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What changed in Hamilton Lane INC's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Hamilton Lane INC's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+514 added−569 removedSource: 10-K (2025-05-30) vs 10-K (2024-05-23)

Top changes in Hamilton Lane INC's 2025 10-K

514 paragraphs added · 569 removed · 403 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

93 edited+24 added−89 removed156 unchanged
Biggest changeIntellectual Property We own or have rights to trademarks, service marks or trade names that we use in connection with the operation of our business. In addition, our names, logos and website names and addresses are owned by us or licensed by us. We also own or have the rights to copyrights that protect the content of our solutions.
Biggest changeIn addition, our trade names, logos and website names and URL addresses are owned by us or have been licensed to us. We also own or have a license to the copyrights that protect the content of our solutions. We believe that the “Hamilton Lane” trade name, logos and website are material to our operations.
If, upon the final distribution of any of our specialized funds from which we earn carried interest, we and our affiliates have received cumulative carried interest in excess of the amount to which we would be entitled from the profits calculated for such investments in the aggregate, or if the limited partners have not received distributions equal to those to which they are entitled, the carried interest recipient will typically return such part of any carried interest to the limited partners as is necessary to ensure that they receive the amounts to which they are entitled, less taxes on the carried interest.
If, upon the final distribution of any of our specialized funds from which we earn carried interest, we and our affiliates have received cumulative carried interest in excess of the amount to which we would be entitled from the profits calculated for such investments in the aggregate, or if the limited partners have not received distributions equal to those to which they are entitled, the carried interest recipient will typically return such 20 part of any carried interest to the limited partners as is necessary to ensure that they receive the amounts to which they are entitled, less taxes on the carried interest.
Subject to specific client investment guidelines, we rarely invest in “first time” funds unless the management team has previously worked successfully together and built a credible and impressive track record. • Secondary Investments. The private secondary market is a non-regulated private market in which buyers and sellers directly negotiate the terms of transactions.
Subject to specific client investment guidelines, 11 we rarely invest in “first time” funds unless the management team has previously worked successfully together and built a credible and impressive track record. • Secondary Investments. The private secondary market is a non-regulated private market in which buyers and sellers directly negotiate the terms of transactions.
As investments are approved by the relevant investment committees, our portfolio management group utilizes portfolio construction methodologies as it deems appropriate to analyze the portfolios of all clients currently investing and submits a proposed allocation to the chief compliance officer or his designee for review and approval.
Allocation of Investment Opportunities As investments are approved by the relevant investment committees, our portfolio management group utilizes portfolio construction methodologies as it deems appropriate to analyze the portfolios of all clients currently investing and submits a proposed allocation to the chief compliance officer or his designee for review and approval.
Our funds are generally subject to extension for up to two years at the 19 discretion of the general partner and thereafter if consent of the requisite majority of limited partners or, in some cases, the fund’s advisory committee is obtained. Our evergreen funds do not have a fixed term.
Our funds are generally subject to extension for up to two years at the discretion of the general partner and thereafter if consent of the requisite majority of limited partners or, in some cases, the fund’s advisory committee is obtained. Our evergreen funds do not have a fixed term.
Possible sanctions that may be imposed include the suspension of individual employees, limitations on engaging in certain lines of business for specified periods of time, revocation of investment advisor and other registrations or licenses, censures and fines. SEC Regulation HLA is registered as an investment advisor with the SEC.
Possible sanctions that may be imposed include the suspension of individual employees, limitations on engaging in certain lines of business for specified periods of time, revocation of investment advisor and other registrations or licenses, censures and fines. 23 SEC Regulation HLA is registered as an investment advisor with the SEC.
Our attorneys also review and make recommendations regarding amendments and requests for consents presented by the fund managers from time to time. In addition, our legal team is responsible for preparing, reviewing 21 and negotiating all documents relating to the formation and operation of our specialized funds to investors in the United States.
Our attorneys also review and make recommendations regarding amendments and requests for consents presented by the fund managers from time to time. In addition, our legal team is responsible for preparing, reviewing and negotiating all documents relating to the formation and operation of our specialized funds to investors in the United States.
In addition, the governing agreements of our funds typically require the suspension of the investment period if, depending on the fund, between two and ten designated principals of the Manager cease to devote sufficient professional time to or cease to be employed by the Manager, often called a “key person event”, or in connection with certain other events discussed under “—Duration, Redemption and Termination.” See “Risk Factors—Risks Related to our Business—Our ability to retain our senior management team and attract additional qualified investment professionals is critical to our success” included in Part I, Item 1A of this Form 10-K. 18 Management Fees .
In addition, the governing agreements of our funds typically require the suspension of the investment period if, depending on the fund, between two and ten designated principals of the Manager cease to devote sufficient professional time to or cease to be employed by the Manager, often called a “key person event”, or in connection with certain other events discussed under “—Duration, Redemption and Termination.” See “Risk Factors—Risks Related to our Business—Our ability to retain our senior management team and attract additional qualified investment professionals is critical to our success” included in Part I, Item 1A of this Form 10-K.
We calculate our AUM as the sum of: (1) the net asset value (“NAV”) of our clients’ and funds’ underlying investments; (2) the unfunded commitments to our clients’ and funds’ underlying investments; and (3) the amounts authorized for us to invest on behalf of our clients and fund investors but not committed to an underlying investment.
We calculate our AUM as the sum of: (1) the net asset value (“NAV”) of our clients’ and funds’ underlying investments; (2) the unfunded commitments to our clients’ and funds’ underlying investments; and 14 (3) the amounts authorized for us to invest on behalf of our clients and fund investors but not committed to an underlying investment.
Our operational due diligence (“ODD”) team is empowered with 11 separate voting rights on each of the firm’s fund investment opportunities, which means that we will only proceed with investments that are approved by both our investment committee and our ODD team.
Operational Due Diligence Our operational due diligence (“ODD”) team is empowered with separate voting rights on each of the firm’s fund investment opportunities, which means that we will only proceed with investments that are approved by both our investment committee and our ODD team.
In some circumstances, we may waive or offset the Cobalt LP subscription fee for clients who pay management fees to us for other services. Distribution Management We enter into written contracts with each of our distribution management clients, including our specialized funds.
In some circumstances, we may waive or offset the Cobalt LP subscription fee for clients who pay management fees to us for other services. 21 Distribution Management We enter into written contracts with each of our distribution management clients, including our specialized funds.
We generally reduce the asset-based and/or incentive fees or carried interest on customized separate accounts to the extent that assets in the accounts are invested in our specialized funds so that our clients do not pay duplicate fees. Duration and Termination.
We generally reduce the asset-based and/or incentive fees or carried interest on customized separate accounts to the extent that assets in the accounts are invested in our specialized funds so that our clients do not pay duplicate fees. 18 Duration and Termination.
Specialized Funds Since 1997, we have sponsored primary funds, secondary funds, direct investment funds, strategic opportunities funds, social and environmental impact funds and Small Business Investment Company funds. The terms of each fund vary. We have described below the key terms of these funds.
Specialized Funds Since 1997, we have sponsored primary funds, secondary funds, direct investment funds, strategic opportunities funds, social and environmental impact funds and Small Business Investment Company funds. The terms of each fund vary. We have described below certain of the key terms of these funds.
We manage these investment vehicles under an investment management 17 agreement between the investment vehicle entity and us, and we manage all aspects of the vehicles, utilizing the services of third parties as needed, including administrators and custodial banks.
We manage these investment vehicles under an investment management agreement between the investment vehicle entity and us, and we manage all aspects of the vehicles, utilizing the services of third parties as needed, including administrators and custodial banks.
We have what is commonly referred to as an “Up-C” structure, which provides our pre-IPO owners with the tax advantage of continuing to own interests in a pass-through structure and provides potential future tax 6 benefits for both the public company and the legacy owners (through the tax receivable agreement) when they ultimately exchange their pass-through interests for shares of Class A common stock or, at our election, for cash.
We have what is commonly referred to as an “Up-C” structure, which provides our pre-IPO owners with the tax advantage of continuing to own interests in a pass-through structure and provides potential future tax 7 benefits for both the public company and the legacy owners (through the tax receivable agreement) when they ultimately exchange their pass-through interests for shares of Class A common stock or, at our election, for cash.
Primary investments are investments in private markets funds at the time the funds are initially launched. The investments take the form of a capital commitment, where the fund 10 will call capital from investors over time as investments are made.
Primary investments are investments in private markets funds at the time the funds are initially launched. The investments take the form of a capital commitment, where the fund will call capital from investors over time as investments are made.
We maintain a disciplined investment monitoring process designed to adapt portfolio allocation to enhance returns in our advisory and customized separate account portfolios, as well as in our specialized funds.
We maintain a disciplined 13 investment monitoring process designed to adapt portfolio allocation to enhance returns in our advisory and customized separate account portfolios, as well as in our specialized funds.
The following chart summarizes the growth of our fee-earning AUM since fiscal year 2020. * Amounts may not foot due to rounding Our Clients Our client base primarily comprises investors that range from those seeking to make an initial investment in alternative assets to some of the largest and most sophisticated private markets investors.
The following chart summarizes the growth of our fee-earning AUM since fiscal year 2021. * Amounts may not foot due to rounding Our Clients Our client base primarily comprises investors that range from those seeking to make an initial investment in alternative assets to some of the largest and most sophisticated private markets investors.
Our differentiators include a global platform, a range of risk/return offerings via both semi-liquid and closed-end funds and multiple investment strategies. We have a diversified revenue stream from a variety of client types in multiple geographic regions, with no single client representing more than 3% of management and advisory fee revenues.
Our differentiators include a global platform, a range of risk/return offerings via both semi-liquid and closed-end funds and multiple investment strategies. We have a diversified revenue stream from a variety of client types in multiple geographic regions, with no single client representing more than 2% of management and advisory fee revenues.
The discretion to invest committed capital generally is subject to investment guidelines established by our clients or by us in conjunction with our clients. Fees . While the specific terms of our contracts vary significantly from client to client, generally our customized separate account clients are charged asset-based fees annually on committed or net invested capital and/or net asset value.
The discretion to invest committed capital generally is subject to investment guidelines established by our clients or by us in conjunction with our clients. Fees . While the specific terms of our contracts vary significantly from client to client, generally our customized separate account clients are charged asset-based fees annually on committed or net invested capital and/or NAV.
Given our leading market position and strong reputation for investing and client service, our objective is to continue to leverage the following strategic advantages to exceed the industry growth rate. 8 Leverage our market leading position as one of the largest allocators of primary capital to the world’s leading fund managers.
Given our leading market position and strong reputation for investing and client service, our objective is to continue to leverage the following strategic advantages to exceed the industry growth rate. 9 Leverage our market leading position as one of the largest allocators of primary capital to the world’s leading fund managers.
In many of these countries and jurisdictions, which include the European Union (“EU”), the European Economic Area (“EEA”), the individual member states of each of the EU and EEA, Australia, Canada, China, Hong Kong, Israel, Japan, Mexico, Singapore, South Korea, Switzerland and the United Kingdom (“U.K.”), we and our operations, and in some cases our personnel, are subject to regulatory oversight and requirements.
In many of these countries and jurisdictions, which include the European Union (“EU”), the European Economic Area (“EEA”), the individual member states of each of the EU and EEA, Australia, Canada, Chile, China, Hong Kong, Israel, Japan, Mexico, Singapore, South Korea, Switzerland, the United Arab Emirates and the United Kingdom (“U.K.”), we and our operations, and in some cases our personnel, are subject to regulatory oversight and requirements.
The exchange of a Class B unit will result in the redemption and cancellation of the corresponding share of Class B common stock. 7 Voting Rights Except as provided in our certificate of incorporation or by applicable law, holders of Class A common stock and Class B common stock vote together as a single class.
The exchange of a Class B unit will result in the redemption and cancellation of the corresponding share of Class B common stock. 8 Voting Rights Except as provided in our certificate of incorporation or by applicable law, holders of Class A common stock and Class B common stock vote together as a single class.
The contents of our websites are not incorporated by reference into this Form 10-K or in any other report or document we file with the SEC, and any references to our websites are intended to be inactive textual references only. 30
The contents of our websites are not incorporated by reference into this Form 10-K or in any other report or document we file with the SEC, and any references to our websites are intended to be inactive textual references only. 27
(2) We hold all of the Class A units of HLA, representing the right to receive approximately 73.6% of the distributions made by HLA. We act as the sole manager of HLA and operate and control all of its business and affairs.
(2) We hold all of the Class A units of HLA, representing the right to receive approximately 76.6% of the distributions made by HLA. We act as the sole manager of HLA and operate and control all of its business and affairs.
ERISA and the Internal Revenue Code of 1986, as amended (the “Code”), impose certain duties on persons that are fiduciaries under ERISA, prohibit certain transactions involving benefit plans and “parties in interest” or “disqualified persons” to those plans, and provide monetary penalties for violations of these prohibitions.
ERISA and the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), impose certain duties on persons that are fiduciaries under ERISA, prohibit certain transactions involving benefit plans and “parties in interest” or “disqualified persons” to those plans, and provide monetary penalties for violations of these prohibitions.
HLI has dual-class common stock, the rights of which are described in more detail below. The below chart summarizes our organizational structure as of March 31, 2024.
HLI has dual-class common stock, the rights of which are described in more detail below. The below chart summarizes our organizational structure as of March 31, 2025.
The remaining $21 billion is non fee-earning AUM, which includes accounts that earn fees as discretionary AUM is invested or considered active as well as accounts past their fee-earning period.
The remaining $26 billion is non fee-earning AUM, which includes accounts that earn fees as discretionary AUM is invested or considered active as well as accounts past their fee-earning period.
Available Information Our website is located at www.hamiltonlane.com, and the Shareholders page of our website is located at http://ir.hamiltonlane.com. We are subject to the informational requirements of the Exchange Act and file or furnish reports, proxy statements and other information with the SEC.
Available Information Our website is located at www.hamiltonlane.com, and the Shareholders page of our website is located at https://shareholders.hamiltonlane.com. We are subject to the informational requirements of the Exchange Act and file or furnish reports, proxy statements and other information with the SEC.
The difference is due primarily to $40 billion of discretionary AUM earning a flat fee or fee on number 14 of funds for which we categorize revenue as advisory and reporting. This was partially offset by a decrease of $3 billion of fee-earning AUM from customized separate accounts clients with non-discretionary AUA.
The difference is due primarily to $43 billion of discretionary AUM earning a flat fee or fee on number 16 of funds for which we categorize revenue as advisory and reporting. This was partially offset by a decrease of $3 billion of fee-earning AUM from customized separate accounts clients with non-discretionary AUA.
The management fee during the investment period is often charged on capital commitments and after the investment period (or a defined anniversary of the fund’s initial closing) is typically reduced by a percentage of the management fee for the preceding year or charged on net invested capital or net asset value.
The management fee during the investment period is often charged on capital commitments and after the investment period (or a defined anniversary of the fund’s initial closing) is typically reduced by a percentage of the management fee for the preceding year or charged on net invested capital or NAV.
We believe that our strong culture is a key factor driving our success in developing and maintaining high-quality relationships with current/prospective employees, clients, prospects, business partners and the communities within which we live and work.
Employees Our Culture We believe that our strong culture is a key factor driving our success in developing and maintaining high-quality relationships among our employees and with our clients, prospects, business partners and the communities within which we live and work.
We had approximately $796 billion of AUA as of March 31, 2024. 5 • Distribution Management : We offer distribution management services to our clients through active portfolio management to enhance the realized value of publicly traded stock they receive as distributions in-kind from private equity funds. • Reporting, Monitoring, Data and Analytics : We provide our clients with comprehensive reporting and investment monitoring services, usually bundled into our broader investment solutions offerings, but also on a stand-alone, fee-for-service basis.
We had approximately $819 billion of AUA as of March 31, 2025. 6 • Distribution Management : We offer distribution management services to our clients through active portfolio management to enhance the realized value of publicly traded stock they receive as distributions in-kind from private equity funds. • Reporting, Monitoring, Data and Analytics : We provide our clients with comprehensive reporting and investment monitoring services, usually bundled into our broader investment solutions offerings, but also on a stand-alone, fee-for-service basis.
