Hamilton Lane Incorporated - Investor Presentation. Spring 2017

Transcription

1 Hamilton Lane Incorporated - Investor Presentation Spring 2017

2 A Compelling Growth Story Value Drivers Established and leading market position Proven record of growth over many years Strong industry tailwinds Significant locked-in and recurring revenue Strong and steady margins Significant employee ownership Our Franchise Continued growth Scalable Industry leader Predictable Profitable Aligned Our strengths and unique market positioning translate into a successful growth company operating in a fast-growing industry with meaningful barriers to entry Page 2

3 Leading, Global Private Markets Solutions Provider Buyout Growth Equity Credit Primary Funds Investors/Limited Partners (LPs) Infrastructure Venture Capital Co-Investments ~$40B of AUM 1 ~$292B of AUA 1 Secondary Transactions Nat. Resources Real Estate Private Markets Funds Private Companies Co-Investment Secondary Founded in 1991, we are one of the largest allocators of capital to private markets worldwide with over $330B of AUM / AUA ~300 professionals dedicated to the private markets (nearly all are shareholders) 12 offices in key markets globally ~350 sophisticated clients globally (in 35 countries) Significant proprietary databases and suite of analytical tools $41B of discretionary commitments since 2000 We operate at the epicenter of a large, fast-growing and highly desirable asset class, helping a wide array of investors around the world navigate, access and succeed in the private markets 1 As of 12/31/2016 Page 3

4 What We Do for Our Clients Our value proposition Customized Separate Accounts Tailored solutions through managed investment accounts Specialized Funds Primaries, secondaries, direct/co-investments, fundof-funds and white-label products Distribution Management Active portfolio management of private markets distribution 42% of Revenue 1 42% of Revenue 1 2% of Revenue 1 Advisory Services Partnering with large institutions with in-house resources to assist across the complex landscape 14% of Revenue 1 Reporting, Monitoring, Data and Analytics Customized, technologydriven reporting, monitoring & analytics services 1 Based on FYTD 3Q17 revenue Page 4

5 Who We Work For Our global client base includes institutional investors of all sizes and with different needs... Sample clients include... Public Pensions Some of the largest pension funds in the U.S. and globally Sovereign Wealth Funds Some of the world s largest SWFs Endowment Funds Wide range of colleges, universities and foundations Taft Hartley A leading provider to U.S. labor union pension plans Financial Institutions Banks, insurance companies and other financial firms that are global in nature Corporate Pension Funds Recognizable brands across a variety of industries Page 5

6 Highly Diversified Client Mix Diversified revenue stream with no single client representing more than approximately 4% of management and advisory fee revenues 2016 Clients & Investors by Type HNW/ Family Office 14% Corporate/ Private Pension 12% Labor Union Pension Plans 26% Sovereign Wealth Fund 2% Public Pension 15% Endowment/ Foundation 10% Financial/ Insurance 21% 2016 Management & Advisory Fees by Client Sticky Client Base ~12 year average term for specialized products 7 year average age of separate account client relationship No customized separate account clients lost in the last four fiscal years 80% re-up rate for clients whose first investment period has expired 60% of new customized separate account management fees over the last three fiscal years have come from our existing client base Other 58% Top 10 Clients 28% Clients % Multiple Layers of Diversification 40% of our clients have multiple products and/or services with us 90% of our top 20 clients have multiple products and/or serivces with us Top 20 clients contributed 42% to FY2016 net revenue Page 6

7 Where We Fit in the Asset Management Ecosystem We are not a one size fits all provider Private markets allocator Partners Group Traditional asset managers Federated Cohen & Steers Artisan Partners Eaton Vance BlackRock Invesco Legg Mason OM Asset Management T. Rowe Price Waddell & Reed Franklin Templeton Janus Capital Group Alternative asset managers Ares The Carlyle Group Blackstone Oaktree Apollo KKR Financial solutions / Investor & business services MSCI Thomson Reuters SS&C Markit McGraw Hill Financial SEI Factset Morningstar Envestnet Moody s Financial Engines Global consultants AON Willis Towers Watson Marsh & McLennan Companies Page 7

