software program for financial
−Removed: management and human capital management, which provides a platform to deliver our human capital processes, allowing enhanced data analysis, better controls through trackable and auditable transactions, and employee and manager self service.
+Added: In support of our DE&I strategy, we launched the Hamilton Lane Emerging Talent Internship program, designed to introduce women and people of color to Hamilton Lane and to the opportunities in the private markets.
+Added: Finally, we completed the final implementation phase of a software program for financial management and human capital management, which provides a platform to deliver our human capital processes, allowing enhanced data analysis, better controls through trackable and auditable transactions, and employee and manager self service.
Our success is because of our people, our colleagues across the globe who bring their authentic selves to work every day.
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decisions designed to benefit our clients, our employees and our competitive edge.
−Removed: New Corporate Headquarters — LEED and Fitwel Certifications
−Removed: In addition to the efforts noted above, we are pursuing both LEED (Leadership in Energy and Environmental Design) and Fitwel certifications for our new corporate headquarters office building in Conshohocken, Pennsylvania.
−Removed: The LEED certification demonstrates the value we place on locating our headquarters in an energy and resource-efficient building.
−Removed: The Fitwel certification demonstrates our commitment to the health and wellness of our employees.
−Removed: It focuses on increasing physical activity, providing healthy food options, promoting safety and contributing to the overall physical and mental wellbeing of those who work in the building.
−Removed: The office will offer increased spaces designated for personal wellness, mental health and well-being and employee connectivity.
Compensation and Benefits
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• a carried interest plan;
−Removed: • competitive health and wellness benefits.
+Added: • competitive health, wellness, retirement and work/life benefits.
The particular mix and weighting of elements varies depending on the functional area and level of seniority within our organization.
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We believe a blend of variable and longer-term components further attracts and incentivizes talent, provides an overall compensation package that is competitive with the market and encourages retention of top performers.
−Removed: Our health and wellness benefits include 16 weeks of fully paid parental leave plus one additional week to be used on demand, regardless of gender identity, lactation and milk shipping services, assisted reproductive technology and adoption support, back-up child, elder and self-care, mental health services and a number of financial wellness benefits including our Employee Share Purchase Plan, as amended, through which employees can purchase shares of our Class A common stock at a discounted price.
+Added: Our benefits include 16 weeks of fully paid parental leave plus one additional week to be used on demand, regardless of gender identity, lactation and milk shipping services, assisted reproductive technology and adoption support, back-up child, elder and self-care, workplace flexibility, mental health services and a number of financial wellness benefits including educational assistance, a student loan refinancing and repayment program, commuter benefits and our Employee Share Purchase Plan, as amended, through which employees can purchase shares of our Class A common stock at a discounted price.
+Added: Corporate Responsibility
+Added: For more than 30 years, Hamilton Lane has proudly helped our clients and their beneficiaries achieve more financially secure futures.
+Added: We believe responsible and sustainable investing is a global business imperative and is key to building long-term value in a rapidly changing and increasingly complex world.
+Added: Many nations, communities and individuals are demanding that companies prioritize ESG issues, as well as
+Added: advance more diverse, equitable and inclusive workplaces.
+Added: Investment sectors cannot afford to sit on the sidelines of these issues, and that certainly holds true for the private markets.
+Added: As a global leader in our asset class, Hamilton Lane has consistently been at the forefront of industry changes, often helping to influence and drive them.
+Added: And our commitment to responsible and sustainable investing practices is no exception.
+Added: In fact, one needs to look no further than our mission statement – we enrich lives and safeguard futures – to see that the notion of investing responsibly is core to our culture and values.
+Added: To accomplish this, we are committed to selecting investment partners who we believe share our values and those of our clients.
+Added: Responsible investing makes good business sense as it integrates the desire for reducing risk with the goal of creating better outcomes for all stakeholders.
+Added: Our Continued Commitment to ESG & Sustainability Issues
+Added: Hamilton Lane has long been focused on ESG issues, and has been formally issuing our ESG Questionnaire to fund managers since 2010.
+Added: Our RIC was established in 2012, and each of our investment teams factor ESG considerations into their investment processes.