Because a Sunset may not take place for some time, certain of the Class B Holders will, by virtue of their voting control of us and the stockholders agreement described below, continue to control us for the near future. Our Class B common stockholders collectively hold 77.5% of the combined voting power of our common stock.
Because a Sunset may not take place for some time, certain of the Class B Holders will, by virtue of their voting control of us and the stockholders agreement described below, continue to control us for the near future. Our Class B common stockholders collectively hold 73.7% of the combined voting power of our common stock.
The committee is composed of the chief operating officer, who is also our chief risk officer, general counsel, chief financial officer, chief compliance officer, chief technology officer, head of investments, and head of client legal. The ERM committee meets on a quarterly and as-needed basis.
The committee is composed of the chief operating officer, who is also our chief risk officer, general counsel, chief financial officer, chief compliance officer, chief technology officer, co-head of investments, and head of investment legal. The ERM committee meets on a quarterly and as-needed basis.
As an important first step towards this goal, we became a signatory to Initiative Climate International (“iCI”) in 2022. iCI is affiliated with PRI and is composed of a platform of leading private equity investors dedicated to understanding and reducing carbon emissions of private equity-backed companies.
As an important first step towards this goal, we became a signatory to Initiative Climate International (“iCI”) in 2022. iCI is composed of a platform of leading private equity investors and firms dedicated to understanding and reducing carbon emissions of private equity-backed companies.
In addition, the compliance team is responsible for all regulatory matters relating to Hamilton Lane Securities LLC, our Securities and Exchange Commission (“SEC”)- and Financial Industry Regulatory Authority (“FINRA”)-registered broker-dealer affiliate through which we offer interests in our specialized funds.
In addition, the compliance team is responsible for all regulatory matters relating to Hamilton Lane Securities LLC, our SEC- and Financial Industry Regulatory Authority (“FINRA”)-registered broker-dealer affiliate through which we offer interests in our specialized funds.
Furthermore, employees have the opportunity to participate in our formal Mentoring Program, which is designed to help less tenured employees foster relationships with more experienced colleagues and/or peers in different departments with the goal of enhancing professional and personal development and growth.
Employees can participate in our formal mentoring program, which is designed to help less tenured employees foster relationships with more experienced colleagues or peers in different departments with the goal of enhancing professional and personal development and growth.
The parties to the stockholders agreement control approximately 77.6% of the combined voting power of our common stock. This group is therefore able to exercise control over all matters requiring the approval of our stockholders, including the election of our directors and the approval of significant corporate transactions.
The parties to the stockholders agreement control approximately 74.9% of the combined voting power of our common stock. This group is therefore able to exercise control over all matters requiring the approval of our stockholders, including the election of our directors and the approval of significant corporate transactions.
Specialized funds comprised approximately $32 billion of our AUM as of March 31, 2024. • Advisory Services : We offer non-discretionary investment advisory services to assist clients in developing and implementing their private markets investment programs.
Specialized funds comprised approximately $40 billion of our AUM as of March 31, 2025. • Advisory Services : We offer non-discretionary investment advisory services to assist clients in developing and implementing their private markets investment programs.
With approximately 700 employees worldwide as of March 31, 2024, we are proud that our culture has been recognized annually for the last 12 years by Pensions & Investments magazine, a leading investment publication, as a “Best Place to Work in Money Management” since the inception of the list in 2012.
With approximately 760 employees worldwide as of March 31, 2025, we are proud that our culture has been recognized annually for the last 13 years by Pensions & Investments magazine, a leading investment publication, as a “Best Place to Work in Money Management” since the inception of the list in 2012.
As of March 31, 2024, our client and investor base included over 1,800 institutions and intermediaries and is broadly diversified by type, size and geography. Our intermediary clients enable us to provide our investment products to an expanded range of high-net-worth individuals and family offices.
As of March 31, 2025, our client and investor base included over 2,300 institutions and intermediaries and is broadly diversified by type, size and geography. Our intermediary clients enable us to provide our investment products to an expanded range of high-net-worth individuals and family offices.
We have a diversified revenue stream from a variety of client types in multiple geographic regions, with no single client representing more than 3% of management and advisory fee revenues. Approximately 60% of our fiscal 2024 management and advisory fee revenues came from clients based outside of the United States.
We have a diversified revenue stream from a variety of client types in multiple geographic regions, with no single client representing more than 2% of management and advisory fee revenues. Approximately 39% of our fiscal 2025 management and advisory fee revenues came from clients based outside of the United States.
We currently have approximately 700 employees, including 238 investment professionals, operating across 22 global offices servicing our clients throughout the world. We offer a variety of investment solutions to address our clients’ needs across a range of private markets, including private equity, private credit, real estate, infrastructure, natural resources, growth equity, venture capital and impact.
We currently have approximately 760 employees, including 265 investment professionals, operating across 22 global offices servicing our clients throughout the world. We offer a variety of investment solutions to address our clients’ needs across a range of private markets, including private equity, private credit, real estate, infrastructure, real assets, growth equity, venture capital and impact.
We generally have discretionary investment authority over our customized separate accounts, which comprised approximately $93 billion of our AUM as of March 31, 2024. • Specialized Funds : We organize, invest and manage specialized primary, secondary and direct investment funds.
We generally have discretionary investment authority over our customized separate accounts, which comprised approximately $99 billion of our AUM as of March 31, 2025. • Specialized Funds : We organize, invest and manage commingled specialized primary, secondary and direct investment funds.
The team measures adherence to the stated strategies and limited partnership agreement terms. The team is in regular contact with fund managers, which allows for early detection of potential issues and timely development of constructive recommendations. We actively track and report on each investment and on overall portfolios.
The team measures adherence to the stated strategies and limited partnership agreement terms. The team is in regular contact with fund managers, which allows for early detection of potential issues and timely development of constructive recommendations. We actively track and report on each investment and on overall portfolios. We provide clients with comprehensive and customized quarterly and annual reports.
Our definition of fee-earning AUM is not based on any definition that is set forth in the agreements governing the customized separate accounts or specialized funds that we manage. As of March 31, 2024, our fee-earning AUM was approximately $66 billion compared to $124 billion in AUM.
Our definition of fee-earning AUM is not based on any definition that is set forth in the agreements governing the customized separate accounts or specialized funds that we manage. As of March 31, 2025, our fee-earning AUM was approximately $72 billion compared to $138 billion in AUM.
Item 1. Business Our Company We are a global private markets investment solutions provider with approximately $124 billion of discretionary assets under management (“AUM”), and approximately $796 billion of non-discretionary assets under advisement (“AUA”) as of March 31, 2024.
Item 1. Business Our Company We are a global private markets investment solutions provider with approximately $138 billion of discretionary assets under management (“AUM”), and approximately $819 billion of non-discretionary assets under advisement (“AUA”) as of March 31, 2025.
For the year ended March 31, 2024, our top 10 clients generated approximately 14% of management and advisory fee revenues, and our top 20 clients generated approximately 22% of management and advisory fee revenues with all of our top 20 clients having multiple allocations, products or services with us.
For the year ended March 31, 2025, our top 10 clients generated approximately 12% of management and advisory fee revenues, and our top 20 clients generated approximately 19% of management and advisory fee revenues with all of our top 20 clients having multiple allocations, products or services with us.
For the year ended March 31, 2024, our top 10 clients generated approximately 14% of management and advisory fee revenues, and our top 20 clients generated approximately 22% of management and advisory fee revenues. 15 Sales and Marketing Our client and private wealth solutions groups consists of a global employee base located strategically throughout the world that allows us to have a local presence in many markets and be closer to our clients.
For the year ended March 31, 2025, our top 10 clients generated approximately 12% of management and advisory fee revenues, and our top 20 clients generated approximately 19% of management and advisory fee revenues. 17 Sales and Marketing Our client and private wealth solutions groups consist of a global employee base located strategically throughout the world that allows us to have a local presence in many markets and be closer to our clients.
Investors in our specialized funds, other than the evergreen funds, generally make commitments to provide capital at the outset of a fund and deliver capital when called upon by us, as investment opportunities become available and to fund operational expenses and other obligations.
We may also offer additional evergreen funds in the future with additional specialized strategies. Capital Commitments. Investors in our specialized funds, other than the evergreen funds, generally make commitments to provide capital at the outset of a fund and deliver capital when called upon by us, as investment opportunities become available and to fund operational expenses and other obligations.
Our principal competition for customized separate accounts is mostly other highly specialized and independent private markets asset management firms. We compete primarily in the advisory services area of the business with firms that are regionally based and with a select number of large consulting firms for whom private markets investments is only one, often small, portion of their overall business.
Our principal competition for customized separate accounts is mostly other highly specialized and independent private markets asset management firms. We compete primarily in the advisory services area of the business with firms that are regionally based and with a select number of large consulting firms.
Financial Conduct Authority no longer have “passporting” privileges under certain EU directives, such as the AIFMD and the Markets in Financial Instruments Directive II (“MiFID II”), which certain of our specialized funds and customized separate accounts relied upon for access to markets throughout the EU.
For example, our subsidiaries that are authorized and regulated by the U.K. Financial Conduct Authority no longer have “passporting” privileges under certain EU directives, such as the AIFMD and the Markets in Financial Instruments Directive II (“MiFID II”), which certain of our specialized funds and customized separate accounts relied upon for access to markets throughout the EU.
Our AUA is diversified across geographies with approximately 41% derived from clients based outside of the United States. 13 The following chart summarizes the growth of our AUA since fiscal year 2020.
Our AUA is diversified across geographies with approximately 42% derived from clients based outside of the United States. 15 The following chart summarizes the growth of our AUA since fiscal year 2021.
Assets Under Management and Advisement As of March 31, 2024, we had total AUA and AUM of approximately $921 billion, of which $124 billion represents discretionary AUM from our customized separate accounts and specialized funds, and $796 billion represents non-discretionary AUA managed on behalf of our advisory accounts.
Assets Under Management and Advisement As of March 31, 2025, we had total AUA and AUM of approximately $958 billion, of which $138 billion represents discretionary AUM from our customized separate accounts and specialized funds, and $819 billion represents non-discretionary AUA managed on behalf of our advisory accounts.
We earn management fees based on a percentage of limited partners’ capital commitments to, net invested capital or net asset value in, our specialized funds.
Management Fees . We earn management fees based on a percentage of capital commitments to, net invested capital or NAV in, our specialized funds.
Within the client service group, our client operations group is dedicated to tracking and reporting on primary investments, secondary investments and direct investments that we manage for our clients. This group also uses the services of third-party administrators and analysts, particularly with respect to specialized funds.
The allocation committee is composed of senior professionals throughout the organization. Monitoring & Reporting Our client operations group is dedicated to tracking and reporting on primary investments, secondary investments and direct investments that we manage for our clients. This group also uses the services of third-party administrators and analysts, particularly with respect to specialized funds.
Expand private markets solutions and products to defined contribution, retail and similar pools of investable assets. We believe we are pioneers in the creation, distribution, and management of products such as specialized secondaries, direct investments and specialty credit strategies that are designed to serve defined contribution retirement plans and similar entities.
We believe we are pioneers in the creation, distribution, and management of products such as specialized secondaries, direct investments and specialty credit strategies that are designed to serve defined 10 contribution retirement plans and similar entities.
If the incentive fee calculation results in a negative amount in a given year, that amount is applied to reduce the balance in the notional account.
If the incentive fee calculation results in a negative amount in a given year, that amount is applied to reduce the balance in the notional account. We are not required to repay any negative balance in the notional account.
Performance fees are based on the aggregate amount of realized gains earned by the applicable customized separate account, subject to the achievement of defined minimum returns to the clients. Performance fees are based on a fixed percentage of net profits, subject to a compounded annual preferred return that varies by account.
Performance fees are based on the aggregate amount of unrealized or realized gains earned, subject to the achievement of defined minimum returns to the clients or a high-water mark. Performance fees are based on a fixed percentage of net profits with some subject to a compounded annual preferred return that varies by account.
Compensation and Benefits In order to make working at Hamilton Lane an attractive proposition for current and prospective employees, we have developed a comprehensive total rewards compensation program. The elements of this program are designed to recognize and reward individual performance and recognize contributions that align with and drive positive business results.
Compensation and Benefits In order to attract and retain current and prospective employees, we have developed a comprehensive total rewards compensation program. The elements of this program are designed to reward individual performance and recognize contributions that align with and drive positive business results.
At the beginning of the engagement for each advisory account and customized separate account, a relationship manager is assigned as the principal contact person with that client. The relationship managers take primary responsibility for working with the clients to design their strategic plans and to implement those plans in accordance with investment guidelines agreed to by us and the clients.
At the beginning of the engagement for each advisory account and customized separate account, a senior professional from FIMS is assigned as the principal contact person with that client. FIMS takes primary responsibility for working with the clients to design their strategic plans and to implement those plans in accordance with agreed upon investment guidelines.
Strategies include investments in businesses with a focus on the core categories of environmental and/or social impact. Diversify and grow client base. We aim to continue to expand our relationships with existing clients and intend to capitalize on significant opportunities in new client segments globally, such as smaller institutions and high-net-worth individuals.
Strategies include investments in businesses with a focus on environmentally and/or socially impactful products and services. Diversify and grow client base. We aim to continue to expand our relationships with existing clients and intend to capitalize on significant opportunities with new clients globally, such as smaller institutions and high-net-worth individuals.
We are not required to repay any negative balance in the notional account. 20 Distribution management contracts have varying durations, some with indefinite terms, and typically can be terminated by our clients for any reason generally upon 30 to 90 days’ notice. Some contracts provide for termination on shorter or longer notice.
Distribution management contracts have varying durations, some with indefinite terms, and typically can be terminated by our clients for any reason generally upon 30 to 90 days’ notice. Some contracts provide for termination on shorter or longer notice.
Assets related to our advisory accounts have increased from approximately $434 billion as of March 31, 2020, to approximately $796 billion as of March 31, 2024, representing a CAGR of approximately 16%. Our AUA clients are predominately large institutional investors, with 49% of AUA related to public pension funds and 30% related to sovereign wealth funds.
Assets related to our advisory accounts have increased from approximately $631 billion as of March 31, 2021, to approximately $819 billion as of March 31, 2025, representing a CAGR of approximately 7%. Our AUA clients are predominately large institutional investors, with 47% of AUA related to public pension funds and 30% related to sovereign wealth funds.
One evergreen fund is marketed to investors outside of the United States, and in the United States, we offer a similar vehicle for U.S. investors, which is registered under the Securities Act and as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”).
Certain of these evergreen funds are marketed to investors outside of the United States, and in the United States, we offer similar vehicles for U.S. investors, which are registered under the Securities Act and as investment companies under the Investment Company Act of 1940, as amended (the “Investment Company Act”).
We are proud of our organization’s history of embracing and championing diversity. Our success is because of our people – our colleagues across the globe who bring their authentic selves to work every day. Together, we believe diverse perspectives lead to informed decisions designed to benefit our clients, our employees and our competitive edge.
Our success is because of our people – our colleagues across the globe who bring their authentic selves to work every day. From our diverse perspectives, we can make informed decisions designed to benefit our clients, our employees and our competitive edge.
We believe a blend of variable and longer-term components further attracts and incentivizes talent, provides an overall compensation package that is competitive with the market and encourages retention of top performers. 25 Our benefits include 16 weeks of fully paid parental leave plus one additional week to be used on demand, regardless of gender identity, lactation and milk shipping services, assisted reproductive technology and adoption support, back-up child, elder and self-care, workplace flexibility, mental health services and a number of financial wellness benefits including educational assistance, a student loan refinancing and repayment program, commuter benefits and our Employee Share Purchase Plan, as amended, through which employees can purchase shares of our Class A common stock at a discounted price.
