Executive Summary / Key Takeaways

• Hamilton Lane ($HLNE) has surpassed $1 trillion in total asset footprint, driven by robust growth in its specialized funds, particularly the high-fee-rate Evergreen platform, and strategic technology investments. This milestone underscores its leadership in the expanding private markets.
• The firm's strategic partnership with Guardian Life Insurance Company of America, involving the management of a nearly $5 billion existing private equity portfolio and $500 million in annual commitments for a decade, significantly enhances its insurance solutions platform and provides substantial, scaling revenue opportunities.
• Financial performance for the six months ended September 30, 2025, demonstrates strong momentum, with total revenues increasing by $15.9 million and Fee-Related Earnings (FRE) growing 34% year-over-year to $160.7 million, supported by fee-related performance revenues (FRPR) from Evergreen funds.
• Hamilton Lane is actively leveraging its proprietary technology, including Cobalt LP and strategic investments in Securitize, Novata, and 73 Strings, to enhance data transparency, streamline operations, and expand access to private markets for a broader investor base, solidifying its competitive moat.
• Despite broader market volatility and a muted exit environment, Hamilton Lane maintains a stable margin outlook, prudent leverage, and a confident stance on private credit fundamentals, positioning itself to capitalize on dislocations and continue its long-term growth trajectory.

The Private Markets Frontier: Hamilton Lane's Strategic Blueprint

Hamilton Lane has firmly established itself as a global leader in private markets investment solutions, a sector characterized by its complexity, opacity, and significant potential for differentiated returns. The firm's overarching strategy is elegantly simple yet profoundly effective: prioritize client needs, construct thoughtfully designed portfolios, and deliver strong risk-adjusted returns. This client-centric ethos has been the bedrock of its success since its founding in 1991, enabling it to consistently attract more clients and capital.

The company's journey from its origins in private markets to its 2017 IPO, and now to a total asset footprint exceeding $1 trillion, reflects a strategic evolution. Hamilton Lane has consistently demonstrated resilience during periods of market stress, with its private equity valuations recovering faster than public market indices during both the dotcom collapse and the Global Financial Crisis. This historical performance underpins its current conviction that private equity will continue to exhibit lower volatility and quicker recovery times compared to public equities in any downturn.

Hamilton Lane operates across several key areas: customized separate accounts, specialized funds (including its rapidly expanding Evergreen platform), advisory services, distribution management, and reporting, monitoring, data, and analytics. This diversified approach allows the firm to cater to a broad spectrum of institutional and individual investors globally, from those making initial forays into alternatives to the most sophisticated private markets participants.

Technological Edge: Powering Transparency and Efficiency

A cornerstone of Hamilton Lane's competitive advantage lies in its differentiated technology and data solutions. The firm leverages its proprietary technology, notably Cobalt LP, as a core offering. Cobalt LP is a sophisticated data and analytics software system designed to empower investors with comprehensive tools for managing their private market portfolios.

This technology provides tangible benefits by allowing clients to import and upload their private market holdings to perform crucial functions such as benchmarking, comparative analysis, cash flow forecasting, and public market equivalent calculations. The strategic intent behind Cobalt is to bring greater clarity and transparency to an otherwise opaque asset class, enabling faster and more efficient decision-making for investors.

Hamilton Lane's commitment to technological innovation extends beyond its internal platforms through strategic investments and partnerships. The firm has invested in Securitize, a leader in tokenizing real-world assets, which recently announced a business combination to become publicly traded. This partnership, initiated in 2022, aligns with Hamilton Lane's vision of making private markets more accessible to a broader investor base through digital blockchain solutions, potentially offering lower investment minimums and increased liquidity. Hamilton Lane expects a return of more than 2x its initial investment in Securitize, demonstrating the financial upside of these strategic tech bets.

Another key investment is in Novata, a platform focused on sustainability data solutions for private markets. Hamilton Lane recently invested additional capital in Novata's acquisition of Atlas Metrics, which expands Novata's global reach and now supports over 400 clients and 13,000 private companies worldwide. This initiative directly addresses the growing demand from investors for trusted, efficient, and scalable sustainability data, enhancing data transparency and analytical capabilities across the asset class.

