As co-investments heat up, Hamilton Lane starts raising next dedicated fund

The private equity behemoth now holds $902bn in AUM.

Hamilton Lane is in the initial phases of shopping its sixth co-investment fund.

LPs have eyed co-investment opportunities in recent years, driven by the lure of reduced fees. However, managing co-investments can be challenging for institutions without dedicated teams able to respond in timely demands to deal opportunities.

The firm’s latest co-investment fund is officially in the market, said co-CEO Erik Hirsch at the company’s earnings call on February 6.

“There’s nothing to report yet because we’ve started the marketing process with existing investors, but we have not yet had a close,” Hirsch said.

Hirsch did not reveal the size of the fund’s target. A spokesperson for Hamilton Lane said the company was not able to share further details.

Hamilton Lane Equity Opportunities Fund V closed at $2.1 billion in January 2023. Known LP commitments came from Indiana Public Retirement System and Public Employee Retirement System of Idaho.

The company also expects to hold a final close for its latest flagship secondaries fund over the next few weeks, as reported by Secondaries Investor.

Hamilton Lane Secondary Fund VI has a $5 billion target, according to Buyouts’ database. Hirsch said Fund VI has raised $3.5 billion to date.

The Pennsylvania-based firm had $902.8 billion in AUM as of the end of 2023, according to the company’s earnings presentation.

Hirsch also expressed bullishness for the exit marketplace, which dramatically slowed over the past two years as the Federal Reserve raised interest rates, making debt more expensive, resulting in reduced distributions to LPs.

“We see public markets and the overall economy stabilizing and investors going back out into the water. The expectation is we’ll see distribution activity increase,” Hirsch said.

Recent results from Massachusetts Pension Reserves Investment Management back up Hirsch’s commentary. The system reported that fourth-quarter 2023 distributions increased by 13.8 percent compared to the three previous months, bringing back a positive net cashflow of $192.9 million.