+Added: We raised our first dedicated Impact Opportunities Fund in 2019 and our second Impact Opportunities Fund in 2021, with each fund seeking to make direct investments in businesses with a focus on environmental and social impact.
+Added: In 2020, we appointed a long-tenured, senior member of our organization to the newly-created position of Director of ESG & Sustainability.
+Added: This individual is focused on bringing more cohesion, consistency, centralization and employee training to our efforts and leads our RIC.
+Added: We are actively growing our dedicated ESG team and resources.
+Added: We have measured the carbon footprint associated with the energy usage at our global offices, our business travel and the commuting of our global employees and have committed to carbon neutrality for our operations going back to 2019.
+Added: We have partnered with climate and sustainable development expert, Climate Impact Partners, to offset the unavoidable emissions of our 2019 and 2020 operations and intend to continue doing so going forward.
+Added: The partnership seeks to offset carbon dioxide emissions by supporting projects with third-party verified carbon credits as well as societal benefit, including a wind power project in India and two world-leading clean cooking projects in Bangladesh and Ghana.
+Added: These clean cooking projects not only cut carbon emissions, helping tackle climate change, but also improve lives by halving fuel bills for families and reducing exposure to toxic fumes.
+Added: By cutting fuel requirements, the projects also help reduce deforestation.
+Added: We are also exploring multiple avenues to reduce our carbon intensity in line with the Task Force on Climate-Related Financial Disclosures (“TCFD”) recommendations.
+Added: Last year, we moved into our new headquarters in Conshohocken, Pennsylvania, a suburb of Philadelphia.
+Added: The office is pursuing a Silver LEED (Leadership in Energy and Environmental Design) certification and has been awarded a Fitwel certification.
+Added: The LEED certification demonstrates the value we place on locating our headquarters in an energy and resource-efficient building.
+Added: The Fitwel certification demonstrates our commitment to the health and wellness of our employees.
+Added: We incorporated ESG considerations into our design and furnishing choices, and the office offers increased spaces designated for personal wellness, mental health and well-being and employee connectivity.
+Added: HL Green, an employee-led initiative formed in 2019, plans to continue researching and advising on opportunities for the firm to engage employees in practices that help protect the environment and promote sustainability both in the office and beyond.
+Added: Safeguarding Futures
+Added: At Hamilton Lane, we take seriously our goal of generating strong investment returns for our clients and their beneficiaries, while incorporating ESG and sustainability principles into our investing practices.
+Added: Our long-standing focus on ESG and sustainability issues has been reinvigorated in part because of the growing importance such practices have for our clients and our own genuine commitment to responsible investing.
+Added: Investing Responsibly
+Added: Hamilton Lane’s RIC was established in 2012 and is responsible for oversight, strategy and guidance on all ESG matters, including our ESG policy.
+Added: Our longstanding RIC shows the importance of responsible investing and effective ESG risk management at Hamilton Lane.
+Added: The RIC meets regularly to determine relevant updates to our corporate ESG policy and to ensure continued thought development on ESG policy.
+Added: RIC members are also present at every investment committee meeting to monitor investment compliance with the corporate ESG policy.
+Added: The RIC meets separately when an investment has significant ESG risk and/or when compliance with corporate ESG policy is not straightforward.
+Added: We fully integrate ESG into all of our due diligence processes.
+Added: As part of our standard process, we rate general partners on their approach to ESG, which allows us to help our clients understand how their general partners are performing while also allowing us to identify the areas in which to engage with the general partners.
+Added: Our proprietary rating system seeks to benchmark general partners to best practices, which means that the standards we expect from our general partners are continuously increasing.
+Added: Included in our overall approach to ESG is our ongoing focus on diversity and social inclusion both at the general partner and underlying portfolio company level.
+Added: This process is both qualitative and quantitative, and final recommendations are based on whether an investment satisfies both parts of the process.
+Added: Further, we work with both general partners and our clients to help them develop their own ESG policies and procedures, as necessary.
+Added: By incorporating ESG factors across our investment process and increasing the level of available information, we are aiming to help our clients better understand and meet their responsible investing objectives.
+Added: Post-investment, we monitor general partners and their developing portfolios and direct investment portfolio companies to ensure adherence to ESG policies and commitments.