Our benefits include 12 weeks of fully paid parental bonding leave plus one additional week to be used on demand (regardless of gender identity), lactation and milk shipping services, assisted reproductive technology and adoption support, back-up child, elder and self-care, workplace flexibility, mental health services and a number of financial wellness benefits including educational assistance, a student loan refinancing and repayment program, commuter benefits and our Employee Share Purchase Plan, as amended, through which employees can purchase shares of our Class A common stock at a discounted price.
We identify and develop strategic partnerships with, and/or opportunistically seek minority stakes in these companies and often, are either a client of these companies or share in a common vision that will provide strategic benefits to both parties.
We identify and develop strategic partnerships with, and/or opportunistically seek minority stakes in, these companies, and often are either a client of these companies or share in a common vision seeking to provide strategic benefits to both parties. Expand private markets solutions and products to defined contribution, retail and similar pools of investable assets.
The incentive fees charged by our specialized funds are generally referred to as “carried interest.” Our primary funds invest the majority of their capital in other private markets funds on a primary basis, and certain of our primary funds earn carried interest on these investments.
Our primary funds invest the majority of their capital in other private markets funds on a primary basis, and certain of our primary funds earn carried interest on these investments.
We believe that the “Hamilton Lane” trade name, logos and website are material to our operations. Legal and Compliance Our general counsel reports to Erik Hirsch, one of our co-chief executive officers. Our attorneys are embedded in our corporate legal and investment legal teams.
Legal and Compliance Our general counsel reports to Erik Hirsch, one of our co-chief executive officers. Our attorneys are embedded in our corporate legal and investment legal teams.
A significant portion of our revenue base is recurring and is based on the long-term nature of our specialized funds and customized separate accounts as well as long-term relationships with many of our clients, providing highly predictable cash flows.
A significant portion of our revenue base is recurring and is based on the long-term nature of our specialized funds and customized separate accounts as well as long-term relationships with many of our clients, providing predictable cash flows. Since our inception, we have experienced consistent, strong growth, which continues to be reflected in our more recent AUM and AUA growth.
The relationship managers communicate and meet regularly with their clients to discuss potential investments that we are currently considering, funds expected to be raised in the next 12 months, the current status of the clients’ portfolios, investment strategies and overall market conditions.
FIMS works directly with our portfolio management group to ensure that all investment opportunities that are appropriate for their clients are considered. FIMS communicate and meet regularly with their clients to discuss potential investments, funds expected to be raised in the next 12 months, the status of the clients’ portfolios, investment strategies and overall market conditions.
Most of our customized separate accounts and specialized funds are not registered under the Investment Company Act because they fall outside the scope of the Investment Company Act or qualify for an exemption thereunder. 22 ERISA-Related Regulation Some of our specialized funds are treated as holding “plan assets” as defined under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), as a result of investments in those funds by benefit plan investors.
ERISA-Related Regulation Some of our specialized funds are treated as holding “plan assets” as defined under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), as a result of investments in those funds by benefit plan investors.
Once a primary or secondary investment is closed, we have frequent conversations with private markets fund managers, hold periodic in-person meetings (conditions permitting) and attend annual meetings and advisory board meetings.
Once a primary or secondary investment is closed, we have frequent conversations with private markets fund managers, hold periodic in-person meetings (conditions permitting) and attend annual meetings and advisory board meetings. This process generally is led by senior members of the investment platform. Our team closely follows the activities and investments in clients’ portfolios.
Investment Process and Monitoring Our investment team is generally organized by investment type (primary, secondary and direct investment). The direct investment team is further specialized with separate teams that focus on equity or credit. We also have a specialized team that analyzes all investment types related to real assets opportunities.
Investment Process and Monitoring Our investment team is generally organized by investment type (primary, secondary and direct investment), asset class or strategy and functional area. The direct investment team is further specialized with separate teams that focus on equity or credit.
Individual member states of the EU have imposed additional requirements that may include internal arrangements with respect to risk management, liquidity risks, asset valuations, and the establishment and security of depository and custodial requirements.
Individual member states of the EU have imposed additional requirements that may include internal arrangements with respect to risk management, liquidity risks, asset valuations, and the establishment and security of depository and custodial requirements. 24 The application of some of these requirements and regulations to our business changed with the exit of the U.K. from the EU (“Brexit”), which became official in January 2020.
Talent Acquisition and Retention Our Human Resources department, in close collaboration with our DEI&B Council, has implemented a core set of competencies and practices that equip employees with the knowledge and skills to create a supportive environment for all.
Talent Acquisition, Retention and Development of Human Capital Our Human Resources department, in close collaboration with our Belong@HamiltonLane Council, has implemented a core set of competencies and practices that equip employees with the knowledge and skills to create a supportive environment. This program centers around four pillars: recruiting/retention, education, employee resource groups and external partnerships.
The asset management business is intensely competitive, and in addition to the above factors, our ability to continue to compete effectively will depend upon our ability to attract highly qualified investment professionals and retain existing employees.
The asset management business is intensely competitive, and in addition to the above factors, our ability to continue to compete effectively will depend upon our ability to attract highly qualified investment professionals and retain existing employees. 22 Intellectual Property We own or have a license to the trademarks, service marks or trade names that we use in connection with the operation of our business.
While we do not anticipate changing our broad views around the importance of responsible investing and taking a materiality approach within our underwriting process, we may evolve our policies and procedures as it relates to our sensitivities and exclusions and guidance to our investment teams on handling them.
As we evolve, we will continue to review and revisit our approach. While we do not anticipate changing our broad views around the importance of responsible investing and taking a financial materiality approach to considering RI, ESG and climate factors within our investment process, we may evolve our policies and procedures in the future.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe Loan Agreements contain, and any future debt instruments may contain, financial and other covenants that impose requirements on us and limit our and our subsidiaries’ ability to engage in certain transactions or activities, such as: 36 • incur additional debt; • provide guarantees in respect of obligations of other persons; • make loans, advances and investments; • maintain account balances at other financial institutions; • make certain payments in respect of equity interests, including, among others, the payment of dividends and other distributions, redemptions and similar payments, payments in respect of warrants, options and other rights, and payments in respect of subordinated indebtedness; • enter into transactions with investment funds and affiliates; • create or incur liens; • enter into negative pledges; • sell all or any part of the business, assets or property, or otherwise dispose of assets; • make acquisitions or consolidate or merge with other persons; • enter into sale-leaseback transactions; • change the nature of our business; • change our fiscal year; • make certain modifications to organizational documents or certain material contracts; • make certain modifications to certain other debt documents; and • enter into certain agreements with respect to the repayment of indebtedness, the making of loans or advances, or the transfer of assets.
Biggest changeThe Loan Agreements and the Note Purchase Agreement contain, and any future debt instruments may contain, financial and other covenants that impose requirements on us and limit our and our subsidiaries’ ability to engage in certain transactions or activities, such as: • incur additional debt; • provide guarantees in respect of obligations of other persons; • make loans, advances and investments; • maintain account balances at other financial institutions; • make certain payments in respect of equity interests, including, among others, the payment of dividends and other distributions, redemptions and similar payments, payments in respect of warrants, options and other rights, and payments in respect of subordinated indebtedness; • enter into transactions with investment funds and affiliates; • create or incur liens; • enter into negative pledges; • sell all or any part of the business, assets or property, or otherwise dispose of assets; • make acquisitions or consolidate or merge with other persons; • enter into sale-leaseback transactions; • change the nature of our business; • change our fiscal year; • make certain modifications to organizational documents or certain material contracts; • make certain modifications to certain other debt documents; • enter into certain agreements with respect to the repayment of indebtedness, the making of loans or advances, or the transfer of assets; and • enter into investments or engage in deals or transactions that involve exposure to economic sanctions. 34 There can be no assurance that we will be able to comply with the financial covenants contained in our Loan Agreements and the Note Purchase Agreement, including requirements that we maintain a consolidated leverage ratio within a specified range, specified amounts of management fees, a specified amount of adjusted EBITDA, and a specified minimum tangible net worth (as defined in those agreements).
Our ability to retain our senior management team and attract additional qualified investment professionals is critical to our success. Our success depends on our ability to retain our senior management team and to recruit additional qualified investment, sales and other professionals.
Our ability to retain our senior management team and attract additional qualified investment professionals is critical to our success. Our success depends on our ability to retain our senior management team and to recruit and retain additional qualified investment, sales and other professionals.
In addition, certain of our funds and customized separate accounts may utilize lines of credit to fund investments. Because interest expense and other costs of borrowings under lines of credit are an expense of the fund or account, the fund’s or account’s net multiple of invested capital may be reduced, as well as the amount of carried interest generated.
In addition, certain of our funds and customized separate accounts utilize lines of credit to fund investments. Because interest expense and other costs of borrowings under lines of credit are an expense of the fund or account, the fund’s or account’s net multiple of invested capital may be reduced, as well as the amount of carried interest generated.
In addition, we are required to develop continuously our infrastructure in response to the increasingly complex investment management industry and increasing sophistication of investors. Legal and regulatory developments also contribute to the level of our expenses.
In addition, we are required to develop our infrastructure continuously in response to the increasingly complex investment management industry and increasing sophistication of investors. Legal and regulatory developments also contribute to the level of our expenses.
Isolated incidents involving such matters have occurred in the past but have not had a material impact on our financial condition or results of operations.
Isolated incidents involving such matters have occurred in the past but have not had a material impact on our financial condition or results of operations.
Attacks on our or our service providers’ information technology infrastructure could enable the attackers to gain unauthorized access to and steal our sensitive or proprietary information, destroy data or disable, degrade or sabotage our systems or divert or otherwise steal funds, and attackers have in the past gained unauthorized access to sensitive information about us, our clients and investors by attacking the systems of certain of our service providers.
Attacks on our or our service providers’ information technology infrastructure could enable the attackers to gain unauthorized access to and steal our sensitive or proprietary information, destroy data or disable, degrade or sabotage our systems or divert or otherwise steal funds, and attackers have in the past gained unauthorized access to sensitive information about us, our clients and investors by attacking our systems and the systems of certain of our service providers.
Our investment management business competes with a variety of traditional and alternative asset managers, commercial banks, investment banks and other financial institutions, and we expect that competition will continue to increase.
Our investment management business competes with a variety of traditional and alternative asset managers, commercial banks, investment banks and other financial institutions. We expect that competition will continue to increase.
It is not possible to predict with certainty the possible future business and economic ramifications arising from the occurrence of another pandemic or global health crisis, but such events could: (i) restrict our ability to easily travel and meet with prospective and current clients in person (which inhibits building and strengthening our relationships with them); (ii) impede our ability to market our funds and attract new business (which may result in lower or delayed revenue growth); (iii) restrict our ability to conduct on-site due diligence as may be appropriate for a potential investment (which can impede the identification of investment risks); (iv) cause a slowdown in fundraising activity (which could result in delayed or decreased management fees); (v) cause a slowdown in our deployment of capital (which could adversely affect our 55 revenues and our ability to raise capital for new or successor funds); (vi) limit the ability of general partners to exit existing investments (which could decrease incentive fee revenue); and (vii) adversely impact our liquidity and cash flows due to declines in revenues.
It is not possible to predict with certainty the possible future business and economic ramifications arising from the occurrence of another pandemic or global health crisis, but such events could: (i) restrict our ability to easily travel and meet with prospective and current clients in person (which inhibits building and strengthening our relationships with them); (ii) impede our ability to market our funds and attract new business (which may result in lower or delayed revenue growth); (iii) restrict our ability to conduct on-site due diligence as may be appropriate for a potential investment (which can impede the identification of investment risks); (iv) cause a slowdown in fundraising activity (which could result in delayed or decreased management fees); (v) cause a slowdown in our deployment of capital (which could adversely affect our revenues and our ability to raise capital for new or successor funds); (vi) limit the ability of general partners to exit existing investments (which could decrease incentive fee revenue); and (vii) adversely impact our liquidity and cash flows due to declines in revenues.
Our certificate of incorporation requires, to the fullest extent permitted by law, that (A) the Court of Chancery in the State of Delaware will be the sole and exclusive forum for (1) any derivative action or proceeding brought on our behalf, (2) any action asserting a claim of breach of a fiduciary duty owed by any of our current or former directors, officers or stockholders to us or our stockholders, (3) any action asserting a claim arising pursuant to any provision of the DGCL or our certificate of incorporation or bylaws, (4) any action to interpret, apply, enforce or determine the validity of our certificate of incorporation or bylaws or (5) any action asserting a claim governed by the internal affairs doctrine and (B) the federal district courts of the United States of America will be the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act.
Our certificate of incorporation requires, to the fullest extent permitted by law, that (A) the Court of Chancery in the State of Delaware will be the sole and exclusive forum for (1) any derivative action or proceeding brought on our behalf, (2) any action asserting a claim of breach of a fiduciary duty owed by any of our current or former directors, officers or stockholders to us or our stockholders, (3) any action asserting a claim arising pursuant to any provision of the DGCL or our certificate of incorporation or bylaws, (4) any action to interpret, apply, enforce or determine the validity of our certificate of incorporation or bylaws or (5) any action asserting a claim governed by the internal affairs doctrine and (B) the federal district courts of the 65 United States of America will be the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act.
For more information on the risks associated with our evergreen funds, see “—The exercise of redemption or repurchase rights by investors in our evergreen funds may adversely affect our revenues.” To the extent we introduce new types of investment structures, products or services, we will face numerous risks and uncertainties, including risks associated with the possibility that we have insufficient expertise to engage in such activities profitably or without incurring inappropriate amounts of risk, that we do not have the required investment of capital and other resources and that we could potentially lose clients due to the perception that we are no longer focusing on our core business.
For more information on the risks associated with our evergreen funds, see “—The exercise of redemption or repurchase rights by investors in our evergreen funds may adversely affect our revenues.” 31 To the extent we introduce new types of investment structures, products or services, we will face numerous risks and uncertainties, including risks associated with the possibility that we have insufficient expertise to engage in such activities profitably or without incurring inappropriate amounts of risk, that we do not have the required investment of capital and other resources and that we could potentially lose clients due to the perception that we are no longer focusing on our core business.
However, if anything were to happen that would cause Hamilton Lane Incorporated to be deemed to be an investment company under the Investment Company Act, requirements imposed by the Investment Company Act, including limitations on our capital structure, ability to transact business with affiliates (including HLA) and ability to compensate key employees, could make it impractical for us to continue our business as currently conducted, impair the agreements and arrangements between and among HLA, us or our senior management team, or any combination thereof and materially and adversely affect our business, financial condition and results of operations.
However, if anything were to happen that would cause Hamilton Lane Incorporated to be deemed to be an investment company under the Investment Company Act, requirements imposed by the Investment Company Act, including limitations on our capital structure, ability to transact business with affiliates (including HLA) and ability to compensate key employees, could make it impractical for us to continue our business as currently conducted, impair the agreements and arrangements between and among HLA, us or our senior management team, or any 66 combination thereof and materially and adversely affect our business, financial condition and results of operations.
Breaches in security, whether malicious in nature or through inadvertent transmittal or other loss of data, could potentially jeopardize our, our employees’ or our clients’ or counterparties’ sensitive, confidential, proprietary and other information processed and stored in, and transmitted through, our computer systems and networks or those of our third-party service providers, or otherwise cause interruptions or malfunctions in our, our employees’, our clients’, our counterparties’ or third parties’ operations, which could result in material financial losses, increased costs, disruption of our business, liability to clients and other counterparties, regulatory intervention or reputational damage, which, in turn, could cause a decline in our earnings and/or stock price.
Breaches in security, whether malicious in nature or through inadvertent transmittal or other loss of data, could potentially jeopardize our, our employees’ or our clients’ or counterparties’ sensitive, confidential, proprietary and other information processed and stored in, and transmitted through, our 45 computer systems and networks or those of our third-party service providers, or otherwise cause interruptions or malfunctions in our, our employees’, our clients’, our counterparties’ or third parties’ operations, which could result in material financial losses, increased costs, disruption of our business, liability to clients and other counterparties, regulatory intervention or reputational damage, which, in turn, could cause a decline in our earnings and/or stock price.
