Hamilton Lane closes debt fund ahead of target

Hamilton Lane closed Hamilton Lane Strategic Opportunities Fund 2016 with $210 million in commitments, ahead of its $150 million target, as it takes aim mostly at senior-debt investments for middle-market companies.

Drew Schardt, managing director, said limited partners’ need for yield in a flat interest-rate environment, plus the move of private debt to fill the void left by bank debt that’s vacated the market, fueled interest in the new fund.

“The genesis of the fund involved listening to what our clients wanted” in duration and yield “and combining that piece with our existing access to unique and attractive lending opportunities in private debt,” he said.

Hamilton Lane Strategic Opportunities Fund 2015 raised about $70 million in a shorter time than the 2016 fund as the firm moved quickly to launch the fund series, he said.

The fundraising period for the 2015 fund was “very abbreviated,” he said. “The demand was there, but we had to close the fund in order to deploy it in a year.”

The new fund also will be deployed in a year, with a life span of about five years and an expected annual percentage return into the double digits, he said.

The co-investment fund will focus mostly on asset-backed performing loans to high-quality companies in the middle market.

“We’ll invest in high-quality businesses now underserved by traditional lenders,” he said.

The fund will deploy a flexible and opportunistic approach, with the ability to lend directly to companies as well as to tap Hamilton Lane’s private network and partners to participate in private loans led by others, he said.

While the opportunity appears larger in newly issued senior loans, the fund portfolio may include some non-performing loans, or distressed credit out of Europe.

The new fund attracted interest from a wide variety of LPs worldwide, he said.

The fund taps into the expertise of Hamilton Lane’s existing credit platform, which dates back about 17 years and now includes more than 80 private-markets pros on its investment team.

Action Item: Hamilton video on private credit: http://bit.ly/25VZo2O

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