Company Overviews21.q4cdn.com/282623170/files/doc_presentations/Investor-Present… · Some of the...
Transcript of Company Overviews21.q4cdn.com/282623170/files/doc_presentations/Investor-Present… · Some of the...
Hamilton Lane Incorporated - Investor PresentationCompany Overview
Page 2
A Compelling Growth Story
Value Drivers Our Franchise
Established and leading market position Continued growth
Proven record of growth over many years Scalable
Strong industry tailwinds Industry leader
Significant locked-in and recurring revenue Predictable
Strong and steady margins Profitable
Significant employee ownership Aligned
Our strengths and unique market positioning translate into a successful growth company operating in a fast-growing industry with meaningful barriers to entry
Page 3
Leading, Global Private Markets Solutions Provider
• Founded in 1991, we are one of the largest allocators of capital to private markets worldwide with nearly $360B of AUM / AUA• Over 290 professionals dedicated to the private markets (substantially all are stockholders)• 14 offices in key markets globally• ~350 sophisticated clients globally (in 35 countries)• Significant proprietary databases and suite of analytical tools • $49B of discretionary commitments since 2000
We operate at the epicenter of a large, fast-growing and highly desirable asset class, helping a wide array of investors around the world navigate, access and succeed in the private markets
~$46Bof AUM1
~$314Bof AUA1
Buyout Growth Equity Real E
state
Inf
rast
ruct
ure
C
redit
Venture Capital Co-Investment Secondary
Nat
. Res
ourc
esC
o-Investments
Secondary T
rans
actio
ns
Primary Funds
Private Markets Funds
Private Companies
Investors/Limited Partners (LPs)
1 As of 6/30/2017
Page 4
What We Do for Our Clients
Customized Separate Accounts
Tailored solutions through managed investment
accounts
Specialized Funds
Primaries, secondaries, direct/co-investments, fund-
of-funds and white-label products
Advisory Services
Partnering with large institutions with in-house
resources to assist across the complex landscape
Reporting, Monitoring,
Data and Analytics
Customized, technology-driven reporting, monitoring
& analytics services
Distribution Management
Active portfolio management of private
markets distributions
Our value proposition
Page 5
Who We Work For
Our global client base includes institutional investors of all sizes and with different needs...
Public Pensions
Some of the largest pension funds in the U.S.
and globally
Taft Hartley
A leading provider to U.S. labor union pension plans
Sovereign Wealth FundsSome of the world’s
largest SWFs
Financial Institutions
Banks, insurance companies and other financial firms that are
global in nature
Endowment FundsWide range of colleges,
universities and foundations
Corporate Pension FundsRecognizable brands
across a variety of industries
Sample clients include...
Page 6
Diversified revenue stream with no single client representing more than 5% of management and advisory fee revenues
Highly Diversified Client Mix
Sticky Client Base• ~12 year average term for specialized products• Seven year average age of separate account client
relationship• No customized separate account clients lost in the last
four fiscal years• 80% re-up rate for clients whose first investment period
has expired• Over 60% of new customized separate account
management fees over the last three fiscal years have come from our existing client base
Multiple Layers of Diversification• Over 40% of our clients have multiple products and/or
services with us• 95% of our top 20 clients have multiple products and/or
services with us
Top 20 clients contributed 39% to FY17 net revenue
FY17 Clients and Investors by TypePublic Pension
14%
Endowment/Foundation
14%
Financial/Insurance
20%SovereignWealth Fund
2%
Top 10 Clients26%
Clients 11-2013%
Other61%
Labor UnionPension Plans
24%
Corporate/Private Pension
9%
HNW/Family Office
17%
FY17 Management and Advisory Fees by Client
Page 7
Where We Fit in the Asset Management Ecosystem
We are not a one size fits all provider
Private markets allocator
Traditional asset managers
Alternative asset managers
Financial solutions / Investor & business services