The historical performance of our funds should not be considered indicative of the future performance of these funds or of any future funds we may raise, in part because: • market conditions and investment opportunities during previous periods may have been significantly more favorable for generating positive performance than those we may experience in the future; • the performance of our funds is generally calculated on the basis of NAV of the funds’ investments, including unrealized gains, which may never be realized; • our historical returns derive largely from the performance of our earlier funds, whereas future fund returns will depend increasingly on the performance of our newer funds or funds not yet formed; • our newly established funds may generate lower returns during the period that they initially deploy their capital; • in recent years, there has been increased competition for investment opportunities resulting from the increased amount of capital invested in private markets alternatives and high liquidity in debt markets, and the increased competition for investments may reduce our returns in the future; • the performance of particular funds also will be affected by risks of the industries and businesses in which they invest; and • we may create new funds that reflect a different asset mix and new investment strategies, as well as a varied geographic and industry exposure, compared to our historical funds, and any such new funds could have different returns than our previous funds. 31 The success of our business depends on the identification and availability of suitable investment opportunities for our clients.
The historical performance of our funds should not be considered indicative of the future performance of these funds or of any future funds we may raise, in part because: • market conditions and investment opportunities during previous periods may have been significantly more favorable for generating positive performance than those we may experience in the future; • the performance of our funds is generally calculated on the basis of NAV of the funds’ investments, including unrealized gains, which may never be realized; • our historical returns derive largely from the performance of our earlier funds, whereas future fund returns will depend increasingly on the performance of our newer funds or funds not yet formed; • our newly established funds may generate lower returns during the period that they initially deploy their capital; • in recent years, there has been increased competition for investment opportunities resulting from the increased amount of capital invested in private markets alternatives and high liquidity in debt markets, and the increased competition for investments may reduce our returns in the future; • the performance of particular funds also will be affected by risks of the industries and businesses in which they invest; and • we may create new funds that reflect a different asset mix and new investment strategies, as well as a varied geographic and industry exposure, compared to our historical funds, and any such new funds could have different returns than our previous funds. 28 The success of our business depends on the identification and availability of suitable investment opportunities for our clients.
We have entered into a tax receivable agreement for the benefit of the direct and indirect members of HLA other than us, pursuant to which we will pay them 85% of the amount of the tax savings, if any, that we realize (or, under certain circumstances, are deemed to realize) as a result of increases in tax basis (and certain other tax benefits) resulting from our acquisition of membership units or as a result of certain items of loss being specially allocated to us for tax purposes in connection with dispositions by HLA of certain investment assets.
We have entered into a tax receivable agreement for the benefit of the direct and indirect members of HLA other than us, pursuant to which we will pay them 85% of the amount of the tax savings, if any, that we realize (or, under certain circumstances, are deemed to realize) as a result of increases in tax basis (and certain other tax benefits) resulting from our acquisition of membership units or as a result of certain items of loss 61 being specially allocated to us for tax purposes in connection with dispositions by HLA of certain investment assets.
Our business and the performance of investments made by our specialized funds, customized separate accounts and advisory accounts can be materially affected by difficult or volatile market, economic and geopolitical conditions and events in the United States or throughout the world that are outside our control, including interest rates, inflation, economic recession, the availability of credit, changes in laws, trade barriers, public health crises, natural disasters, civil unrest, trade conflicts, war or threat of war, terrorism or political uncertainty.
Our business and the performance of investments made by our specialized funds, customized separate accounts and advisory accounts can be materially affected by difficult or volatile market, economic and geopolitical conditions and events in the United States or throughout the world that are outside our control, including interest rates, inflation, economic recession, the availability of credit, changes in laws, tariffs and trade barriers, public health crises, natural disasters, civil unrest, trade conflicts, war or threat of war, terrorism or political uncertainty.
For more information on this risk, please see “—Our indebtedness may expose us to substantial risks, and our cash balances are exposed to the credit risks of the financial institutions at which they are held.” Failure to maintain the security of our information technology networks, or those of our third-party service providers, or data security breaches could harm our reputation and have a material adverse effect on our results of operations, financial condition and cash flow.
For more information on this risk, please see “—Our indebtedness may expose us to substantial risks, and our cash balances are exposed to the credit risks of the financial institutions at which they are held.” 44 Failure to maintain the security of our information technology networks, or those of our third-party service providers, or data security breaches could harm our reputation and have a material adverse effect on our results of operations, financial condition and cash flow.
A general economic downturn or tightening of global credit markets may cause us to write down the valuations of investments and result in reduced opportunities to find suitable investments and make it more difficult for us, or the funds in which we and our clients invest, to exit and realize value from existing investments, potentially resulting in a decline in the value of the investments held in our clients’ portfolios and a decrease in incentive fee revenue.
A general economic downturn, recession or tightening of global credit markets may cause us to write down the valuations of investments and result in reduced opportunities to find suitable investments and make it more difficult for us, or the funds in which we and our clients invest, to exit and realize value from existing investments, potentially resulting in a decline in the value of the investments held in our clients’ portfolios and a decrease in incentive fee revenue.
In addition, negative publicity and press speculation about us, our investment activities or the private markets in general, whether or not based in truth, or litigation or regulatory action against us or any third-party managers recommended by us or 50 involving us may tarnish our reputation and harm our ability to attract and retain clients and materially adversely affect our financial condition or results of operations.
In addition, negative publicity and press speculation about us, our investment activities or the private markets in general, whether or not based in truth, or litigation or regulatory action against us or any third-party managers recommended by us or involving us may tarnish our reputation and harm our ability to attract and retain clients and materially adversely affect our financial condition or results of operations.
Such prior events, to date, have not had a material impact on our financial condition or results of operations. Further, we allow for hybrid and remote/office work, which introduces operational risks, including heightened cybersecurity risk, as remote working environments can be less secure and more susceptible to 47 hacking attacks.
Such prior events, to date, have not had a material impact on our financial condition or results of operations. Further, we allow for hybrid and remote/office work, which introduces operational risks, including heightened cybersecurity risk, as remote working environments can be less secure and more susceptible to hacking attacks.
Our account balances at each institution typically exceed Federal Deposit Insurance Corporation (“FDIC”) insurance coverage of $250,000 per depositor, and, as a result, there is a concentration of credit risk related to amounts on deposit in excess of FDIC insurance coverage. In some cases, we have transferred uninsured cash balances to money market mutual funds.
Our account balances at each institution typically exceed Federal Deposit Insurance Corporation (“FDIC”) 33 insurance coverage of $250,000 per depositor, and, as a result, there is a concentration of credit risk related to amounts on deposit in excess of FDIC insurance coverage. In some cases, we have transferred uninsured cash balances to money market mutual funds.
The violation of these laws, obligations and standards by any of our employees, advisors or third-party service providers would adversely affect our clients and us by subjecting us to, among other things, civil and criminal penalties or material fines, profit disgorgement, injunctions on future conduct, securities litigation and a general loss of investor confidence.
The violation of these laws, obligations and standards by any of our employees, advisors or third-party service providers would adversely affect our clients and us by subjecting us to, among other things, civil and criminal penalties or material fines, profit disgorgement, injunctions on future conduct, securities 36 litigation and a general loss of investor confidence.
If we do not continue to develop and implement appropriate processes and tools to maintain this culture, particularly in light of rapid and significant growth in our employee population and our permitting hybrid and remote/office work, our ability to compete successfully and achieve our business objectives could be impaired, which could negatively impact our business, financial condition and results of operations.
If we do not continue to develop and implement appropriate processes and tools to maintain this culture, particularly in light of rapid and significant growth in our employee population and our permitting 41 hybrid and remote/office work, our ability to compete successfully and achieve our business objectives could be impaired, which could negatively impact our business, financial condition and results of operations.
In addition, a number of jurisdictions, including the United States, have restrictions on foreign direct investment pursuant to which their respective heads of state and/or regulatory bodies have the authority to block or impose conditions with respect to certain transactions, such as investments, acquisitions and divestitures, if such transaction threatens to impair national security.
In addition, a number of jurisdictions, including the United States, have restrictions on foreign direct investment pursuant to which their respective heads of state and/or regulatory bodies have the authority to 56 block or impose conditions with respect to certain transactions, such as investments, acquisitions and divestitures, if such transaction threatens to impair national security.
Further, we may fail to consummate identified investment opportunities because of business, regulatory or legal complexities or uncertainty and adverse developments in the U.S. or global economy, financial markets or geopolitical conditions, and our ability to deploy capital in certain countries may be adversely impacted by U.S. and foreign government policy changes and regulations.
Further, we may fail to consummate identified investment opportunities because of business, regulatory or legal complexities or 32 uncertainty and adverse developments in the U.S. or global economy, financial markets or geopolitical conditions, and our ability to deploy capital in certain countries may be adversely impacted by U.S. and foreign government policy changes and regulations.
Also, in the event of insolvency, liquidation, dissolution, reorganization or bankruptcy of a company in which one or more of our specialized funds, customized separate accounts or advisory accounts hold an investment, holders of securities ranking senior to our clients’ investments would 43 typically be entitled to receive payment in full before distributions could be made in respect of our clients’ investments.
Also, in the event of insolvency, liquidation, dissolution, reorganization or bankruptcy of a company in which one or more of our specialized funds, customized separate accounts or advisory accounts hold an investment, holders of securities ranking senior to our clients’ investments would typically be entitled to receive payment in full before distributions could be made in respect of our clients’ investments.
For example, members of our senior management team have different tax positions 65 from Class A common stockholders and from us, which could influence their decisions regarding whether and when to dispose of assets, whether and when to incur new or refinance existing indebtedness, and whether and when we should terminate the tax receivable agreement and accelerate the obligations thereunder.
For example, members of our senior management team have different tax positions from Class A common stockholders and from us, which could influence their decisions regarding whether and when to dispose of assets, whether and when to incur new or refinance existing indebtedness, and whether and when we should terminate the tax receivable agreement and accelerate the obligations thereunder.
A disaster or a disruption in technology or infrastructure that supports our business, including a disruption involving electronic communications, cloud-based infrastructure or other 46 services used by us, our third-party service providers or other third parties with whom we conduct business, or a disruption directly affecting our principal offices, could negatively impact our ability to continue to operate our business without interruption.
A disaster or a disruption in technology or infrastructure that supports our business, including a disruption involving electronic communications, cloud-based infrastructure or other services used by us, our third-party service providers or other third parties with whom we conduct business, or a disruption directly affecting our principal offices, could negatively impact our ability to continue to operate our business without interruption.
Our compliance obligations include those relating to U.S. state laws and regulations, including, without limitation the CPRA, which provides for enhanced privacy protections for 48 California residents, a private right of action for data breaches and statutory fines and damages for data breaches or other CPRA violations, as well as a requirement of “reasonable” cybersecurity.
Our compliance obligations include those relating to U.S. state laws and regulations, including, without limitation the CPRA, which provides for enhanced privacy protections for California residents, a private right of action for data breaches and statutory fines and damages for data breaches or other CPRA violations, as well as a requirement of “reasonable” cybersecurity.
These strategies and procedures may fail under some circumstances, particularly if we are confronted with risks that 44 we have underestimated or not identified, including those related to difficult market or geopolitical conditions. Given the large number and size of our funds, we often have large positions with a single counterparty.
These strategies and procedures may fail under some circumstances, particularly if we are confronted with risks that we have underestimated or not identified, including those related to difficult market or geopolitical conditions. Given the large number and size of our funds, we often have large positions with a single counterparty.
Failure of our risk management techniques could materially and adversely affect our business, financial condition and results of operations, including our right to receive incentive fees. The due diligence process that we undertake in connection with investments may not reveal all facts that may be relevant in connection with an investment.
Failure of our risk management techniques could materially and adversely affect our business, financial condition and results of operations, including our right to receive incentive fees. 42 The due diligence process that we undertake in connection with investments may not reveal all facts that may be relevant in connection with an investment.
Shares of our Class A common stock and Class B common stock entitle the respective holders to identical non-economic rights, except that each share of our Class A common stock entitles its holder to one vote on all matters to be voted on by stockholders generally, while each share of our Class B common stock entitles its holder to ten votes until a Sunset becomes effective.
Shares of our Class A common stock and Class B common stock entitle the respective holders to identical non-economic rights, except that each share of our Class A common stock entitles its holder to one vote on all matters to be voted on by stockholders generally, while each share of our Class B common stock entitles its holder to ten votes until a Sunset becomes 63 effective.
The legislation could hinder our ability to deploy capital as freely as we would wish and to 62 recruit and incentivize staff. Different and extended internal governance, disclosure, reporting, liquidity and group “prudential” consolidation requirements (among other things) could also have a material impact on our EU-based operations.
The legislation could hinder our ability to deploy capital as freely as we would wish and to recruit and incentivize staff. Different and extended internal governance, disclosure, reporting, liquidity and group “prudential” consolidation requirements (among other things) could also have a material impact on our EU-based operations.
In the event that our specialized funds, customized separate accounts or individual investments perform poorly, our revenues and earnings derived from incentive fees will decline, and it will be 39 more difficult for us to raise capital for new specialized funds or gain new or retain current customized separate account clients in the future.
In the event that our specialized funds, customized separate accounts or individual investments perform poorly, our revenues and earnings derived from incentive fees will decline, and it will be more difficult for us to raise capital for new specialized funds or gain new or retain current customized separate account clients in the future.
Any of these risks could materially and adversely affect our business, financial condition and results of operations. Our specialized funds and customized separate accounts may face risks relating to undiversified investments. We cannot give assurance as to the degree of diversification that will be achieved in any of our specialized funds or customized separate accounts.
Any of these risks could materially and adversely affect our business, financial condition and results of operations. 40 Our specialized funds and customized separate accounts may face risks relating to undiversified investments. We cannot give assurance as to the degree of diversification that will be achieved in any of our specialized funds or customized separate accounts.
Also, events that damage the reputation of our industry generally, such as highly publicized incidents of fraud or other scandals, could have a material adverse effect on our business, regardless of whether any of these events directly relate to our specialized funds, customized separate accounts or advisory accounts.
Also, events that damage the reputation of our 48 industry generally, such as highly publicized incidents of fraud or other scandals, could have a material adverse effect on our business, regardless of whether any of these events directly relate to our specialized funds, customized separate accounts or advisory accounts.
A significant reduction in the number of fee-paying clients and/or AUM/AUA levels in any given period could reduce our revenue and materially and adversely affect our business, financial condition and results of operations. Our failure to deal appropriately with conflicts of interest could damage our reputation and materially and adversely affect our business.
A significant reduction in the number of fee-paying clients and/or AUM/AUA levels in any given period could reduce our revenue and materially and adversely affect our business, financial condition and results of operations. 29 Our failure to deal appropriately with conflicts of interest could damage our reputation and materially and adversely affect our business.
A number of factors serve to increase our competitive risks: • some of our competitors have more relevant experience, greater financial and other resources and more personnel than we do; • some of our specialized funds and customized separate accounts or the investments that we recommend to our clients may not perform as well as competitors’ funds or other available investment products; • there are relatively few barriers to entry impeding new asset management firms, including a relatively low cost of entering these lines of business, and the successful efforts of new entrants into our various lines of business is expected to continue to result in increased competition; • if allocation of assets to alternative investment strategies increases, there will be increased competition for alternative investments and access to fund general partners and managers; • some of our competitors may have a lower cost of capital and access to funding sources that are not available to us, which may create competitive disadvantages for us with respect to our specialized funds, particularly funds that directly use leverage or rely on debt financing of their portfolio companies to generate superior investment returns; • some of our competitors may be more successful than us in the development of new products to address investor demand for new or different investment strategies and/or regulatory changes, 56 including with respect to products with mandates that incorporate ESG considerations, or products that are targeted toward retail; • further innovations in financial technology (or fintech) have the potential to disrupt the financial industry and change the way financial institutions, as well as investment managers, do business, and could exacerbate these competitive pressures; • some of our competitors may be more successful than us in the development and implementation of new technology to address investor demand for product and strategy innovation; • some of our competitors may have instituted, or may institute, low cost, high speed financial applications and services based on artificial intelligence, and new competitors may enter the investment management space using new investment platforms based on artificial intelligence; • some of our competitors may be subject to less regulation and accordingly may have more flexibility to undertake and execute certain strategies or investments than us and/or bear less compliance expense than us; • some of our competitors may have more flexibility than us in raising certain types of investment funds under the investment management contracts they have negotiated with their clients; • some of our competitors may have more expertise or be regarded by investors as having more expertise in a specific strategy or geographic region; • certain investors may prefer to invest with private partnerships; and • other industry participants will from time to time seek to recruit our investment professionals and other employees away from us.