+Added: We are in the process of implementing technology solutions to actively monitor ESG incidents in products and client portfolios.
+Added: We ultimately seek to standardize ESG reporting capabilities across our platform.
+Added: Our current ESG investment guidelines are the following:
+Added: • Environmental—Greenhouse gas emission, pollution, natural resource consumption and waste management are all criteria that we evaluate and consider in our investment process.
+Added: Furthermore, given the risks they pose to our planet and collective well-being, we do not directly invest through our discretionary capital in thermal coal, oil sands, or non-sustainable forestry practices.
+Added: • Social—Employee diversity, workplace conditions, supply chain practices, consumer protections and broader societal impacts are criteria that we evaluate and consider in our investment process.
+Added: Furthermore, given the risks they pose to our neighbors around the world, we do not directly invest through our discretionary capital in companies with material operations in controversial weapons (defined as chemical/biological, nuclear, cluster munitions and landmines), abusive lending practices, tobacco/nicotine products, pornography, or companies that support animal cruelty, child labor, human trafficking or forced labor.
+Added: • Governance—Ownership structures, voting rights, compensation, accounting practices and processes for dealing with conflicts of interest are critical to our underwriting process.
+Added: Sound governance is the bedrock for implementing responsible investing across the “E” and the “S” components of ESG.
+Added: • Special consideration and enhanced scrutiny are given to investments in areas with potentially higher ESG risks, such as mining, fossil fuel production, deforestation, alcohol, gambling and companies with operations in regions with a history of ESG abuses.
+Added: Furthermore, we have been a signatory to the United Nations Principles for Responsible Investment (“PRI”) since 2008 and, recently, Managing Director Ana Lei Ortiz has served as a PRI Private Equity Advisory Committee Member.
+Added: We also helped develop the PRI Limited Partners’ Responsible Investment Due Diligence Questionnaire.
+Added: In addition, we participate every year in the PRI’s annual Transparency Assessment (which has recently become mandatory).
+Added: It is designed to provide feedback to signatories to support ongoing learning and
+Added: development, as well as to be a key step in building a common language and industry standard for reporting and responsible investment activities.
+Added: In the 2019/2020 reporting cycle, we received an “A+” grade for our performance in the Indirect Private Equity category and an “A” grade in the Strategy & Governance category.
+Added: We have also made a pledge to reach net-zero emissions by 2050 or sooner across all discretionary assets under management.
+Added: As an important first step towards this goal, we became a signatory to Initiative Climat International (“iCI”) in 2022.
+Added: iCI is affiliated with the PRI and is composed of a platform of leading private equity investors dedicated to understanding and reducing carbon emissions of private equity-backed companies.
+Added: It was founded to help ensure the private equity industry plays its part in meeting the goals of the Paris Agreement on Climate Change (the “Paris Agreement”).
+Added: Its members commit to active engagement with portfolio companies to manage and reduce emissions and to promote sustainability.
+Added: Finally, we are an Influencer member of Pensions for Purpose (“PfP”), whose mission is to encourage ESG and impact investing at pension funds and increase knowledge sharing among market participants, and we have endorsed the ILPA Principles, which are aimed at improving the private equity industry for the long-term benefit of all industry participants and beneficiaries.
+Added: Environmental Best Practices
+Added: Climate change and environmental degradation are among the largest challenges that face the investment industry and humanity as a whole.
+Added: A purely exclusionary approach is not sufficient to solve these problems, but rather a holistic one is required.
+Added: We will seek to invest meaningfully into climate solutions and areas where we and our investment partners can drive significant de-carbonization and will endeavor to invest in the fossil fuel production sector only through managers who realize and are working to de-risk these assets in ways aligned with the Paris Agreement.
+Added: Additionally, we seek to avoid oil and natural gas-related assets (upstream, midstream, or downstream) unless the general partner or deal sponsor has indicated a full understanding of the climate-related risks involved, and has adopted a comprehensive ESG policy that includes the ability to measure and report on climate-related risks and mitigation efforts being undertaken in the portfolio.
+Added: We expect to expand this to other carbon intensive sectors in the future.