Global consultants
Partners Group
Federated
OM Asset Management T. Rowe Price Waddell & Reed
Ares
MSCI
Factset Morningstar
Willis Towers WatsonAON Marsh & McLennan Companies
Envestnet Moody’s Financial Engines
Thomson Reuters Markit McGraw Hill Financial SEISS&C
The Carlyle Group Blackstone Oaktree Apollo KKR
Janus Capital GroupFranklin Templeton
Artisan Partners Eaton Vance BlackRock Invesco Legg MasonCohen & Steers
Page 8
Hamilton Lane is a market leader in a growing asset class with a model that lends itself to stability and predictability
Industry Tailwinds and Preferred Business Model
Blackstone KKR Apollo
Ares
Carlyle
Oaktree
Partners Group
BlackRock
Franklin Templeton
T. Rowe
Invesco
Eaton Vance
Legg Mason
Janus Capital
Federated
Artisan Partners
Cohen & Steers
Old Mutual
Waddell & Reed
-10%
-5%
0%
5%
10%
15%
20%
30% 40% 50% 60% 70% 80% 90% 100%
4 Ye
ar A
UM
CAG
R
Management & Advisory Fees as a % of Revenue (LFY)
Alternative Managers
Traditional Managers
Ass
et G
row
th
Stability & Predictability
Note: Represents peers identified by research analysts where the relevant information is available; based on the most recent fiscal year data (most as of 12/31/16)Source: Capital IQ and public filings
Page 9
Growing Asset Footprint & Influence
$36 $51 $77 $79 $95 $81
$129 $147 $147 $189 $205
$292
$314
$6 $7
$11 $13 $16 $19
$22 $24 $30
$32 $35
$40 $46
$0
$50
$100
$150
$200
$250
$300
$350
$400
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 6/30/17
Total AUA Total AUM
Total Assets Under Management/Advisement ($B)1
1 Data as of calendar year end 12/31 unless noted otherwise. Numbers may not tie due to rounding.
CAGR: 21%
$359BAUM & AUAQ-o-Q Growth
AUA: 4%AUM: 10%
Page 10
Fee-Earning AUM Driving Revenues
...and annual fee rates are stable
Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Jun-16 Jun-17
Customized Separate Accounts Specialized Funds
CAGR: 14%
Total Fee-Earning Assets Under Management ($B)1
$0
$5
$10
$15
$20
$25
$30
$35
$40
$11
$5
$16
$14
$5
$19
$16
$6
$22
$17
$7
$24
$18
$9
$27
$18
$9
$28
$17
$7
$25
12%Y-o-Y Growth
0.58% 0.55% 0.56% 0.57% 0.65%20.51%
1 Data as of fiscal year end 3/31; unless otherwise noted2 Reflects retroactive fees of $5.8M
Total Management Fee Revenues as a % of Average FEAUM
Page 11
Annual performance data as of fiscal year ending March 31 unless noted otherwise1
Growing and Stable Revenue and Earnings Profile
Note: Numbers may not tie due to rounding. Data as of fiscal year end 3/311 Adjusted EBITDA and Fee Related Earnings are non-GAAP financial measures. For a reconciliation from GAAP financial measures to non-GAAP financial measures, see Appendix, page 19.
2016 Adjusted EBITDA includes $20.3M of compensation expenses related to incentive fee revenue that was not recognized in 2016 but is expected to be recognized in future periods
$0
$25
$50
$75
$100
$125
$150
$81
2014
$87
2015
$104
2017$0
$40
$80
$120
$160
$200
$240
$130
$9 $140
2014
$146
$10 $155
2015
$158
$23 $181
2016
$173
$7
$180
2017
US
D in
Mill
ions
$0 $20 $40 $60 $80
$100 $120 $140
$64
2014
$74
2015
$83
2017
US
D in
Mill
ions
Total Revenue Total Expenses ($M)
Adjusted EBITDA ($M)1
$68
2016
$119
2016
CAGR: 11%
$113
$6$119
2013
$69
2013
CAGR: 11%
$55
2013$0
$20$40$60$80
$100$120$140
2013 2014 2015 2016 2017
$47 $54$63
$70 $72
Fee Related Earnings1
CAGR: 11%
US
D in
Mill
ions
US
D in
Mill
ions
Management & Advisory Fees Incentive Revenue
Page 12
Significant Growth Visibility
Investor Re-Ups and Maintaining Allocations
Addressable Market
New Products
New Distribution Channels
Client Base Diversification
Global Expansion
Data Advantage
Defined Contribution Opportunity
++++++
=+
Multiple Avenues
of Profitable Growth Ahead
Page 13
Robust Data Advantage Informs Our Investment Decisions
Hamilton Lane Proprietary
40 Vintage Years
~$3T Total Fund Commitments
3,300+ Funds
~50,000 Portfolio Companies
Advantages for Our Clients
Benchmarks
Market Intelligence
Manager Selection
Industry Insights
Asset Level Insights
Attribution Analysis
Partnerships with leading-edge technology providers
Data collection and reporting
Investment workflow management
Allocation software Benchmarking and analytics