A number of factors serve to increase our competitive risks: • some of our competitors have more relevant experience, greater financial and other resources and more personnel than we do; • if, as we expect, allocation of assets to alternative investment strategies increases, there will be increased competition for alternative investments and access to fund general partners and managers; • some of our specialized funds and customized separate accounts or the investments that we recommend to our clients may not perform as well as competitors’ funds or other available investment products; • there are relatively few barriers to entry impeding new asset management firms, including a relatively low cost of entering these lines of business, and the successful efforts of new entrants into our various lines of business is expected to continue to result in increased competition; • some of our competitors may have a lower cost of capital and access to funding sources that are not available to us, which may create competitive disadvantages for us with respect to our specialized funds, particularly funds that directly use leverage or rely on debt financing of their portfolio companies to generate superior investment returns; • some of our competitors may be more successful than us in the development of new products to address investor demand for new or different investment strategies and/or regulatory changes, including with respect to products with mandates that incorporate ESG considerations, or products that are targeted toward retail; • further innovations in financial technology (or fintech) have the potential to disrupt the financial industry and change the way financial institutions, as well as investment managers, do business, and could exacerbate these competitive pressures; • some of our competitors may be more successful than us in the development and implementation of new technology, including AI technology, to service clients and address investor demand for product and strategy innovation; • some of our competitors may have instituted, or may institute, low cost, high speed financial applications and services based on AI, and new competitors may enter the investment management space using new investment platforms based on artificial intelligence; • some of our competitors may be subject to less regulation and accordingly may have more flexibility to undertake and execute certain strategies or investments than us and/or bear less compliance expense than us; • some of our competitors may have more flexibility than us in raising certain types of investment funds under the investment management contracts they have negotiated with their clients; • some of our competitors may have more expertise or be regarded by investors as having more expertise in a specific strategy or geographic region; 52 • certain investors may prefer to invest with private partnerships; and • other industry participants will from time to time seek to recruit our investment professionals and other employees away from us.
Collecting, measuring and reporting the information and metrics required under the various existing regulations has imposed administrative burden and increased cost on us, and such burden and cost are likely to increase as new regulations are enacted, particularly if the requirements imposed on us by various regulations lack harmonization on a global basis.
Moreover, collecting, measuring and reporting the information and metrics required under the various existing regulations has imposed administrative burden and increased cost on us, and such burden and cost are likely to increase as new regulations are enacted, particularly if the requirements imposed on us by various regulations lack harmonization on a global basis.
In addition, we believe Hamilton Lane Incorporated is not an investment company under section 3(b)(1) of the Investment Company Act because it is primarily engaged in a non-investment company business. 68 The Investment Company Act and the rules thereunder contain detailed parameters for the organization and operations of investment companies.
In addition, we believe Hamilton Lane Incorporated is not an investment company under section 3(b)(1) of the Investment Company Act because it is primarily engaged in a non-investment company business. The Investment Company Act and the rules thereunder contain detailed parameters for the organization and operations of investment companies.
In addition, carried interest distributions have in the past and may in the future decrease in difficult, volatile or uncertain economic environments as the ability of general partners to exit and realize value from existing investments may be even more limited than in more stable economic environments.
In addition, carried interest distributions have in the past and may in the future decrease in difficult, volatile or uncertain economic environments as the ability of general partners to exit and realize 37 value from existing investments may be even more limited than in more stable economic environments.
This may subject us to reputational harm, make such vehicles less attractive to investors in the future and negatively impact future subscriptions to such 40 vehicles, which could have a material adverse effect on the cash flows of such vehicles and may negatively impact the revenues we derive from them.
This may subject us to reputational harm, make such vehicles less attractive to investors in the future and negatively impact future subscriptions to such vehicles, which could have a material adverse effect on the cash flows of such vehicles and may negatively impact the revenues we derive from them.
The value of the fund investments of our specialized funds and customized separate accounts is determined periodically by us based on the fair value of such investments as reported by the underlying fund managers. Our valuation of the funds in which we invest is largely dependent upon the processes employed by the managers of those funds.
The value of the fund investments of our specialized funds and customized separate accounts is determined periodically by us based 38 on the fair value of such investments as reported by the underlying fund managers. Our valuation of the funds in which we invest is largely dependent upon the processes employed by the managers of those funds.
Furthermore, such conditions could also increase the risk of default with respect to investments held by our funds that have significant debt investments. Our business could generate lower revenue in a general economic downturn or a tightening of global credit markets.
Furthermore, such conditions could also increase the risk of default with respect to investments held by our funds that have significant debt investments. Our business could generate lower revenue in a general economic downturn or recession or a tightening of global credit markets.
As a result, in certain circumstances, payments could be made under the tax receivable agreement in excess of our ultimate cash tax savings. In certain circumstances, HLA is required to make distributions to us and the direct and indirect owners of HLA, and the distributions that HLA will be required to make may be substantial.
As a result, in certain circumstances, payments could be made under the tax receivable agreement in excess of our ultimate cash tax savings. 62 In certain circumstances, HLA is required to make distributions to us and the direct and indirect owners of HLA, and the distributions that HLA will be required to make may be substantial.
As we expand the scope of our business, we increasingly confront potential and actual conflicts of interest relating to our advisory and investment management businesses. For example, we may recommend that 32 various advisory clients invest in specialized funds managed by us.
As we expand the scope of our business, we increasingly confront potential and actual conflicts of interest relating to our advisory and investment management businesses. For example, we may recommend that various advisory clients invest in specialized funds managed by us.
The leveraged capital structure of such businesses increases the exposure of the funds’ portfolio companies to adverse economic factors such as rising interest rates, financial institution risks discussed above, downturns in the economy or deterioration in the condition of such business or its industry.
The leveraged capital structure of such businesses increases the exposure of the funds’ portfolio companies to adverse economic factors such as rising interest rates, financial institution risks discussed above, downturns in the economy or deterioration in the condition of such 35 business or its industry.
However, the impact of the penalty is directly correlated to the amount of capital previously invested by the investor in the fund. For 38 instance, if an investor has invested little or no capital early in the life of the fund, then the forfeiture penalty may not be as meaningful.
However, the impact of the penalty is directly correlated to the amount of capital previously invested by the investor in the fund. For instance, if an investor has invested little or no capital early in the life of the fund, then the forfeiture penalty may not be as meaningful.
The HLA membership units held directly and indirectly by the members of HLA other than HLI, including members of our senior management team, may in the future be exchanged for shares of our Class A 63 common stock or, at our election, for cash.
The HLA membership units held directly and indirectly by the members of HLA other than HLI, including members of our senior management team, may in the future be exchanged for shares of our Class A common stock or, at our election, for cash.
We have and will continue to provide resources to foster the development of new product offerings and business strategies by our investment professionals and launch successor and related products, such that our 34 new strategies seek to achieve a level of scale and profitability.
We have and will continue to provide resources to foster the development of new product offerings and business strategies by our investment professionals and launch successor and related products, such that our new strategies seek to achieve a level of scale and profitability.
A general market downturn or a specific market dislocation may result in lower investment returns for the private markets funds or portfolio companies in which our specialized funds and customized 42 separate accounts invest, which consequently would materially and adversely affect investment returns for our specialized funds and customized separate accounts.
A general market downturn or a specific market dislocation may result in lower investment returns for the private markets funds or portfolio companies in which our specialized funds and customized separate accounts invest, which consequently would materially and adversely affect investment returns for our specialized funds and customized separate accounts.
While the balances and liquidity of the accounts we maintain at First Republic have not been materially adversely affected by that bank’s failure, if any of the financial institutions at which we maintain account balances or upon which we rely for credit were to become unstable or insolvent, our ability to access existing cash, cash equivalents and investments, or to access existing or enter into new banking arrangements or facilities to pay operational and other costs, could be threatened or lost, which could have a material adverse effect on our business and financial condition.
While the balances and liquidity of the accounts we maintained at First Republic were not materially adversely affected by that bank’s failure, if any of the financial institutions at which we maintain account balances or upon which we rely for credit were to become unstable or insolvent, our ability to access existing cash, cash equivalents and investments, or to access existing or enter into new banking arrangements or facilities to pay operational and other costs, could be threatened or lost, which could have a material adverse effect on our business and financial condition.
As a registered investment adviser, HLA has fiduciary duties to its clients. Similarly, our subsidiary, Hamilton Lane Securities LLC, is registered as a broker-dealer 60 with the SEC and FINRA, and it is subject to their rules and regulations.
As a registered investment adviser, HLA has fiduciary duties to its clients. Similarly, our subsidiary, Hamilton Lane Securities LLC, is registered as a broker-dealer with the SEC and FINRA, and it is subject to their rules and regulations.
Our cash flow may fluctuate significantly due to the fact that we receive carried interest distributions only when investments are realized and achieve a certain preferred return based on performance.
Our cash flow may fluctuate significantly due to the fact that we typically receive carried interest distributions only when investments are realized and achieve a certain preferred return based on performance.
Such non-U.S. investments involve certain factors not typically associated with U.S. investments, including risks related to (i) currency exchange matters, such as exchange rate fluctuations between the U.S. dollar and the foreign currency in which the investments are denominated or commitments to the specialized funds or portfolio funds are denominated, and costs associated with conversion of investment proceeds and income from one currency to another, (ii) differences between the U.S. and foreign capital markets, including the absence of uniform accounting, auditing, financial reporting and legal standards, practices and disclosure requirements and less government supervision and regulation, (iii) certain economic, social and political risks, including exchange control regulations and restrictions on foreign investments and repatriation of capital, the risks of war, political, economic or social instability, and (iv) the possible imposition of foreign taxes with respect to such investments or confiscatory taxation.
Such non-U.S. investments involve certain factors not typically associated with U.S. investments, including risks related to (i) currency exchange matters, such as exchange rate fluctuations between the U.S. dollar and the foreign currency in which the investments are denominated or commitments to the specialized funds or portfolio funds are denominated, and costs associated with conversion of investment proceeds and income from one currency to another, (ii) differences between the U.S. and foreign capital markets, including the absence of uniform accounting, auditing, financial reporting and legal standards, practices and disclosure requirements and less government supervision and regulation, (iii) certain economic, social and political risks, including exchange control regulations and restrictions on foreign investments and repatriation of capital, tariffs and trade barriers, the risks of war, political, economic or social instability, and (iv) the possible imposition of foreign taxes with respect to such investments or confiscatory taxation.
Additionally, allocating investment opportunities appropriately frequently involves significant and subjective judgements, and the risk that allocation decisions could be challenged as inconsistent with our obligations under applicable law, governing fund agreements or our own policies cannot be eliminated. It is possible that actual, potential or perceived conflicts could give rise to investor dissatisfaction, litigation or regulatory enforcement actions.
Additionally, allocating investment opportunities appropriately frequently involves significant and subjective judgments, and the risk that allocation decisions could be challenged as inconsistent with our obligations under applicable law, governing fund agreements or our own policies cannot be eliminated. It is possible that actual, potential or perceived conflicts could give rise to investor dissatisfaction, litigation or regulatory enforcement actions.
In addition, the governing agreements of our specialized funds typically require the suspension of the investment period if, depending on the fund, between two and ten designated members of our senior management team cease to devote sufficient professional time to or cease to be employed by HLA, often called a “key person event,” or in connection 33 with certain other events.
In addition, the governing agreements of our specialized funds typically require the suspension of the investment period if, depending on the fund, between two and ten designated members of our senior management team either cease to devote sufficient professional time to or cease to be employed by HLA, often called a “key person event,” or in connection with certain other events.
The substantial growth of our business in recent years may be difficult to sustain, as it may place significant demands on our resources and employees and will increase our expenses.
The substantial growth of our business in recent years may be difficult to sustain, and it may place significant demands on our resources and employees and will increase our expenses.
Any actual or perceived inability by us to adequately address privacy concerns, or comply with applicable privacy laws, regulations, policies, industry standards and guidance, contractual obligations, or other legal obligations, even if unfounded, could result in significant regulatory and third-party liability, increased costs, disruption of our business and operations, and a loss of client confidence and other reputational damage.
Any actual or perceived inability by us to adequately address privacy concerns, or comply with applicable privacy laws, regulations, policies, industry standards and guidance, contractual obligations, or other legal obligations, even if unfounded, could result in significant regulatory and third-party liability, increased costs, disruptions to our business and operations, and a loss of client confidence and other reputational damage.
In addition, if the United States were to default on its debt, the negative ramifications on the U.S. and global economies could be unprecedented and long-lasting and may dramatically exacerbate risks highlighted here and elsewhere in this Form 10-K. 58 Extensive government regulation, compliance failures and changes in law or regulation could adversely affect us.
In addition, if the United States were to default on its debt, the negative ramifications on the U.S. and global economies could be unprecedented and long-lasting and may dramatically exacerbate risks highlighted here and elsewhere in this Form 10-K. 54 Extensive government regulation, compliance failures and changes in law or regulation could adversely affect us.
We, our specialized funds and customized separate accounts and portfolio companies in which our specialized funds and customized separate accounts invest face risks associated with climate change, including risks related to the impact of climate- and ESG-related legislation and regulation (both domestically and internationally), risks related to technology- and climate change-related business trends (such as the process of transitioning to a lower-carbon economy) and risks stemming from the physical impacts of climate change.
We, our specialized funds and customized separate accounts and portfolio companies in which our specialized funds and customized separate accounts invest, face risks associated with climate change, including risks related to the impact of climate- and sustainability-related legislation and regulation (both domestically and internationally), risks related to technology- and climate change-related business trends (such as the process of transitioning to a lower-carbon economy) and risks stemming from the physical impacts of climate change.
For more information on our Loan Agreements, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Loan Agreements”. We expect to continue to utilize debt to finance and grow our operations, which will expose us to the typical risks associated with the use of leverage.
For more information on our Loan Agreements and Senior Notes, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Senior Notes and Loan Agreements”. We expect to continue to utilize debt to finance and grow our operations, which will expose us to the typical risks associated with the use of leverage.
Our advisory and investment management businesses are subject to regulation in the United States, including by the SEC, the Commodity Futures Trading Commission, the Internal Revenue Service (the 59 “IRS”), FINRA and other regulatory agencies, pursuant to, among other laws, the Investment Advisers Act, the Securities Act, the Code, the Commodity Exchange Act, the Investment Company Act and the Exchange Act.
Our advisory and investment management businesses are subject to regulation in the United States, including by the SEC, the Commodity Futures Trading Commission, the Internal Revenue Service (the “IRS”), FINRA and other regulatory agencies, pursuant to, among other laws, the Investment Advisers Act, the Securities Act, the Internal Revenue Code, the Commodity Exchange Act, the Investment Company Act 55 and the Exchange Act.
The distribution of retail products, including through new channels (such as tokenization and digital securities exchanges), whether directly or through market intermediaries, can be complex and could expose us to allegations of improper conduct and/or actions by regulators within and outside the United States with respect to, among other things, product suitability, investor classification, compliance with securities laws, conflicts of interest and the adequacy of disclosure to customers to whom our products are distributed through those channels.
The distribution of retail products, including through tokenization and digital securities exchanges, whether directly or through market intermediaries, can be complex and could expose us to allegations of improper conduct and/or actions by regulators within and outside the United States with respect to, among other things, product suitability, investor classification, compliance with securities laws, conflicts of interest and the adequacy of disclosure to customers to whom our products are distributed through those channels.
For example, government authorities of certain U.S. states have requested information from and publicly scrutinized certain asset managers with respect to whether such managers have adopted ESG policies that would restrict investing in certain industries or sectors, such as traditional energy.