Furthermore, the firm made a strategic investment in 73 Strings, an AI-powered platform that provides comprehensive data extraction, monitoring, and valuation solutions for private markets. This technology streamlines middle-office processes, enabling data structuring, standardization, and fair value estimation, which is essential for scaling growth and product innovation within alternative investments.

These technological differentiators collectively contribute to Hamilton Lane's competitive moat by enhancing its service offerings, improving operational efficiency, and expanding its market reach. They enable the firm to attract and retain clients by providing superior tools and insights, potentially leading to higher asset retention and the ability to command premium fees for its specialized solutions. The strategic intent is clear: to leverage technology to drive long-term growth, improve margins through efficiency gains, and solidify its position as a market leader in private markets data and analytics.

Competitive Landscape and Strategic Positioning

Hamilton Lane operates in a highly competitive alternative asset management industry, vying with major global players such as Blackstone , KKR & Co. Inc. (KKR), Apollo Global Management Inc. (APO), and The Carlyle Group Inc. (CG). While these larger competitors often focus on massive-scale deals and broader infrastructure plays, Hamilton Lane carves out a qualitatively strong, yet niche, market position through its specialized strategies and client-centric approach.

Hamilton Lane's strength lies in its agility and customization, particularly in mid-market private equity and advisory services. Its offerings in customized separate accounts and specialized strategies, including fund-of-funds and co-investments, provide a more tailored and flexible approach for mid-market investors. For instance, Hamilton Lane's direct investment strategies, especially in early-stage ventures and mezzanine financing, offer a specialized edge compared to KKR's broader, growth-focused portfolio.

The firm's proprietary technology, such as Cobalt LP, provides a distinct advantage in analytics and reporting, differentiating it from rivals. This technological edge, coupled with its strong brand and global network, fosters customer loyalty and facilitates deal access, particularly in emerging markets. While larger competitors like Blackstone (BX) may exhibit superior financial performance in terms of overall revenue growth and profitability due to their sheer scale, Hamilton Lane's focus on operational execution for mid-market deals and its ability to provide customized solutions allow it to compete effectively.

However, Hamilton Lane faces competitive vulnerabilities, primarily its smaller scale compared to industry giants, which can lead to higher customer acquisition costs and potential challenges in deal sourcing against firms with more robust resources. Its growth trajectory, while steady, may lag behind competitors with broader market influence. The firm strategically addresses these challenges by disproportionately allocating resources to the growth of its Evergreen products, which offer superior economics, and by forging strategic partnerships that enhance its brand and reach.

The increasing competition in the Evergreen fund space, with numerous firms launching similar products, is a notable dynamic. Hamilton Lane believes its scale, brand, head start, and technology are immense advantages. The firm's high percentage of Evergreen AUM with an incentive fee component (over 85% as of March 31, 2025) is a key differentiator compared to other providers. While acknowledging potential fee compression in the long term, Hamilton Lane is focused on achieving large-scale growth, believing that offering more choice to both retail and institutional clients is paramount.

Financial Performance and Operational Momentum

Hamilton Lane's financial performance for the six months ended September 30, 2025, reflects robust growth and strategic execution. Total revenues increased by $15.9 million, reaching $366.8 million, primarily driven by a rise in management and advisory fees.

Management and advisory fees for specialized funds saw a 7.8% increase to $172.6 million, while customized separate accounts contributed $70.3 million, up 3.1%. Notably, revenue from reporting, monitoring, data, and analytics surged by 20.6% to $17.0 million, underscoring the success of its technology solutions.

Incentive fees, including fee-related performance revenues (FRPR), totaled $91.0 million for the six months, contributing significantly to the overall revenue growth. The blended fee rate across the platform has steadily increased to 65 basis points as of September 30, 2025, up 14% since its 2017 IPO, a direct result of the strategic shift towards higher-fee-rate specialized funds, particularly Evergreen products.

Total expenses for the six months ended September 30, 2025, increased by $20.2 million to $210.1 million. Compensation and benefits rose by $13.0 million, driven by increased headcount and equity-based compensation, which saw a significant $17.3 million increase. General, administrative, and other expenses also grew by $6.2 million, partly due to third-party commissions related to Evergreen fund subscriptions. Despite these investments, the firm's Fee-Related Earnings (FRE) for the six months ended September 30, 2025, grew 34% year-over-year to $160.7 million, with an FRE margin of 50% for the quarter, benefiting from strong FRPR.