8 Industry Tailwinds and Preferred Business Model Hamilton Lane is a market leader in a growing asset class with a model that lends itself to stability and predictability 20% Asset Growth 4 Year AUM CAGR 15% 10% 5% 0% Blackstone KKR Apollo Ares Alternative Managers Carlyle Partners Group Oaktree Franklin Eaton Vance T. Rowe BlackRock Invesco Traditional Managers Old Mutual Artisan Partners Janus Capital Cohen & Steers Legg Mason Federated -5% Waddell & Reed -10% 30% 40% 50% 60% 70% 80% 90% 100% Management & Advisory Fees as a % of Revenue (LFY) Stability & Predictability Note: Represents peers identified by research analysts where the relevant information is available; based on the most recent fiscal year data (most as of 12/31/16) Source: Capital IQ and public filings Page 8

9 Growing Asset Footprint & Influence Total Assets Under Management/Advisement ($B) 1 $350 $333B AUM & AUA $300 $40 $250 $200 CAGR: 21% $32 $35 $24 $30 $150 $292 $22 $16 $19 $100 $11 $13 $189 $205 $50 $7 $147 $147 $129 $6 $95 $77 $79 $81 $36 $51 $ Total AUA Total AUM Note: Data as of calendar year end 12/31. Numbers may not tie due to rounding Page 9

10 Fee-Earning AUM Driving Revenue Fee-earning AUM drives the bulk of our revenue Total-Fee Earning Assets Under Management ($B) 1 $40 $35 Total Management Fee Revenue as a % of Average FEAUM 0.58% 0.55% 0.56% 0.57% $30 $25 $20 $15 $10 $16 $5 $11 $19 $5 $14 CAGR: 14% $22 $6 $16 $24 $7 $17 $26 $8 $18 $5 $0 Mar-13 Mar-14 Mar-15 Mar-16 Dec-16 Customized Separate Accounts 1 Data as of fiscal year end 3/31 unless noted otherwise Specialized Funds...and fee rates are stable Page 10

11 Growing and Stable Revenue and Earnings Profile Data as of fiscal year ending March 31 unless noted otherwise 1 Total Revenue Total Expenses ($M) USD in Millions $240 $200 $160 $120 $80 $40 CAGR: 14% $155 $140 $10 $9 $181 $23 $130 $146 $158 $133 $7 $126 USD in Millions $150 $125 $100 $75 $50 $25 $81 $87 $119 $76 $ FYTD 3Q17 $ FYTD 3Q17 Adjusted EBITDA ($M) Adjusted EBITDA Margin (%) 1 $140 75% USD in Millions $120 $100 $80 $60 $40 $64 $74 $68 $62 50% 25% 46% 47% 37% 47% $20 $ FYTD 3Q17 0% FYTD 3Q Adjusted EBITDA includes $20.3M of compensation expenses related to incentive fee revenue that was not recognized in 2016 but is expected to be recognized in future periods Note: Numbers may not tie due to rounding. Data as of fiscal year end 3/31 1 Adjusted EBITDA and Adjusted EBITDA Margin are non-gaap financial measures. For a reconciliation of Adjusted EBITDA and Adjusted EBITDA margin to Comparable GAAP measure of Net Income, please see Appendix, page 18. Page 11

12 Significant Growth Visibility Investor Re-Ups and Maintaining Allocations + Addressable Market + New Products + New Distribution Channels + Client Base Diversification + Global Expansion + Defined Contribution Opportunity + Data Advantage = Multiple Avenues of Profitable Growth Ahead Page 12