+Added: As an influential voice in the private markets, Hamilton Lane seeks to identify managers and investments that incorporate environmental best practices, some of which include:
+Added: • An official Environmental Policy Statement at the managing company and portfolio company level—This statement should set clear messaging and expectations from the top down.
+Added: • Robust environmental due diligence—Managers must consider the material risks and opportunities that arise from an investment’s impact on the natural world.
+Added: • A focus on reducing the carbon footprint of the management company and portfolio companies—Material and measurable reductions demonstrate a commitment to a better future and create a favorable position for future regulation.
+Added: • Efforts toward compliance with the TCFD—TCFD has become a widely accepted framework for monitoring and reporting climate-related risks and potential opportunities.
+Added: • Monitoring and reporting of environmental key performance indicators (“KPIs”)—Transparency with limited partners and general partners enhances accountability.
+Added: While we ask the same questions of each general partner through our request-for-information process, we recognize that risks vary by sector and deal and understand a suitable environmental risk mitigation strategy will depend on the associated risks of the manager’s investment focus.
+Added: Strategies such as energy, which have much higher relative material environmental risks, will receive added scrutiny in the due diligence process.
+Added: Committing to Being an Ally
+Added: As a firm, Hamilton Lane acknowledges the systemic racism that oppresses billions of people around the world, and we recognize that we share in the responsibility to listen to our communities, to understand the issues and to act.
+Added: We are committed to offering attention, influence and resources to be part of the solution.
+Added: Building a better future means joining together in our efforts through increased engagement and continued sharing of ideas, concerns and personal experiences.
+Added: As one of our core values states, we strive to “Do the Right Thing,” a value we leaned on especially in 2020 as protests against social injustice and Black Lives Matter movements spread across the United States and around the world.
+Added: One of the first steps our organization took was to heed the advice of those leading the movements:
+Added: That is, to begin listening and reflecting on our actions and opportunities for being an ally.
+Added: Then, and with the recognition that there would be much more work to do, we took some initial, but meaningful, action.
+Added: As noted above, in an effort to further expand our commitment to promoting and supporting a more diverse workforce, we announced the adoption of a new corporate value – “Promoting Equity and Inclusion from Within,” as well as:
+Added: • A new strategic plan aimed at expanding upon existing efforts to intentionally embed diversity, equity and inclusion into the fabric of the firm’s values, culture, and recruiting and retention practices.
+Added: The plan outlines enhanced recruiting and retention efforts, including an emphasis on ongoing training, accountability and inclusivity.
+Added: • Employees were granted extra volunteer time off to use toward any activity in support of the social justice movement.
+Added: • We began to identify ways in which our employees could listen to and learn from each other.
+Added: Our Diversity, Equity & Inclusion Speaker Series, which launched in 2017 as a means to provide outside perspectives on DE&I issues, shifted its focus to activism and social justice, hosting speakers on topics such as corporate responsibility, general awareness of racism and implementing effective approaches to racial equality.
+Added: • Our DE&I Council also launched a new series called Social Justice Chats (“#SJChats”), a series of employee-facilitated small group conversations about racial and social inequities, barriers and constructs.
+Added: These developments speak to Hamilton Lane’s acknowledgment of the present moment and important progress underway, as well as to our long-standing commitment to advancing women and other underrepresented groups within the private markets industry.
+Added: Social Best Practices
+Added: The year 2020 will be widely remembered as one of tragedy, upheaval and transformation.
+Added: We hope it will also be recognized as a year that enhanced awareness of social inequities, and provoked deep reflection and conversation among individuals, communities and companies around the world.
+Added: Hamilton Lane has long prioritized both our internal diversity efforts across our global teams and the health of the communities in which we invest and operate.
+Added: We seek to partner with managers who share our dedication to these issues and exhibit best practices, including:
+Added: • An official DE&I policy statement at the managing and portfolio company levels
+Added: • A focus on expanding diversity of decision-making within the managing and portfolio company management
+Added: • A diverse board composition
+Added: • Diversity mandates for hiring third-party service providers
+Added: • Monitoring and reporting of social KPIs
+Added: • Supplier due diligence
+Added: We also seek to invest in diverse organizations and partner with managers who share a commitment to DE&I.