Aggregation of Industry & Fund-Level Data Creates Our Wealth of Proprietary
Information+
Hamilton Lane Analytical & Research Capabilities
Page 14
Deep Bench of Talent and Award-Winning Culture
Executive Management (7)
Investment Team (95)
Business Development
(20)
Product Management
(20) Finance (20)
IT (20)
Legal & Compliance
(20) HR / Admin
(15) Client
Services (80)
Key Stats• Over 290 employees globally• ~70% of the team is less than 40 years of age• Women compose ~40% of the employee base and ~30% of
all senior roles
Beyond the Business• HL in Action – Volunteerism and Matching Gifts Program • HL Wellness Committee• Hamilton Lane matching gifts program• HL Women’s Exchange• HL Diversity & Inclusion Council
Awards
Widespread employee ownershipSource: Company data. Employee figures as of 6/30/2017
Page 15
The Hamilton Lane Story
Growing asset base
Expanding private markets
allocations
Desire to consolidate
service partners
Increasingly complex offering
set
Industry Tailwinds
Market leading footprint
Global, blue-chip client base
Deep, talented, aligned team
Solutions focused
Our Approach +
Continued AUM Growth
Stable and Growing Margins
Expected Earnings Growthx =
Page 16
Growing Global Presence• Continued expanding our global footprint with the addition of two new offices in Sydney, Australia
and Munich, Germany
Enhanced Governance• Added two new independent board members; Leslie F. Varon and David J. Berkman
Expanding Asset Footprint• New client adds and separate account re-ups continue• Completed the raise of our latest flagship secondary fund, Hamilton Lane Secondary Fund IV, L.P., which attracted
$1.9 billion in commitments--our largest specialized product to date• Closed our credit-focused annual series fund, Hamilton Lane Strategic Opportunities Fund 2017, on $435 million in
commitments, which is more than twice the size of the prior year’s fund
Continuation of Data & Technology Initiatives• Partnered with IPREO to form Private Market Connect, a data collection and management initiative
Transacting in Areas of Growth• Signed the acquisition of Real Asset Portfolio Management, LLC, which will broaden the firm’s real assets
capabilities
Shareholder Returns• Announced our intent to pay a quarterly dividend to shareholders; dividends declared for the first two quarters as a
public company
Since the IPO
Appendix
Page 18
Historical Income Statement
(Dollars in Thousands)Year Ended March 31,
2013 2014 2015 2016 2017RevenuesManagement and advisory fees $112,982 $130,455 $145,876 $157,630 $172,674
Incentive fees 6,179 9,309 9,509 23,167 7,146
Total revenues 119,161 139,764 155,385 180,797 179,820 ExpensesCompensation and benefits 46,789 55,950 60,157 92,065 72,116
General, administrative and other 22,210 24,760 26,865 26,898 31,589
Total expenses 68,999 80,710 87,022 118,963 103,705 Other income (expense)
Equity in income of investees 12,149 16,905 10,474 1,518 12,801
Interest expense (11,136) (8,503) (5,883) (12,641) (14,565)
Interest income 296 142 87 194 320
Other non-operating income (loss) (461) (699) (1,056) 5,816 83
Total other income (expense) 848 7,845 3,622 (5,113) (1,361)
Income before income taxes 51,010 66,899 71,985 56,721 74,754 Income tax expense (benefit) (827) (128) 483 869 316
Net income 51,837 67,027 71,502 55,852 74,438
Less: income attributable to non-controlling interests 51,837 67,027 71,502 55,852 72,634
Net income attributable to Hamilton Lane Incorporated $- $- $- $- $612
Page 19
Non-GAAP Reconciliation
Year Ended March 31,(Dollars in thousands except share and per share amounts) 2013 2014 2015 2016 2017Net income attributable to Hamilton Lane Incorporated $- $- $- $- $612
Income (loss) attributable to non-controlling interests in general partnerships 3,157 4,565 2,242 (1,255) 1,192 Income attributable to non-controlling interests in Hamilton Lane Advisors, L.L.C. 48,680 62,462 69,260 57,107 72,634 Incentive fees (6,179) (9,309) (9,509) (23,167) (7,146)Incentive fee related compensation1 2,854 4,511 4,542 31,714 3,283 Interest income (296) (142) (87) (194) (320)Interest expense 11,136 8,503 5,883 12,641 14,565 Income tax expense (benefit) (827) (128) 483 869 316 Equity in income of investees (12,149) (16,905) (10,474) (1,518) (12,801)Other non-operating (income) loss 461 699 1,056 (5,816) (83)