13 Robust Data Advantage Informs Our Investment Decisions Hamilton Lane Proprietary 40 Vintage Years ~$3T Total Fund Commitments 3,200+ Funds ~50,000 Portfolio Companies Aggregation of Industry & Fund-Level Data Creates Our Wealth of Proprietary Information + Hamilton Lane Analytical & Research Capabilities Advantages for Our Clients Benchmarks Market Intelligence Manager Selection Industry Insights Asset Level Insights Attribution Analysis Partnerships with leading-edge technology providers Data collection and reporting Investment workflow management Allocation software Benchmarking and analytics Page 13

14 Deep Bench of Talent and Award-Winning Culture Executive Management (7) Finance (20) Investment Team (95) Business Development (20) Product Management (20) IT (20) Client Services (80) Legal & Compliance (20) HR / Admin (15) Key Stats Awards ~300 employees globally ~70% of the team is less than 40 years of age Women compose ~40% of the employee base and ~30% of all senior roles Beyond the Business HL in Action Volunteerism and Matching Gifts Program HL Wellness Committee Hamilton Lane matching gifts program HL Women s Exchange HL Diversity & Inclusion Council Widespread employee ownership Source: Company data. Employee figures as of 1/31/2017 Page 14

15 The Hamilton Lane Story Market leading footprint Deep, talented, aligned team + Our Approach Growing asset base Industry Tailwinds Expanding private markets allocations Global, blue-chip client base Solution focused Desire to consolidate service partners Increasingly complex offering set Continued AUM Growth Stable and x Growing Margins = Expected Earnings Growth Page 15

16 Appendix

17 Historical Income Statement (in thousands of dollars) Fiscal Year Ended March 31, Nine months ending December 31, Estimated 2014A 2015A 2016A 2015A 2016A CY16 2 Revenues Management and advisory fees 130, , , , , ,600 Incentive fees 9,309 9,509 23, ,151 6,868 8,884 Total revenues 139, , , , , ,484 Expenses Compensation and benefits 55,950 60,157 92,065 77,193 53,161 68,033 General, administrative and other 24,760 26,865 26,898 19,273 22,925 30,550 Total Expenses 80,710 87, ,963 96,466 76,086 98,583 Other Income (expense) Equity in income of affiliates 16,905 10,474 1,518 1,165 8,882 9,235 Interest expense (8,503) (5,883) (12,641) (9,703) (8,780) (11,718) Interest income Other non-operating income (loss) (699) (1,056) 5,816 5, Total other income (expense) 7,845 3,622 (5,113) (2,593) 493 (2,027) Income before provision (benefit) for foreign income taxes 66,899 71,985 56,721 40,395 57,548 73,874 Less: (benefit) provision for foreign income taxes (128) (264) 392 Net income 67,027 71,502 55,852 40,182 57,812 73,482 Less: Income (loss) attributable to non-controlling interests 4,565 2,242 (1,255) (852) 1, Net income attributable to HLA 62,462 69,260 57, , ,788 72,861 ¹ Includes $20.3 million of compensation expenses related to incentive fee revenue that has not been recognized in FY2016, but is expected to be recognized in future periods; 2 Computed as FY 9M17 financials plus the difference between FY 2016 and FY 9M16 financials Page 17

18 GAAP Reconciliation (in thousands of dollars) Fiscal Year Ended March 31, Nine months ending December 31, Estimated 2014A 2015A 2016A 2015A 2016A CY16 2 Net Income Attributable to HLA 62,462 69,260 57,107 41,034 56,788 72,861 Income (loss) attributable to non-controlling interests 4,565 2,242 (1,255) (852) 1, Interest expense 8,503 5,883 12,641 9,703 8,780 11,718 Provision (benefit) for income taxes (128) (264) 392 Depreciation and amortization 1,853 1,867 2,027 1,526 1,440 1,941 Equity in (income) of affiliates (16,905) (10,474) (1,518) (1,165) (8,882) (9,235) Equity-based compensation 3,070 3,390 3,730 2,819 3,506 4,417 Other non-operating (income) loss 699 1,056 (5,816) (5,866) (232) (182) Adjusted EBITDA 64,119 73,707 67, , ,160 82,533 Total revenue 139, , , , , ,484 Adjusted EBITDA Margin 46% 47% 37% 34% 47% 47% ¹ Includes $20.3 million of compensation expenses related to incentive fee revenue that has not been recognized in FY2016, but is expected to be recognized in future periods; 2 Computed as FY 9M17 financials plus the difference between FY 2016 and FY 9M16 financials Page 18