Hamilton Lane's balance sheet remains strong, with cash and cash equivalents at $240.8 million as of September 30, 2025. The company maintains a conservative leverage profile, with $288.1 million in debt outstanding and $325 million in available credit under its Loan Agreements. The firm's largest asset is its investments alongside clients in customized separate accounts and specialized funds, which it views as crucial for long-term growth.

Outlook and Strategic Trajectory

Hamilton Lane's outlook is anchored in its continued expansion within the private markets, particularly through its Evergreen platform and strategic partnerships. The firm projects a stable FRE margin in the "high 40%" range on an annualized basis, acknowledging quarterly fluctuations due to seasonality and bonus accruals. This stability is maintained even as the firm continues to invest significantly in new products and team expansion, offsetting costs through efficiency gains from technology and disciplined expense management.

A key driver for future revenue growth is the conversion of over $1 billion in Evergreen AUM, currently not earning management fees due to fee holidays, into fee-earning AUM. Over half of this is expected to occur in calendar Q4 2025, with the remainder in calendar 2026. The strategic partnership with Guardian Life Insurance Company of America is anticipated to scale revenue over time as the committed capital is deployed, with immediate management fees from Evergreen fund investments and future separate account management fees.

Hamilton Lane is actively fundraising for its Sixth Equity Opportunities Fund, with nearly $1.6 billion raised and clear visibility to exceed the prior fund's $2.1 billion total. The second infrastructure fund has already raised over $1.1 billion, nearly doubling its predecessor, and fundraising for the next flagship secondaries fund has commenced, with a first close expected in the first half of calendar 2026. These initiatives underscore the firm's ability to launch and scale new products effectively.

The company has declared a quarterly dividend of $0.54 per share, maintaining its target of a 10% annual increase for fiscal year 2026, equating to $2.16 per share. This consistent dividend growth reflects management's confidence in the firm's sustained profitability and cash flow generation.

Risks and Challenges

Despite a compelling growth narrative, Hamilton Lane faces several risks. The unpredictability of the macro market, particularly the slow exit environment, continues to impact the customized separate account business, as investors delay redeployment of capital. Management acknowledges that the current market environment, influenced by political and administrative initiatives, creates "a lot of unknowns" and can lead to "paralysis" among investors.

While Hamilton Lane refutes the notion of a broader credit crisis, its predominant exposure to market risk through its role as general partner or investment manager means that movements in the fair value of underlying investments could adversely affect its equity in income of investees. Additionally, a 100 basis point increase in interest rates could lead to an approximate $0.9 million increase in interest expense over the next 12 months due to its floating-rate debt. The increasing competition in the Evergreen fund space also presents a challenge, potentially leading to future fee compression, though Hamilton Lane believes its scale and brand provide a strong competitive position.

Conclusion

Hamilton Lane stands at a pivotal juncture, having successfully crossed the $1 trillion asset footprint threshold, a testament to its enduring strategy and adaptability in the dynamic private markets. The firm's core investment thesis is rooted in its ability to deliver sophisticated, customized private markets solutions, amplified by a robust and expanding Evergreen platform and a clear technological advantage. The recent strategic partnership with Guardian Life Insurance Company of America, coupled with the impressive growth of its Evergreen funds and the successful monetization of technology investments, positions Hamilton Lane for sustained revenue and earnings expansion.

While macroeconomic uncertainties and competitive pressures persist, Hamilton Lane's disciplined approach to expense management, strong balance sheet, and deep data-driven insights provide a solid foundation. The firm's commitment to technological leadership, evidenced by its proprietary Cobalt LP and strategic stakes in innovators like Securitize and Novata, is not merely a differentiator but a critical enabler for future growth and market penetration, particularly in democratizing access to private markets. Investors should recognize Hamilton Lane's proven track record of navigating complex market cycles and its strategic foresight in cultivating new growth avenues, making it a compelling long-term investment in the evolving alternative asset management landscape.