Fee Related Earnings $46,837 $54,256 $63,396 $70,381 $72,252 Depreciation and amortization 2,074 1,853 1,867 2,027 1,915 Equity-based compensation 2,803 3,070 3,390 3,730 4,681 Incentive fees 6,179 9,309 9,509 23,167 7,146 Incentive fee related compensation1 (2,854) (4,511) (4,542) (31,714) (3,283)Interest income 296 142 87 194 320
Adjusted EBITDA $55,335 $64,119 $73,707 $67,785 $83,031
Non-GAAP earnings per shareNet income attributable to Hamilton Lane Incorporated $612
Income attributable to non-controlling interests in general partnerships 1,192 Income attributable to non-controlling interests in Hamilton Lane Advisors, L.L.C. 72,634 Income tax expense 316 IPO related expenses2 1,935 Write-off of deferred financing costs3 3,359
Adjusted pre-tax net income 80,048 Adjusted income taxes4 (32,211)Adjusted net income $47,837
Weighted-average shares of Class A common stock outstanding 18,341,079 Exchange of Class B and Class C units in HLA5 34,438,669
Adjusted shares 52,779,748
Non-GAAP earnings per share $0.91
1 Incentive fee related compensation includes incentive fee compensation expense and bonus and other revenue sharing allocated to carried interest classified as base compensation. 2 Represents accrual of one-time payments to induce members of HLA to exchange their HLA units for HLI Class A common stock in the reorganization in connection with the IPO.3 Represents write-down of unamortized discount and debt issuance costs due to the $160 million paydown of outstanding indebtedness under the Term Loan with proceeds from the IPO.4 Represents corporate income taxes at assumed effective tax rate of 40.24% applied to adjusted pre-tax net income. The 40.24% is based on a federal tax statutory rate of 35.00% and a combined state
income tax rate net of federal benefits of 5.24%.5 Assumes the full exchange of Class B and Class C units in HLA for HLI Class A common stock.
Page 20
Disclosures
As of August 29, 2017
Some of the statements in this presentation may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. Words such as “will,” “expects,” “believes” and similar expressions are used to identify these forward-looking statements. Forward-looking statements discuss management’s current expectations and projections relating to our financial position, results of operations, plans, objectives, future performance and business. All forward-looking statements are subject to known and unknown risks, uncertainties and other important factors that may cause actual results to be materially different, including risks relating to our ability to manage growth, fund performance, risk, changes in our regulatory environment and tax status; market conditions generally; our ability to access suitable investment opportunities for our clients; our ability to maintain our fee structure; our ability to attract and retain key employees; our ability to manage our obligations under our debt agreements; defaults by clients and third-party investors on their obligations to us; our ability to comply with investment guidelines set by our clients; the time, expense and effort associated with being a newly public company; and our ability to receive distributions from Hamilton Lane Advisors, L.L.C. to fund our payment of dividends, taxes and other expenses.
The foregoing list of factors is not exhaustive. For more information regarding these risks and uncertainties as well as additional risks that we face, you should refer to the “Risk Factors” section of our Registration Statement on Form S-1, as amended, and in our subsequent reports filed from time to time with the SEC. The forward-looking statements included in this presentation are made only as of the date presented. We undertake no obligation to update or revise any forward-looking statement as a result of new information or future events, except as otherwise required by law.
The S&P 500 Total Return Index is a capitalization-weighted index of 500 U.S. large cap stocks that assumes all dividends and distributions are reinvested.
The MSCI World Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity performance of developed markets.