Government authorities of certain U.S. states have requested information from and publicly scrutinized certain asset managers with respect to whether such managers have adopted ESG policies that would restrict investing in certain industries or sectors, such as traditional energy.
We have also been required by applicable accounting rules to write down the valuations of investments. These market conditions have also impacted our ability and the 57 ability of funds in which we and our clients invest to liquidate positions in a timely and efficient manner.
We have also been required by applicable accounting rules to write down the valuations of investments. These market conditions have also 53 impacted our ability and the ability of funds in which we and our clients invest to liquidate positions in a timely and efficient manner.
These initiatives, commitments and goals could be difficult and expensive to implement, the personnel, processes and technologies needed to implement them may not be cost effective and may not advance at a sufficient pace, and we may not be able to accomplish them within the timelines we announce or at all.
These goals could be difficult and expensive to implement, the personnel, processes and technologies needed to implement them may not be cost effective and may not advance at a sufficient pace, and we may not be able to accomplish them within the timelines we announce or at all.
Hamilton Lane Incorporated is the sole managing member of HLA and holds an approximately 73.6% economic interest in HLA. As managing member, Hamilton Lane Incorporated exercises complete control over HLA. As such, we do not believe Hamilton Lane Incorporated’s managing member interest in HLA is an investment security.
Hamilton Lane Incorporated is the sole managing member of HLA and holds an approximately 76.6% economic interest in HLA. As managing member, Hamilton Lane Incorporated exercises complete control over HLA. As such, we do not believe Hamilton Lane Incorporated’s managing member interest in HLA is an investment security.
In addition, we may be subject to successor liability for FCPA violations or other acts of bribery, or violations of applicable sanctions or 61 other export control laws committed by companies in which we or our funds invest or which we or our funds acquire.
In addition, we may be subject to 57 successor liability for FCPA violations or other acts of bribery, or violations of applicable sanctions or other export control laws committed by companies in which we or our funds invest or which we or our funds acquire.
Furthermore, underlying investments within our specialized funds and customized separate accounts reflect valuations reported elsewhere in this Form 10-K that are determined as of December 31, 2023.
Furthermore, underlying investments within our specialized funds and customized separate accounts reflect valuations reported elsewhere in this Form 10-K that are determined as of December 31, 2024.
Portfolio companies in non-U.S. jurisdictions may be subject to additional risks, including changes in currency exchange rates, exchange control regulations, risks associated with different types (and lower quality) of available information, expropriation or confiscatory taxation and adverse political and regulatory developments.
Portfolio companies in non-U.S. jurisdictions may be subject to additional risks, including tariffs and trade barriers, changes in currency exchange rates, exchange control regulations, risks associated with different types (and lower quality) of available information, expropriation or confiscatory taxation and adverse political and regulatory developments.
Investments by most of our specialized funds and customized separate accounts will include debt instruments and equity securities of companies that we do not control.
Our specialized funds and customized separate accounts make investments in funds and companies that we do not control. Investments by most of our specialized funds and customized separate accounts will include debt instruments and equity securities of companies that we do not control.
Further, we may not be able to control how third-party artificial intelligence technologies that we choose to use are developed or maintained, or how data we input is used or disclosed, even where we have sought contractual protections with respect to these matters.
Further, we may not be able to control how third-party AI technologies that we choose to use are developed or maintained, or how data we input is used or disclosed, even where we have sought contractual protections with respect to these matters.
In many of these countries and jurisdictions, which include the U.K., the EU, the EEA, certain of the individual member states of each of the EU and EEA, Australia, Canada, China, Hong Kong, Israel, Mexico, Singapore, South Korea, Switzerland and Japan, we and our operations, and in some cases our personnel, are subject to regulatory oversight and requirements.
In many of these countries and jurisdictions, which include the U.K., the EU, the EEA, certain of the individual member states of each of the EU and EEA, Australia, Canada, Chile, China, Hong Kong, Israel, Japan, Mexico, Singapore, South Korea, Switzerland and the United Arab Emirates, we and our operations, and in some cases our personnel, are subject to regulatory oversight and requirements.
For more information on our Loan Agreements, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Loan Agreements”.
For more information on our Senior Notes and Loan Agreements, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Senior Notes and Loan Agreements”.
Our revenue from our investment management business is derived from fees earned for our management of our specialized funds, customized separate accounts and advisory accounts, incentive fees, or carried interest, with respect to certain of our specialized funds and customized separate accounts, and monitoring and reporting fees.
Our revenue from our investment management business is derived from fees earned for our management of our specialized funds, customized separate accounts and advisory accounts, incentive fees, including carried interest and performance fees, with respect to certain of our specialized funds and customized separate accounts, and monitoring and reporting fees.
The approximately 14.2 million shares of Class A common stock issuable upon exchange of the Class B units and Class C units that are held by Class B Holders and Class C Holders will be eligible for resale from time to time, subject to certain exchange timing and volume and Securities Act restrictions.
The approximately 12.7 million shares of Class A common stock issuable upon exchange of the Class B units and Class C units that are held by Class B Holders and Class C Holders will be eligible for resale from time to time, subject to certain exchange timing and volume and Securities Act restrictions.
A cyberattack could persist undetected over extended periods of time and may not be mitigated in a timely manner to prevent or minimize the impact on us.
A cyberattack could persist undetected over an extended period of time and may not be mitigated in a timely manner to prevent or minimize the impact on us.
Our international operations carry special financial and business risks, which could include the following: • greater difficulties in managing and staffing foreign operations; • fluctuations in foreign currency exchange rates that could adversely affect our results; • additional costs of complying with, and exposure to liability under, foreign regulatory regimes; • unexpected changes in trading policies, regulatory requirements, tariffs and other barriers; • longer transaction cycles; • higher operating costs; • local labor conditions and regulations; • adverse consequences or restrictions on the repatriation of earnings; • potentially adverse tax consequences, such as trapped foreign losses; • less stable political and economic environments; • potentially heightened risk of theft or compromise of data and intellectual property, in particular in those jurisdictions that do not have levels comparable to the United States of protection of proprietary information and assets such as intellectual property, trademarks, trade secrets, know-how and client information and records; • potentially compromised protections or rights to technology, data and intellectual property due to government regulation; • terrorism, political hostilities, war, public health crises and other civil disturbances or other catastrophic events, which may reduce business activity, threaten the safety of our international offices, employees and clients, and affect our plans to expand in particular regions; • cultural and language barriers and the need to adopt different business practices in different geographic areas; and • difficulty collecting fees and, if necessary, enforcing judgments. 54 As part of our day-to-day operations outside the United States, we are required to create compensation programs, employment policies, compliance policies and procedures and other administrative programs that comply with the laws of multiple countries.
Our international operations carry special financial and business risks, which could include the following: • greater difficulties in managing and staffing foreign operations; • fluctuations in foreign currency exchange rates that could adversely affect our results; • additional costs of complying with, and exposure to liability under, foreign regulatory regimes; • unexpected changes in trading policies, regulatory requirements, tariffs and other barriers; • longer transaction cycles; • higher operating costs; • local labor conditions and regulations; • adverse consequences or restrictions on the repatriation of earnings; • potentially adverse tax consequences, such as trapped foreign losses; • less stable political and economic environments; • potentially heightened risk of theft or compromise of data and intellectual property, in particular in those jurisdictions that do not have levels comparable to the United States of protection of proprietary information and assets such as intellectual property, trademarks, trade secrets, know-how and client information and records; • potentially compromised protections or rights to technology, data and intellectual property due to government regulation; • tariffs, terrorism, political hostilities, war, public health crises and other civil disturbances or other catastrophic events, which may reduce business activity, threaten the safety of our international offices, employees and clients, and affect our plans to expand in particular regions; • cultural and language barriers and the need to adopt different business practices in different geographic areas; and • difficulty collecting fees and, if necessary, enforcing judgments.
We may be unable to successfully resolve conflicts to our satisfaction. In the event that our trademarks, service marks or trade names are successfully challenged, we could be forced to rebrand our products, services or business, which could result in loss of brand recognition and could require us to devote resources towards advertising and marketing new brands.
In the event that our trademarks, service marks or trade names are successfully challenged, we could be forced to rebrand our products, services or business, which could result in loss of brand recognition and could require us to devote resources towards advertising and marketing new brands.
The investment management business is intensely competitive, with competition based on a variety of factors, including investment performance, the quality of service provided to clients, investor availability of capital and willingness to invest, investment terms and conditions (including fees and liquidity terms), brand recognition and business reputation.
Competition is based on a variety of factors, including investment performance, the quality of service provided to clients, investor availability of capital and willingness to invest, investment terms and conditions (including fees and liquidity terms), brand recognition and business reputation.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe engage diligenced third parties as part of our cybersecurity program. On a periodic basis, we engage third-party auditors to assess our cybersecurity controls and procedures. We also engage reputable third-party security firms to conduct annual penetration tests of our physical and digital security. We then work to remediate critical vulnerabilities identified through these assessments.
Biggest changeWe also engage reputable third-party security firms to conduct annual penetration tests of our physical and digital security. We then work to remediate critical vulnerabilities identified through these assessments. Our cybersecurity processes are integrated into our Company’s overall risk management processes. Our CTO is a member of our cybersecurity and ERM committees and cybersecurity issues are raised to these committees.
We also have a range of controls designed to identify, assess, mitigate, manage, and thereby seek to minimize the cybersecurity risks associated with the engagement of third-party service providers.
We also have a range of controls designed to identify, assess, mitigate, manage, and thereby seek to minimize the cybersecurity risks associated with the engagement of third-party service providers. 68
In addition, we maintain a comprehensive Security Response Policy, which sets forth various actions 70 to be taken in the event of a suspected security breach, including incident verification by our cybersecurity team, notification of our ERM committee, and mitigation and remediation actions.
In addition, we maintain a comprehensive Security Response Policy, which sets forth various actions to be taken in the event of a suspected security breach, including incident verification by our cybersecurity team, notification of our cybersecurity committee, and mitigation and remediation actions.
Our CTO is a member of this committee, along with other of the most senior professionals at the firm, including our chief operating officer who is also our chief risk officer. Our CTO updates the ERM committee on cybersecurity matters on a quarterly and as-needed basis. Our CTO has over 20 years of technology and cybersecurity-related experience.
Our CTO is a member of the cybersecurity committee, along with other of the most senior professionals at the firm, including our chief operating officer (who is also our chief risk officer) and chief compliance officer. Our CTO also updates our ERM committee on cybersecurity matters on a quarterly and as-needed basis.
Prior to joining the Company, he was Vice President of Operations & Security at Linode, where he led systems engineering, information security & compliance, hardware research & development, and project/product management, and previously held senior positions at GE and GE Digital.
Our CTO has over 20 years of technology and cybersecurity-related experience. Prior to joining the Company, he was Vice President of Operations & Security at Linode, where he led systems engineering, information security & compliance, hardware research & development, and project/product management, and previously held senior positions at GE and GE Digital.
We utilize a variety of protective measures as part of our cybersecurity program, including: • reviews of our network access rights and controls; • penetration testing; • patch management; • annual security awareness trainings and assessments for all employees and contingent workers; • security information and event management software to identify anomalies; • periodic security review meetings designed to identify vulnerabilities and review remediation efforts; • a vendor risk management program; and • cybersecurity tabletop exercises. 69 We also maintain a comprehensive Security Response Policy designed to inform proper escalation of non-routine cybersecurity events and to coordinate our actions across departments.
We utilize a variety of protective measures as part of our cybersecurity program, including: • reviews of our network access rights and controls; • penetration testing; • patch management; • annual security awareness trainings and assessments for all employees and contingent workers; • security information and event management software to identify anomalies; • periodic security review meetings designed to identify vulnerabilities and review remediation efforts; • a vendor risk management program; and • cybersecurity tabletop exercises.
Our Chief Technology Officer (“CTO”) serves as security coordinator and leads our cybersecurity and information technology team. As of March 31, 2024, no known cybersecurity threats have materially affected, or are reasonably likely to materially affect our Company, including our business strategy, cash flows, financial condition or results of operations.
As of March 31, 2025, no known cybersecurity threats have materially affected, or are reasonably likely to materially affect our Company, including our business strategy, cash flows, financial condition or results of operations. 67 We engage diligenced third parties as part of our cybersecurity program. On a periodic basis, we engage third-party auditors to assess our cybersecurity controls and procedures.
The policy sets forth, among other things, the following actions in the event of a suspected security breach: incident verification by our cybersecurity team, notification of our ERM committee, notification of an incident response and disclosure team composed of members of our operations, legal, finance and compliance teams, mitigation and remediation actions, and steps to restore business continuity.
The policy sets forth, among other things, the following actions in the event of a suspected security breach: incident verification by our cybersecurity team; notification of our cybersecurity committee, which oversees incident response; assessment of potential impact and materiality; notification of our incident disclosure response team; coordination regarding internal and external communications, including preparation of disclosures on Form 8-K, as necessary; and determination of mitigation and remediation actions with the goal of restoring business continuity.
Removed
Our cybersecurity processes are integrated into our Company’s overall risk management processes. Our CTO is a member of our ERM committee and any cybersecurity issues are immediately raised to the committee.
Added
We also maintain a comprehensive Security Response Policy designed to inform proper escalation of non-routine cybersecurity events and to coordinate our actions across departments.
Added
Our Chief Technology Officer (“CTO”) serves as security coordinator and leads our cybersecurity and information technology team.
Added
In addition, we have a cybersecurity committee that directly oversees the firm’s cybersecurity program and is responsible for cybersecurity strategy, risk assessment and management, and incident response management.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe also lease additional office space in Denver, Frankfurt, Hong Kong, London, Mexico City, Miami, Milan, New York, Portland (Oregon), San Diego, San Francisco, Scranton, Seoul, Shanghai, Singapore, Stockholm, Sydney, Herzliya, Israel (a suburb of Tel Aviv), Tokyo, Toronto and Zürich. We do not own any real property.
Biggest changeWe also lease additional office space in Denver, Dubai, Frankfurt, Herzliya, Israel (a suburb of Tel Aviv), Hong Kong, London, Mexico City, Miami, Milan, New York, Philadelphia, Portland (Oregon), San Francisco, Scranton, Seoul, Shanghai, Singapore, Stockholm, Sydney, Tokyo, Toronto and Zürich. We do not own any real property.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeAlthough there can be no assurance of the outcome of such proceedings, our management does not believe it is probable that any pending or, to our knowledge, threatened legal proceeding or claim would individually or in the aggregate materially affect our consolidated financial statements. Item 4. Mine Safety Disclosures Not applicable. 71 PART II
Biggest changeAlthough there can be no assurance of the outcome of such proceedings, our management does not believe it is probable that any pending or, to our knowledge, threatened legal proceeding or claim would individually or in the aggregate materially affect our consolidated financial statements. Item 4. Mine Safety Disclosures Not applicable. 69 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe performance graph and table shall not be deemed “soliciting material” or to be “filed” with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any of the Company’s filings under the Securities Act or the Exchange Act. 72 3/31/19 3/31/20 3/31/21 3/31/22 3/31/23 3/31/24 Hamilton Lane Incorporated $ 100.00 $ 129.38 $ 210.91 $ 187.05 $ 183.34 $ 284.77 S&P 500 100.00 93.01 145.40 168.13 155.09 201.41 Dow Jones US Asset Managers Index 100.00 85.38 148.70 162.10 146.43 193.58 Issuer Purchases of Equity Securities The following table provides information about our repurchase activity with respect to shares of our Class A common stock for the quarter ended March 31, 2024: Period Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2) January 1-31, 2024 1,973 $ 117.9 — $ 50,000,000 February 1-29, 2024 — $ — — $ 50,000,000 March 1-31, 2024 32,974 $ 107.81 — $ 50,000,000 Total 34,947 $ 108.38 — $ 50,000,000 (1) Represents shares of Class A common stock tendered by employees as payment of taxes withheld on the vesting of restricted stock granted under the Amended and Restated Hamilton Lane Incorporated 2017 Equity Incentive Plan (the “2017 Equity Plan”).
