- Hamilton Lane teamed with tech company Bison on Cobalt LP
- Analytics platform uses firm’s market data
- Functionality includes due diligence, monitoring, forecasting
Private equity has long been opaque, even to those select investors who have access to it. “Limited partners today are clamoring for more transparency,” said Griffith Norville, a principal focused on technology initiatives at Hamilton Lane, the private markets adviser and asset manager. And Norville wants to give it to them.
In October Hamilton Lane announced a partnership with Bison, a Boston technology company, and the launch of a collaborative offering called Cobalt. “We made a Series A investment in them in early 2016, and then we went behind the scenes and helped them develop this Cobalt LP product,” Norville explained.
That product combines “analytics horsepower” and a user interface provided by Bison with Hamilton Lane’s trove of market data, drawn from “a lot of sophisticated LP clients that have been investing in the asset class for 40 years.” Through internal systems and technology partnerships, Cobalt can track nearly $7 trillion of PE commitments globally, Norville said. “We’re also tracking around 4,000 funds that are currently fundraising or projected to come back soon.”
LPs screening their options can use Cobalt to compare GPs’ track records, running information through models that assess the quality of returns (including public-market-equivalent analysis, difficult to do across a portfolio in Excel). Or they can look at different asset classes: “How does private credit compare to venture capital?” The platform also is built for portfolio monitoring, helping LPs who report to a board or internal committee to “demonstrate where the value-add is” in their private equity allocations.
Cobalt can also make forecasts, Norville said: “Having been in the business for 25 years, we have developed some algorithms for projecting the future cash flows of fund positions — upside and downside, not just past market behavior, based on market cycles.” These predictions can help LPs plan for commitments.
The “prototypical user of Cobalt” is neither an operation with a big internal unit of number-crunchers nor a group that completely outsources its technology. “It’s the small teams that need help in scaling their operation,” Norville said. “You might have a pension plan or an endowment or a foundation that has a team of three people that manage their entire private equity portfolio, and they’ve got 80 fund investments; they’re putting hundreds of millions of dollars to work a year, and they’re very talented but they’re short on time, there’s a whole global set of opportunities to cover.”
Ten years ago, these teams were stuck “living in Excel,” taking what data they could get and using the best models they could build. Cobalt provides them “the power to really scale up,” Norville said, “and it’s no longer as intimidating to access this big, complex universe.”
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Photo of Griffith Norville courtesy of Hamilton Lane