Hamilton Lane eyes India, China deal opportunities

Hamilton Lane, the US private equity firm with more than $150 billion in total assets under management and advisory, sees Asia as a growth engine for its overall business, with China and India as the centrepieces for deal opportunities in the region.

“We see the Asian investment opportunity and the growth in our client base as totally critical to the future growth of the business,” says Juan Delgado-Moreira, managing director and head of Europe and Asia at Hamilton Lane.

Delgado-Moreira was relocated to Hong Kong from London last year in a move that underlines the firm's emphasis on growing its deal flow and client base in Asia.

Hamilton Lane Fund VII, a $298 million global private equity fund-of-funds vehicle which closed in June 2011 and is now fully invested, has a 15-20% exposure to Asia. The ratio is likely to rise in future funds, says Delgado-Moreira. “We want to increase it prudently, and with some time.”

The firm is in the process of raising Fund VIII, as well as Hamilton Lane Secondary Fund III, which both have a global scope. While the firm declined to state the target sizes, they are understood to be $500 million for fund VIII and $650 million for the secondary fund.

A notable number of investors in VIII have asked to have exposure only to the fund’s Asian investments, says Delgado-Moreira.  “They are prepared to opt out of parts of a global portfolio in favour of just emerging markets, and in Asia in particular,” he adds, underscoring bullish sentiment towards the region.

The emerging markets of India and China are viewed by Hamilton Lane – and also the broader private equity sector – as ripe for deals. “They are at the heart of opportunities by a number of managers,” says Delgado-Moreira.

Whereas a decade ago deals in China were focused on pre-IPO and early-stage investments in India, the landscape has changed as the countries continue to mature. “The current themes are cross-border international investment from China in mainland-related companies, and restructuring in India,” says Delgado-Moreira.

Indonesia, which has surfaced as a private equity hotspot over the past year, is in Hamilton Lane’s sights, although it is taking a cautious approach to the market. “We have seen primary, secondary and co-investment opportunities,” notes Delgado-Moreira. However, as some deals on offer entail a sizable amount of risk in relation to returns, “in some circumstances, we don’t think it is the best way to put money to work”.

Hamilton Lane has $22 billion in assets under management and $130 billion under advisory. Its largest client pool, both in Asia and globally, comprises sovereign wealth funds, large public pension funds and large corporate pension funds. They typically invest large pools of capital with the firm on an advisory basis, creating a bespoke portfolio of assets under a managed account. “No two accounts are the same,” says Delgado-Moreira.

The firm will continue to raise funds of funds for investors with smaller amounts of capital to allocate – which includes high-net-worth individuals and small to medium-sized corporations. However, the advisory business will remain as the firm’s biggest business segment, given the large pools of capital involved and continued interest from sovereigns and pensions.

“The managed account [segment] is growing very well,” notes Delgado-Moreira. “Many of those accounts are in Asia.”