+Added: As of March 31, 2022, we invested $11.1 billion in discretionary and advisory capital to diverse funds over the two years prior to that date, with a diverse manager being one where there is 25% or more diversity in at least two of the following four categories:
+Added: ownership level, investment committee, carried interest or investment team.
+Added: Promoting Equity and Inclusion from Within
+Added: In today’s world, humans are intertwined in a way unlike any other time in our history.
+Added: Across the globe,
+Added: nations, communities and individuals are demanding that companies prioritize ESG and sustainability issues, as well as advance more diverse, equitable and inclusive workplaces.
+Added: It is our view that the more diverse professionals we can attract to our asset class, the more our industry can thrive.
+Added: We know that smart teams do great things, but diverse teams can do truly incredible things, and the way to affect change is to help create it.
+Added: We leverage our status as a global leader in the private markets to advance these initiatives in an effort to benefit our clients, our employees, our industry and our communities.
+Added: We are proud of our organization’s history of embracing and championing diversity.
+Added: That authentic commitment is demonstrated by the meaningfully diverse representation across our organization.
+Added: As of March 31, 2022, 49% of our employees were minorities or women and 41% of senior leaders were minorities or women.
+Added: Those figures are well above the averages for our industry.
+Added: We know that talent is everywhere, but that not all talent has access.
+Added: Our goal is to provide a path for more diverse professionals to become part of the private markets industry.
+Added: We are guided by a genuine belief that in order to diversify and, therefore, improve the composition of our asset class, we must advocate for, educate and include women and ethnically diverse candidates early and often.
+Added: Our partnerships with organizations such as Girls Who Invest, Women Societies Alliance, Cristo Rey Philadelphia, Big Brothers Big Sisters and Philadelphia Financial Scholars, as well as initiatives such as the Hamilton Lane Women’s Exchange (“HLWE”), our annual Undergraduate Women’s Private Equity Summit, our Emerging Talent Program and our targeted campus recruiting program, are a testament to this belief.
+Added: In early 2021, Hamilton Lane became a signatory to ILPA’s newly announced Diversity in Action Initiative.
+Added: This effort focuses on foundational actions that limited partner and general partner organizations are taking to advance diversity, equity and inclusion, both internally and throughout the industry more broadly.
+Added: Hamilton Lane is honored to join our founding co-signatories in this important effort across our industry, and we remain committed to creating and maintaining an inclusive and collaborative workplace across the world.
+Added: In addition to our recruiting and retention efforts, we recognize that a true commitment to diversity requires a proactive and multi-faceted approach.
+Added: We have multiple employee-led programs designed to help our colleagues with skill development, career progression and work-life balance, as well as to facilitate open dialogues around important topics such as race, inclusion and social justice, including:
+Added: • Coffee Connects—internal networking opportunities for Hamilton Lane women intended to facilitate building new relationships and sharing experiences across the organization
+Added: • DE&I Speaker Series—interview series intended to promote and encourage the honest discussion of issues related to diversity and inclusion within our firm and broader industry
+Added: • HLWE—creating experiences designed to bring Hamilton Lane women together to support their development and success
+Added: • Mentoring Program—formal program designed to help employees foster relationships with more experienced colleagues and/or peers in different departments for professional and personal development and growth
+Added: • #SJChats—employee-facilitated small group sessions discussing a variety of racial inequality and social justice topics
+Added: At Hamilton Lane, we remain fully committed to Diversity, Equity & Inclusion.
+Added: Our success is because of our people – our colleagues across the globe who bring their authentic selves to work every day.
+Added: Together, we believe diverse perspectives lead to informed decisions designed to benefit our clients, our employees and our competitive edge.
Available Information
Our website is located at www.hamiltonlane.com, and the Shareholders page of our website is located at http://ir.hamiltonlane.com.
−Removed: We are subject to the informational requirements of the Exchange Act and
−Removed: file or furnish reports, proxy statements and other information with the SEC.
+Added: We are subject to the informational requirements of the Exchange Act and file or
+Added: furnish reports, proxy statements and other information with the SEC.
Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements, statements of changes in beneficial ownership and amendments to those reports are available for free on the Shareholders page of our website as soon as reasonably practicable after we electronically file them with, or furnish them to, the SEC.
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