Biggest changeThe performance graph and table shall not be deemed “soliciting material” or to be “filed” with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any of the Company’s filings under the Securities Act or the Exchange Act. 70 3/31/20 3/31/21 3/31/22 3/31/23 3/31/24 3/31/25 Hamilton Lane Incorporated $ 100.00 $ 163.01 $ 144.58 $ 141.70 $ 220.10 $ 294.21 S&P 500 100.00 156.33 180.76 166.75 216.55 234.37 Dow Jones US Asset Managers Index 100.00 174.17 189.87 171.52 226.73 256.43 Issuer Purchases of Equity Securities The following table provides information about our repurchase activity with respect to shares of our Class A common stock for the quarter ended March 31, 2025: Period Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2) January 1-31, 2025 — $ — — $ 50,000,000 February 1-28, 2025 — $ — — $ 50,000,000 March 1-31, 2025 32,284 $ 139.01 — $ 50,000,000 Total 32,284 $ 139.01 — $ 50,000,000 (1) Represents shares of Class A common stock tendered by employees as payment of taxes withheld on the vesting of restricted stock granted under the Amended and Restated Hamilton Lane Incorporated 2017 Equity Incentive Plan (the “2017 Equity Plan”).
The graph and table assume $100 invested on March 31, 2019, and dividends reinvested in the security or index. The performance graph and table are not intended to be indicative of future performance.
The graph and table assume $100 invested on March 31, 2020, and dividends reinvested in the security or index. The performance graph and table are not intended to be indicative of future performance.
We have not repurchased any of our Class A common stock under the Stock Repurchase Program, so the full purchase authority remains available under this program, which expires 12 months after the date of the first acquisition under the authorization. Our board of directors most recently re-approved the Stock Repurchase Program in December 2023. Item 6. [Reserved] 73
We have not repurchased any of our Class A common stock under the Stock Repurchase Program, so the full purchase authority remains available under this program, which expires 12 months after the date of the first acquisition under the authorization. Our board of directors most recently re-approved the Stock Repurchase Program in December 2024. Item 6. [Reserved] 71
The payment date will be July 5, 2024. We do not pay dividends on our Class B common stock. The declaration and payment by us of any future dividends to holders of our Class A common stock is at the sole discretion of our board of directors.
The payment date will be July 7, 2025. We do not pay dividends on our Class B common stock. The declaration and payment by us of any future dividends to holders of our Class A common stock is at the sole discretion of our board of directors.
Holders of Class B common stock are entitled to receive only the par value ($0.001) of the Class B common stock upon exchange of the corresponding Class B unit pursuant to the exchange agreement. Holders of Record As of May 20, 2024, there were five stockholders of record of our Class A common stock.
Holders of Class B common stock are entitled to receive only the par value ($0.001) of the Class B common stock upon exchange of the corresponding Class B unit pursuant to the exchange agreement. Holders of Record As of May 27, 2025, there were five stockholders of record of our Class A common stock.
Stock Performance Graph The following graph and table depict the total return to stockholders from the closing price on March 31, 2019 through March 31, 2024, relative to the performance of the S&P 500 Index and the Dow Jones U.S. Asset Managers Index.
Stock Performance Graph The following graph and table depict the total return to stockholders from the closing price on March 31, 2020 through March 31, 2025, relative to the performance of the S&P 500 Index and the Dow Jones U.S. Asset Managers Index.
The number of record holders does not include persons who held shares of our Class A common stock in nominee or “street name” accounts through brokers. As of May 20, 2024, there were 26 stockholders of record of our Class B common stock.
The number of record holders does not include persons who held shares of our Class A common stock in nominee or “street name” accounts through brokers. As of May 27, 2025, there were 25 stockholders of record of our Class B common stock.
Dividend Policy We declared a quarterly dividend of $0.445 per share of Class A common stock to record holders in each quarter of fiscal 2024. On May 23, 2024, we declared a quarterly dividend of $0.49 per share of Class A common stock to record holders at the close of business on June 14, 2024.
Dividend Policy We declared a quarterly dividend of $0.49 per share of Class A common stock to record holders in each quarter of fiscal 2025. On May 29, 2025, we declared a quarterly dividend of $0.54 per share of Class A common stock to record holders at the close of business on June 20, 2025.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeMSCI World PME Primaries (Diversified) PEF I 1998 122 117 1.3 1.2 5.4% 2.5% 378 bps 76 bps 322 bps 16 bps PEF IV 2000 250 238 1.7 1.5 16.2% 11.2% 1,302 bps 828 bps 1,170 bps 708 bps PEF V 2003 135 133 1.7 1.6 14.2% 9.6% 841 bps 363 bps 950 bps 466 bps PEF VI 2007 494 513 1.7 1.6 11.6% 8.7% 59 bps (185 bps) 395 bps 145 bps PEF VII 2010 262 289 1.6 1.6 12.3% 8.4% (156 bps) (527 bps) 237 bps (139 bps) PEF VIII 2012 427 428 1.5 1.5 9.4% 7.0% (361 bps) (593 bps) (37 bps) (271 bps) PEF IX 2015 517 519 1.9 1.9 18.8% 16.6% 490 bps 278 bps 800 bps 583 bps PEF X 2018 278 247 1.5 1.5 17.6% 14.6% 505 bps 148 bps 770 bps 405 bps Secondaries Pre-Fund — — 362 1.5 N/A 17.1% N/A 1,330 bps N/A 1,172 bps N/A Secondary Fund I 2005 360 353 1.2 1.2 5.2% 3.8% 113 bps (63 bps) 341 bps 157 bps Secondary Fund II 2008 591 603 1.5 1.4 19.9% 13.5% 452 bps (195 bps) 869 bps 211 bps Secondary Fund III 2012 909 839 1.4 1.3 12.7% 10.1% (74 bps) (358 bps) 311 bps 33 bps Secondary Fund IV 2016 1,917 2,073 1.7 1.6 16.7% 17.4% 266 bps 289 bps 582 bps 616 bps Secondary Fund V 2019 3,929 3,745 1.5 1.5 21.6% 20.2% 1,210 bps 1,088 bps 1,449 bps 1,329 bps Secondary Fund VI 2022 3,577 994 1.4 1.8 94.2% >100% 6,743 bps 16,963 bps 6,968 bps 17,145 bps Direct/Co-investments Pre-Fund — — 244 1.9 N/A 21.3% N/A 1,655 bps N/A 1,600 bps N/A Co-Investment Fund 2005 604 578 1.0 0.9 0.2% (1.3)% (569 bps) (746 bps) (319 bps) (501 bps) Co-Investment Fund II 2008 1,195 1,157 2.1 1.8 17.9% 14.3% 569 bps 187 bps 948 bps 561 bps Co-Investment Fund III 2014 1,243 1,323 1.8 1.6 15.2% 12.2% 102 bps (199 bps) 434 bps 128 bps Co-Investment Fund IV 2018 1,698 1,490 2.3 2.1 26.3% 24.5% 1,230 bps 1,034 bps 1,509 bps 1,308 bps Equity Opportunities Fund V 2021 2,069 1,607 1.3 1.2 14.0% 11.8% 589 bps 417 bps 749 bps 578 bps Fund Vintage year Fund size ($M) Capital invested ($M) Gross multiple Net Multiple Gross IRR (%) Net IRR (%) Gross Spread vs.
Biggest changeMSCI World PME Primaries (Diversified) PEF I 1998 122 117 1.3 1.2 5.4% 2.5% 378 bps 76 bps 322 bps 16 bps PEF IV 2000 250 238 1.7 1.5 16.2% 11.2% 1,302 bps 828 bps 1,170 bps 708 bps PEF V 2003 135 133 1.7 1.6 14.2% 9.6% 841 bps 363 bps 950 bps 466 bps PEF VI 2007 494 513 1.6 1.6 11.5% 8.7% 55 bps (190 bps) 391 bps 140 bps PEF VII 2010 262 290 1.6 1.5 11.9% 7.9% (223 bps) (598 bps) 173 bps (206 bps) PEF VIII 2012 427 433 1.4 1.5 8.6% 6.1% (499 bps) (737 bps) (163 bps) (402 bps) PEF IX 2015 517 524 1.9 1.9 17.5% 15.2% 275 bps 46 bps 605 bps 375 bps PEF X 2018 278 264 1.6 1.5 15.4% 12.6% 46 bps (269 bps) 374 bps 51 bps Secondaries Pre-Fund — — 362 1.5 N/A 17.1% N/A 1,330 bps N/A 1,172 bps N/A Secondary Fund I 2005 360 353 1.2 1.2 5.2% 3.8% 113 bps (63 bps) 341 bps 157 bps Secondary Fund II 2008 591 603 1.5 1.4 19.9% 13.5% 451 bps (196 bps) 869 bps 209 bps Secondary Fund III 2012 909 841 1.4 1.3 12.7% 10.0% (84 bps) (375 bps) 302 bps 17 bps Secondary Fund IV 2016 1,917 2,110 1.6 1.5 14.8% 15.2% (4 bps) 5 bps 332 bps 349 bps Secondary Fund V 2019 3,929 3,855 1.5 1.5 16.8% 14.7% 387 bps 184 bps 706 bps 508 bps Secondary Fund VI 2022 5,603 2,588 1.3 1.2 45.8% 51.3% 2,221 bps 3,037 bps 2,738 bps 3,610 bps Direct/Co-investments Pre-Fund — — 244 1.9 N/A 21.3% N/A 1,655 bps N/A 1,600 bps N/A Co-Investment Fund 2005 604 578 1.0 0.9 0.2% (1.3)% (570 bps) (747 bps) (319 bps) (502 bps) Co-Investment Fund II 2008 1,195 1,157 2.2 1.9 18.0% 14.4% 567 bps 190 bps 944 bps 563 bps Co-Investment Fund III 2014 1,243 1,323 1.8 1.6 14.7% 11.7% 14 bps (283 bps) 353 bps 51 bps Co-Investment Fund IV 2018 1,698 1,501 2.4 2.2 24.2% 22.6% 884 bps 706 bps 1,202 bps 1,021 bps Equity Opportunities Fund V 2021 2,069 1,819 1.3 1.2 11.4% 9.4% (243 bps) (481 bps) 74 bps (148 bps) Equity Opportunities Fund VI 2024 1,012 213 1.0 1.0 N/M N/M N/M N/M N/M N/M Fund Vintage year Fund size ($M) Capital invested ($M) Gross multiple Net Multiple Gross IRR (%) Net IRR (%) Gross Spread vs.
Realization of the deferred tax assets is primarily dependent upon (1) historic earnings, (2) forecasted taxable income, (3) future tax deductions of tax basis step-ups related to our IPO and subsequent unit exchanges, (4) future tax deductions related to payments under the tax receivable agreement, and (5) our share of HLA’s temporary differences that result in future tax deductions.
Realization of the deferred tax assets is dependent primarily upon (1) historic earnings, (2) forecasted taxable income, (3) future tax deductions of tax basis step-ups related to our IPO and subsequent unit exchanges, (4) future tax deductions related to payments under the tax receivable agreement, and (5) our share of HLA’s temporary differences that result in future tax deductions.
We have entered into a tax receivable agreement with our pre-IPO owners pursuant to which we will pay them 85% of the amount of tax benefits, if any, that we realize (or are deemed to realize in the case of an early 96 termination payment by us, a change in control or a material breach by us of our obligations under the tax receivable agreement) as a result of increases in tax basis (and certain other tax benefits) resulting from purchases or exchanges of membership units of HLA.
We have entered into a tax receivable agreement with our pre-IPO owners pursuant to which we will pay them 85% of the amount of tax benefits, if any, that we realize (or are deemed to realize in the case of an early termination payment by us, a change in control or a material breach by us of our obligations under the tax receivable agreement) as a result of increases in tax basis (and certain other tax benefits) resulting from purchases or exchanges of membership units of HLA.
We believe we will also continue to evaluate opportunities, based on market conditions, to access the capital markets for working capital or to use proceeds from sales of our Class A common stock to settle in cash exchanges of HLA membership interests by direct and indirect owners of HLA pursuant to our exchange agreement.
We will also continue to evaluate opportunities, based on market conditions, to access the capital markets for working capital or to use proceeds from sales of our Class A common stock to settle in cash exchanges of HLA membership interests by direct and indirect owners of HLA pursuant to our exchange agreement.
In connection with the exchange of the Class B units, we also repurchased for par value and canceled a corresponding number of shares of Class B common stock. We did not receive any proceeds from the sale of shares by the selling stockholder. Key Financial and Operating Measures Our key financial measures are discussed below.
In connection with the exchange of the Class B units, we also repurchased for par value and canceled a corresponding number of shares of Class B common stock. We did not receive any proceeds from the sale of shares by the selling stockholder. 75 Key Financial and Operating Measures Our key financial measures are discussed below.
To the extent that our primary funds also directly make secondary investments and direct investments, they generally earn carried interest on a similar basis. Furthermore, certain of our primary funds earn carried interest on their investments in other private markets funds on a primary basis that is generally 5% of net profits, subject to the fund’s compounded annual preferred return.
To the extent that our primary funds also directly make secondary investments and direct investments, they generally earn carried interest on a similar basis. Furthermore, certain of our primary funds earn carried interest on their investments in other private markets funds on a primary basis that is generally 5.0% of net profits, subject to the fund’s compounded annual preferred return.
Recent Accounting Pronouncements Information regarding recent accounting developments and their impact on our results can be found in Note 2, “Summary of Significant Accounting Policies” in the notes to the consolidated financial statements included in Part II, Item 8 of this Form 10-K. 99
Recent Accounting Pronouncements Information regarding recent accounting developments and their impact on our results can be found in Note 2, “Summary of Significant Accounting Policies” in the notes to the consolidated financial statements included in Part II, Item 8 of this Form 10-K.
We believe fundraising efforts will continue to be impacted by certain fundamental asset management trends that include: (1) the increasing importance and market share of alternative investment strategies to investors (including smaller institutions and high-net-worth individuals) in light of an increased focus on lower-correlated and absolute levels of return; (2) the increasing demands of the investing community, including the potential for fee compression and changes to other terms; (3) shifting asset allocation policies of institutional investors; and (4) increasing barriers to entry and growth. 75 • Our ability to generate strong returns.
We believe fundraising efforts will continue to be impacted by certain fundamental asset management trends that include: (1) the increasing importance and market share of alternative investment strategies to investors (including smaller institutions and high-net-worth individuals) in light of an increased focus on lower-correlated and absolute levels of return; (2) the increasing demands of the investing community, including the potential for fee compression and changes to other terms; (3) shifting asset allocation policies of institutional investors; and (4) increasing barriers to entry and growth. 73 • Our ability to generate strong returns.
Our fee-earning AUM comprise assets in our customized separate accounts and specialized funds from which we derive management fees that are generally derived from applying a certain percentage to the appropriate fee base.
Our fee-earning AUM comprise assets in our customized separate accounts and specialized funds from which we derive management fees that are generally derived from applying a certain percentage to the appropriate fee 78 base.
Non-controlling interests Non-controlling interests reflect the portion of income or loss and the corresponding equity attributable to third-party equity holders and employees in certain consolidated subsidiaries that are not 100% owned by us.
Non-controlling interests NCI reflect the portion of income or loss and the corresponding equity attributable to third-party equity holders and employees in certain consolidated subsidiaries that are not 100% owned by us.
Significant judgment is required in determining tax expense and in evaluating tax positions, including evaluating uncertainties under GAAP. We review our tax positions quarterly and adjust our tax balances as new legislation is passed or new information becomes available.
Significant judgment is required in determining tax expense and in evaluating tax positions, 94 including evaluating uncertainties under GAAP. We review our tax positions quarterly and adjust our tax balances as new legislation is passed or new information becomes available.
