By David G. Barry
When it comes to the process of investing in private equity
funds, Hamilton Lane Managing Director Frederick Shaw doesn’t
mince words, calling it “cumbersome” and “operationally difficult.”
Often involving 70 to 80 pages of documents, anti-money laundering forms and a
wire transfer, the process, says Shaw, “is not efficient.”
To that end, the Conshohocken, Penn.-based private markets firm has made a series
of moves in 2022 aimed at making it easier for investors to access the private
markets. Hamilton Lane’s efforts are particularly significant because they are
largely focused on the expanding private wealth market – a large sector that firms
such as Blackstone, KKR, Apollo and Carlyle Group are actively targeting.
Additionally, Hamilton Lane’s initial efforts are worth
watching, given its market size: It had, as of March 31, $901 billion in assets
under management and supervision, composed of more than $106 billion in
discretionary assets and nearly $795 billion in advisory assets.
Hamilton Lane’s first such move occurred earlier this year when it partnered
with ADDX, a Singapore-based digital private market exchange, to offer
tokenized access to its Global Private Assets Fund. As a result, it enables
investors to come into the open-ended fund for a minimum of $10,000 – rather
than the $125,000 or more for those investing through traditional channels. Launched
in May 2019, the fund has $2.2 billion in assets and is composed primarily of
direct equity and secondary investments, along with direct credit.
The partnership, said Shaw, is not only a means to provide a
better solution to clients, but also a way to understand the technology and how
ADDX is using it.
Accredited individual investors from 39 countries are using the ADDX platform.
It cannot be used by investors in the United States because of various
regulations, Shaw said. ADDX also serves wealth managers and corporate
investors through its institutional service.
Shaw said Hamilton Lane is getting a view of how ADDX’s
exchange – which utilizes blockchain – can improve the process. Aside from
enabling smaller investors to become involved in private equity, the system
also will make it easier for those who wish to invest in other funds utilizing
the ADDX exchange.
Impressed with what it’s seen to date, Hamilton Lane recently took part in ADDX’s
new $58 million pre-Series B funding round.
In addition to partnering with ADDX, Hamilton Lane also recently brought aboard
Victor Jung as head of digital assets, a newly created role. He was
previously at Partners Group, where he was head of distribution partners and
liquid private markets-Asia Pacific. In his new role, he’ll be responsible for helping
to develop and oversee the execution of Hamilton Lane’s digital asset strategy.
Jung’s job, said Shaw, will be to “understand the technology, the different
players, the landscape, the different groups and what is the market expecting.”
He added that Jung’s vision of where the market is headed “gels” with Hamilton
Lane’s vision. “He was a natural person to bring into the role,” Shaw said.
In a statement, Jung said that Hamilton Lane “shares in my belief that digital
assets present a major opportunity for the private markets and are likely to be
transformative within this asset class.”
Shaw clarified that Jung is not being brought aboard to
bring Hamilton Lane or its clients into crypto currencies.
“This is not a crypto play,” stressed Shaw. “We’re not going
to invest in cryptocurrencies.”
Rather, it is, said Shaw, an effort to tap into other
platforms that are being created to improve the fund investment process. And
while admitting that it’s still “early days” for blockchain, Shaw and Hamilton
Lane do see its potential to “clear up the real inefficiencies and help improve
transparency within the asset class.”
Shaw said Hamilton Lane’s efforts have led some of its institutional investor
clients to reach out to understand what the firm is doing and how the
technology is being deployed. Blockchain, speculates Shaw, could also provide a
means for LPs to trade their interests in funds outside of the secondary
process.
“What we’re doing is fairly nascent,” he said. “We’re trying to improve the
investor experience.”