19 Historical Balance Sheet (in thousands of dollars) As of Fiscal Year March 31, As of December 31, A 2015A 2016A Assets Cash and cash equivalents 75,818 67,089 68,584 54,441 Investments 92, , , ,437 Total Assets 195, , , ,991 Liabilities & member s equity (deficit) Deferred incentive fee revenue 1,960 45,166 45,166 Senior secured term loan payable, net 122, , , ,417 Total liabilities 138, , , ,221 Non-controlling interests 18,502 17,452 11,368 10,509 Members equity (deficit) 38,610 56,238 (123,306) (134,739) Total liabilities & members equity (deficit) 195, , , ,991 Page 19

20 Key Performance Indicators (in thousands of dollars) Nine months ending Fiscal Year Ended March 31, Estimated December 31, 2014A 2015A 2016A 2015A 2016A CY16 4 Revenue Customized separate accounts 54,248 63,275 67,879 50,433 52,794 70,230 Specialized funds 47,111 51,315 62,340 46,821 53,407 68,926 Advisory and reporting 22,840 22,388 22,536 16,732 17,680 23,484 Distribution management 6,256 8,898 4,875 4,307 2,392 2,960 Total management and advisory fees 130, , , , , ,600 Incentive fees 9,309 9,509 23,167 21,151 6,868 8,884 Total revenues 139, , , , , ,484 Management and advisory fee % 93% 94% 87% 85% 95% 95% Adjusted EBITDA¹ 64,119 73,707 67, , ,160 82,534 Adjusted EBITDA margin 3 46% 47% 37% 34% 47% 47% 1 See page 36 for reconciliation of non-gaap metrics 2 Includes $20.3 million of compensation expenses related to incentive fee revenue that has not been recognized in 2016, but is expected to be recognized in future periods 3 Adjusted EBITDA margin computed as Adjusted EBITDA divided by Total Revenu 4 Computed as FY 9M17 financials plus the difference between FY 2016 and FY 9M16 financials Page 20

21 Disclosures Some of the statements in this presentation may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of Words such as will, expects, believes and similar expressions are used to identify these forward-looking statements. Forward-looking statements discuss management s current expectations and projections relating to our financial position, results of operations, plans, objectives, future performance and business. All forward-looking statements are subject to known and unknown risks, uncertainties and other important factors that may cause actual results to be materially different, including risks relating to our ability to manage growth, fund performance, risk, changes in our regulatory environment and tax status; market conditions generally; our ability to access suitable investment opportunities for our clients; our ability to maintain our fee structure; our ability to attract and retain key employees; our ability to manage our obligations under our debt agreements; defaults by clients and third-party investors on their obligations to us; our ability to comply with investment guidelines set by our clients; the time, expense and effort associated with being a newly public company; and our ability to receive distributions from Hamilton Lane Advisors, L.L.C. to fund our payment of dividends, taxes and other expenses. The foregoing list of factors is not exhaustive. For more information regarding these risks and uncertainties as well as additional risks that we face, you should refer to the Risk Factors section of our Registration Statement on Form S-1, as amended, and in our subsequent reports filed from time to time with the SEC. The forward-looking statements included in this presentation are made only as of the date presented. We undertake no obligation to update or revise any forward-looking statement as a result of new information or future events, except as otherwise required by law. The S&P 500 Total Return Index is a capitalization-weighted index of 500 U.S. large cap stocks that assumes all dividends and distributions are reinvested. The MSCI World Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity performance of developed markets. As of June 1, 2017 Page 21