00:00Talk us through, you know, what you're hoping to accomplish this fund, what areas of the market
00:04you'll be targeting. Katie, great to see you again. This is a story of the mid-market. So
00:10much of the headlines today are dominated by all things big, whether it's public equity or private
00:15equity. We love to fixate on big things. But the reality is, is that a lot of the return in
00:20the
00:20private markets comes from small things. And this fund is generally focused on doing small and mid
00:26market size deals, companies that would be way, way, way too small to take public. And so they are
00:31only accessible in the private markets. So not IPO candidates, or at least not yet these mid-market
00:38firms that you are targeting. Who does that appeal to? What sort of investors were attracted to this
00:44fund that you just raised? All kinds of investors, everything from individual investors up into the
00:50largest institutional investors and everything in between. So I think for most firms, most
00:55investors accessing the small and mid-market is difficult. It's very disparate. And so the
01:01number of players in that space is vast. And they're spread across geographies and they're
01:07spread across segments. And so having a firm with our expertise to help navigate that, very appealing
01:12to investors. And I think the fund reflects that. I am curious too, Eric, we talk about this idea of
01:17all the hand-wringing we saw, particularly earlier this year and last year, about the health of some of
01:22these underlying companies, and obviously all of the hullabaloo about some of the publicly traded
01:28BDCs. From where you sit, and I know you've spoken about this publicly early this year, that some of
01:33that was overblown. Is not just the health of these companies up to snuff, but more importantly, the types
01:39of investors that are coming into these funds right now, they feel comfortable with the risk that they're
01:45taking? Romain, they do. And I think, again, the fundraising dollars reflect that. What I would say
01:51and what I have said is that the market is very big. So the private market contains thousands and
01:57thousands and thousands of fund managers and well over a hundred thousand companies today owned by
02:03private equity firms. Well, you can imagine that there's going to be a pretty wide dispersion of
02:07performance. That is the reality of the private markets. It was that way 30 years ago. It's that way
02:13today. Dispersion is wide and navigating it requires some expertise and those that can navigate it well
02:19get rewarded. So that to me is not surprising, but I think right now we're making the mistake in the
02:25press too much talking about sort of these very broad brush sort of themes. And I think our perspective
02:31is you got to get under the hood and look at the details because not everyone's building the same
02:36portfolios. Not everyone's paying the same price. Not everyone's executing operationally in the same
02:41manner. And so that's why we continue to believe that selection matters. Having key partners matters
02:48and doing this with a concerted effort to be highly selective is crucial to generating the best
02:53performance. I am curious about your own business here. I mean, you are a behemoth to a large degree
02:59here. I mean, obviously you manage a lot of money directly, a few hundred billion dollars, but even more
03:05than that is basically on the advisory side for institutions. And I am curious as to whether there's any
03:11conflict in that business, given the outsized nature of it and whether there would be any discussion
03:17here about maybe reorganizing things at all at Hamilton Lane. No. So for us, we've done both for
03:24over our 30 year history. So we have clients that come to us and seek consultative advice because they
03:30are trying to add outside expertise to complement what their own internal teams do. And then we have way more
03:38clients who simply want to use us as an asset manager. So if you look at the dollars that we
03:44are
03:44responsible for, there are more dollars on the advisory side. But if you look at from a revenue
03:50perspective, the vast majority of the firm's revenue comes from its asset management. And in number of
03:56cases, clients are actually in both buckets. They want help and advice on one portion of their private
04:01markets portfolio. And then they want to use us as an outside manager, as a classic asset manager in
04:07another part of their portfolio. And Eric, I do want to go back to the conversation we were having
04:13about co-investing in general, because as Romain and I were chatting about, I mean, it's becoming
04:17more popular. You're seeing more of these vehicles sort of spring up here. And I wonder what we can
04:23extrapolate out about that. What does that say about where investor appetite is at this moment?
04:28What does this say about the fundraising landscape right now?
04:32I think what it tells you is that investors are simply trying to get a nice diversified exposure
04:37to the segments of the private market that they find most appealing.
04:41So for us, this fund that we're here talking about is only focused on equity. But we do lots
04:47of co-investing in venture and growth capital. We do lots of co-investing in the credit side of the
04:53business, in the infrastructure side of the business, in the real estate side of the business.
04:56So, again, providing a multitude of products for different kinds of investors who are all
05:01looking to solve for different risk return profiles and different segments of the market
05:05that they're choosing to lean in on at this moment in time.
05:09When we talk about kind of where you're looking to invest, not only particularly with this fund,
05:14but everything you do across the board, obviously, I would assume you have a pretty rich sort of data
05:19set and being able to see exactly what your companies are doing, the health of those companies.
05:24Are there any pockets, and you don't have to name any companies, but are there any pockets
05:27out there where there is some degree of concern?
05:32So I think there's, I'm not seeing that thematically. You're certainly seeing some
05:36hiccups right now in how the markets are looking to price software businesses. And again, a real
05:42wrestling going on as to what the impact of AI is going to be on traditional software.
05:47I think what we're seeing in the numbers there is that the impact today is far, far, far more
05:52muted than people want to believe or hope will be the case. That might change in the future. But as
05:59we look at the numbers today, software companies in general doing actually quite well, and many of
06:04them incorporating AI into their offering, thus kind of nullifying or muting some of that impact.
06:10But in general, what we see is a pretty healthy economy. The consumer continues to spend.
06:15The manufacturing space continues to actually rise dramatically, as you're seeing a lot more
06:20focus on on shoring and shortening up supply chains. All of that is being built out and financed
06:27largely in the private space. You're seeing some big capital programs around data centers and the
06:32public markets. But again, a lot of the building that's taking place in this country and others
06:37is largely being financed by the private sector. And that continues to move forward and move forward
06:43aggressively.
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