Factors that could cause or contribute to these differences include, but are not limited to, those discussed below and elsewhere in this Form 10-K, particularly in “Risk Factors”, the “Summary of Risk Factors” and the “Cautionary Note Regarding Forward-Looking Information.” Unless otherwise indicated, references in this Annual Report on Form 10-K to fiscal 2024, fiscal 2023 and fiscal 2022 are to our fiscal years ended March 31, 2024, 2023 and 2022, respectively.
Factors that could cause or contribute to these differences include, but are not limited to, those discussed below and elsewhere in this Form 10-K, particularly in “Risk Factors”, the “Summary of Risk Factors” and the “Cautionary Note Regarding Forward-Looking Information.” Unless otherwise indicated, references in this Annual Report on Form 10-K to fiscal 2025, fiscal 2024 and fiscal 2023 are to our fiscal years ended March 31, 2025, 2024 and 2023, respectively.
The CS LL Index is an index designed to mirror the investable universe of the U.S. dollar denominated leveraged loan market. Loans must be rated 5B or lower and the index frequency is monthly. Our IRR represents the pooled IRR for all discretionary investments for the period from inception to December 31, 2023.
The CS LL Index is an index designed to mirror the investable universe of the U.S. dollar denominated leveraged loan market. Loans must be rated 5B or lower and the index frequency is monthly. Our IRR represents the pooled IRR for all discretionary investments for the period from inception to December 31, 2024.
The future interest payments are calculated using the variable interest rate of 7.25% on our Term Loan Agreement and the fixed interest rate of 3.50% on our 2020 Multi-Draw Term Loan Agreement. (3) Represents commitments by us to fund a portion of each investment made by our specialized funds and certain customized separate account entities.
The future interest payments are calculated using the variable interest rate of 6.25% on our Term Loan Agreement and the fixed interest rate of 3.50% on our 2020 Multi-Draw Term Loan Agreement. (3) Represents commitments by us to fund a portion of each investment made by our specialized funds and certain customized separate account entities.
Global economic conditions, including political environments, financial market performance, interest rates, credit spreads or other conditions beyond our control, all of which affect the performance of the assets underlying private market investments, are unpredictable and could negatively affect the performance of our clients’ portfolios or the ability to raise funds in the future.
Global economic conditions, including political environments, financial market performance, tariff policies, interest rates, credit spreads or other conditions beyond our control, all of which affect the performance of the assets underlying private market investments, are unpredictable and could negatively affect the performance of our clients’ portfolios or the ability to raise funds in the future.
For the year ended March 31, 2024, 2023, and 2022, the full exchange of Class B and Class C units is already included within the GAAP Weighted-average shares of Class A common stock outstanding - diluted. 89 Investment Performance The following tables present information relating to the historical performance of our specialized funds with fund families having at least two distinct vintages and most recent fund sizes of greater than $500 million per fund.
For the year ended March 31, 2024, and 2023, the full exchange of Class B and Class C units is already included within the GAAP weighted-average shares of Class A common stock outstanding - diluted. 84 Investment Performance The following tables present information relating to the historical performance of our specialized funds with fund families having at least two distinct vintages and most recent fund sizes of greater than $500 million per fund.
For each of our secondary funds, direct investment funds, strategic opportunity funds and evergreen funds, we generally earn carried interest equal to a fixed percentage of net profits, usually 10.0% to 12.5%, subject to a compounded annual preferred return that is generally 6.0% to 8.0%.
For each of our secondary funds, direct investment funds, strategic opportunity funds and some of our evergreen funds, we generally earn carried interest equal to a fixed percentage of net profits, usually 10.0% to 76 12.5%, subject to a compounded annual preferred return that is generally 6.0% to 8.0%.
Our investment advisory services include asset allocation, strategic plan creation, development of investment policies and guidelines, the screening and recommending of investments, the monitoring of and reporting on investments and investment manager review and due diligence. Our advisory clients include some of 74 the largest and most sophisticated private markets investors in the world.
Our investment advisory services include asset allocation, strategic plan creation, development of investment policies and guidelines, the screening and recommending of investments, the monitoring of and reporting on investments and investment manager review and due diligence. Our advisory clients include some of 72 the largest and most sophisticated private markets investors in the world.
Substantially all of these funds are globally focused, and they are grouped by the investment strategy utilized. 90 Gross Returns — Realized and Unrealized Fund Vintage year Fund size ($M) Capital invested ($M) Gross multiple Net Multiple Gross IRR (%) Net IRR (%) Gross Spread vs. S&P 500 PME Net Spread vs. S&P 500 PME Gross Spread vs.
Substantially all of these funds are globally focused, and they are grouped by the investment strategy utilized. 85 Gross Returns — Realized and Unrealized Fund Vintage year Fund size ($M) Capital invested ($M) Gross multiple Net Multiple Gross IRR (%) Net IRR (%) Gross Spread vs. S&P 500 PME Net Spread vs. S&P 500 PME Gross Spread vs.
For the years ended March 31, 2024, 2023 and 2022, our net cash provided by operating activities was driven primarily by receipts of management fees and incentive fees, partially offset by payment of operating expenses, which includes compensation and benefits and general, administrative and other expenses.
For the years ended March 31, 2025, 2024 and 2023, our net cash provided by operating activities was driven primarily by receipts of management fees and incentive fees, partially offset by payment of operating expenses, which includes compensation and benefits and general, administrative and other expenses.
We have not repurchased any shares of our Class A common stock under the Stock Repurchase Program, and therefore the full purchase authority remains available. Our board of directors periodically reviews the Stock Repurchase Program and most recently re-approved it in December 2023.
We have not repurchased any shares of our Class A common stock under the Stock Repurchase Program, and therefore the full purchase authority remains available. Our board of directors periodically reviews the Stock Repurchase Program and most recently re-approved it in December 2024.
There has been a trend amongst private markets investors to consolidate the number of general partners in which they invest. At the same time, an increasing flow of capital to the private markets has often times resulted in certain funds being oversubscribed.
There has been a trend among private markets investors to consolidate the number of general partners in which they invest. At the same time, an increasing flow of capital to the private markets has often times resulted in certain funds being oversubscribed.
The use of a credit facility affects the fund’s return and magnifies the performance on the upside or on the downside. 92 Liquidity and Capital Resources Historical Liquidity and Capital Resources We have managed our historical liquidity and capital requirements primarily through the receipt of management and advisory fee revenues.
The use of a credit facility affects the fund’s return and magnifies the performance on the upside or on the downside. 87 Liquidity and Capital Resources Historical Liquidity and Capital Resources We have managed our historical liquidity and capital requirements primarily through the receipt of management and advisory fee revenues.
Our specialized funds and customized separate accounts invest across industries, strategies and geographies, and therefore our general partner investments do not include any significant concentrations in a specific sector or area outside the United States.
Our specialized funds and customized separate accounts invest across industries, strategies and geographies, and therefore our investments do not include any significant concentrations in a specific sector or area outside the United States.
Adjusted shares outstanding for the years ended March 31, 2024, 2023 and 2022 are equal to weighted-average shares of Class A common stock outstanding - diluted. We believe adjusted net income and non-GAAP earnings per share are useful to investors because they enable them to better evaluate total and per-share operating performance across reporting periods.
Adjusted shares outstanding for the years ended March 31, 2024 and 2023 are equal to weighted-average shares of Class A common stock outstanding - diluted. We believe adjusted net income and non-GAAP EPS are useful to investors because they enable them to better evaluate total and per-share operating performance across reporting periods.
The Loan Agreements contain covenants that, among other things, limit HLA’s ability to incur indebtedness, transfer or dispose of assets, merge with other companies, create, incur or allow liens, make investments, pay dividends or make distributions, engage in transactions with affiliates and take certain actions with respect to management fees.
The Loan Agreements and the Note Purchase Agreement contain covenants that, among other things, limit HLA’s ability to incur indebtedness, transfer or dispose of assets, merge with other companies, create, incur or allow liens, make investments, pay dividends or make distributions, engage in transactions with affiliates and take certain actions with respect to management fees.
A detailed discussion of fiscal 2022 items and year-over-year comparisons between fiscal 2023 and fiscal 2022 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” in Part II, Item 7. of our Annual Report on Form 10-K for the fiscal year ended March 31, 2023, as filed with the SEC on May 25, 2023.
A detailed discussion of fiscal 2023 items and year-over-year comparisons between fiscal 2024 and fiscal 2023 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” in Part II, Item 7. of our Annual Report on Form 10-K for the fiscal year ended March 31, 2024, as filed with the SEC on May 23, 2024.
Business Overview We are a global private markets investment solutions provider and operate our business in a single segment. We offer a variety of investment solutions to address our clients’ needs across a range of private markets, including private equity, private credit, real estate, infrastructure, natural resources, growth equity, venture capital and impact.
Business Overview We are a global private markets investment solutions provider and operate our business in a single segment. We offer a variety of investment solutions to address our clients’ needs across a range of private markets, including private equity, private credit, real estate, infrastructure, real assets, growth equity, venture capital and impact.
The data are presented from the date indicated through December 31, 2023 and have not been adjusted to reflect acquisitions or disposals of investments subsequent to that date.
The data are presented from the date indicated through December 31, 2024 and have not been adjusted to reflect acquisitions or disposals of investments subsequent to that date.
The management fee during the investment period is often charged on capital commitments and after the investment period (or a defined anniversary of the fund’s initial closing) is typically reduced by a percentage of the management fee for the preceding year or charged on net invested capital or net asset value.
The management fee during the investment period is often charged on capital commitments and after the investment period (or a defined anniversary of the fund’s initial closing) is typically reduced by a percentage of the management fee for the preceding year or charged on net invested capital or NAV.
FRE represents net income excluding (a) incentive fees and related compensation, (b) interest income and expense, (c) income tax expense, (d) equity in income of investees, (e) non-operating (loss) gain and (f) certain other significant items that we believe are not indicative of our core performance.
FRE represents net income excluding (a) incentive fees, net of fee related performance revenues, and related compensation, (b) equity-based compensation, (c) interest income and expense, (d) income tax expense, (e) equity in income of investees, (f) non-operating gain (loss) and (g) certain other significant items that we believe are not indicative of our core performance.
We had approximately $796.2 billion of AUA as of March 31, 2024. • Distribution Management : We offer distribution management services to our clients through active portfolio management to enhance the realized value of publicly traded stock they receive as distributions in-kind from private equity funds. • Reporting, Monitoring, Data and Analytics: We provide our clients with comprehensive reporting and investment monitoring services, usually bundled into our broader investment solutions offerings, but also on a stand-alone, fee-for-service basis.
We had $819.5 billion of AUA as of March 31, 2025. • Distribution Management : We offer distribution management services to our clients through active portfolio management to enhance the realized value of publicly traded stock they receive as distributions in-kind from private equity funds. • Reporting, Monitoring, Data and Analytics: We provide our clients with comprehensive reporting and investment monitoring services, usually bundled into our broader investment solutions offerings, but also on a stand-alone, fee-for-service basis.
Non-GAAP earnings per share is calculated as adjusted net income divided by adjusted shares outstanding. Adjusted net income is income before taxes fully taxed at our estimated statutory tax rate and excludes any impact of changes in carrying amount of our redeemable NCI.
Non-GAAP EPS is calculated as adjusted net income divided by adjusted shares outstanding. Adjusted net income is income before taxes fully taxed at our estimated statutory tax rate and excludes any impact of changes in carrying amount of our redeemable NCI.
Additionally, the year ended March 31, 2024 was impacted by cash relinquished upon deconsolidation of a previously consolidated fund while the year ended March 31, 2023 was impacted by an impairment on one of our investments. Investing Activities Our investing activities generally reflect cash used for acquisitions, fixed asset purchases and contributions to and distributions from our investments.
Additionally, the years ended March 31, 2025 and 2024 were impacted by cash relinquished upon deconsolidation of a previously consolidated fund while the year ended March 31, 2023 was impacted by an impairment on one of our investments. 89 Investing Activities Our investing activities generally reflect cash used for fixed asset purchases and contributions to and distributions from our investments.
This section of this Form 10-K generally discusses fiscal 2024 and fiscal 2023 items and year-over-year comparisons between fiscal 2024 and fiscal 2023.
This section of this Form 10-K generally discusses fiscal 2025 and fiscal 2024 items and year-over-year comparisons between fiscal 2025 and fiscal 2024.
As of March 31, 2024, the total amount of outstanding loans under the EIP was $1.0 million and we believe the risk of default by an employee to be remote. Critical Accounting Estimates We prepare our consolidated financial statements in accordance with GAAP.
As of March 31, 2025, the total amount of outstanding loans under the EIP was $1.3 million and we believe the risk of default by an employee to be remote. 92 Critical Accounting Estimates We prepare our consolidated financial statements in accordance with GAAP.
The 23.4% is based on a federal tax statutory rate of 21.0% and a combined state income tax rate net of federal benefits of 2.4%. The years ended March 31, 2023 and 2022, represent corporate income taxes at our estimated statutory tax rate of 23.8% applied to adjusted pre-tax net income.
The 23.4% is based on a federal tax statutory rate of 21.0% and a combined state income tax rate net of federal benefits of 2.4%. The year ended March 31, 2023 represents corporate income taxes at our estimated statutory tax rate of 23.8% applied to adjusted pre-tax net income.
Specialized funds fee-earning AUM increased $5.5 billion for fiscal 2024 compared to fiscal 2023. Specialized fund contributions were $6.2 billion for fiscal 2024, due primarily to $2.4 billion from our latest secondary fund and $2.7 billion from our evergreen funds.
Specialized funds fee-earning AUM increased $4.5 billion for fiscal 2025 compared to fiscal 2024. Specialized fund contributions were $7.1 billion for fiscal 2025, due primarily to $4.2 billion from our evergreen funds and $1.2 billion from our latest secondary fund.
Contracts with specialized funds and certain customized separate accounts provide incentive fees, which generally range from 5.0% to 12.5% of profits, when investment returns exceed minimum return levels or other performance targets on either an annual or inception to date basis and are generally payable after all contributed capital and the preferred return on that capital has been distributed to investors.
Contracts with specialized funds and certain customized separate accounts provide incentive fees, which generally range from 5.0% to 12.5% of profits, when investment returns exceed minimum return levels or other performance targets. Incentive fees are generally payable after the achievement of performance targets or after all contributed capital and the preferred return on that capital has been distributed to investors.
Retroactive fees are management fees earned in the current period from investors that commit to a specialized fund towards the end of the fundraising period and are required to pay a catch-up management fee as if they had committed to the fund at the first closing in a prior period.
Retroactive fees are management fees earned from investors that commit to a specialized fund after the first closing of the fund and are required to pay a catch-up management fee as if they had committed to the fund at the first closing in a prior period.
Cash Flows Year Ended March 31, 2024 2023 2022 (in millions) Net cash provided by operating activities $ 120.9 $ 226.6 $ 169.5 Net cash (used in) provided by investing activities $ (122.2) $ 177.9 $ (70.5) Net cash provided by (used in) financing activities $ 4.4 $ (364.1) $ (113.2) Operating Activities Our operating activities generally reflect our earnings in the respective periods after adjusting for significant non-cash activity, including equity in income (loss) of investees, equity-based compensation, lease expense, fair value adjustments to investments and depreciation and amortization, all of which are included in earnings.
Cash Flows Year Ended March 31, 2025 2024 2023 (in millions) Net cash provided by operating activities $ 300.8 $ 120.9 $ 226.6 Net cash (used in) provided by investing activities $ (117.6) $ (122.2) $ 177.9 Net cash (used in) provided by financing activities $ (19.2) $ 4.4 $ (364.1) Operating Activities Our operating activities generally reflect our earnings in the respective periods after adjusting for significant non-cash activity, including equity in income (loss) of investees, equity-based compensation, lease expense, fair value adjustments to investments and depreciation and amortization, all of which are included in earnings.
In evaluating whether we hold a variable interest, we review the equity ownership to determine whether we absorb risk created and distributed by the entity, as well as whether the fees charged to the entity are customary and commensurate with the effort required to provide the services.
In evaluating whether we have a variable interest in the entity, we review the equity ownership and whether we absorb risk created and distributed by the entity, as well as whether the fees charged to the entity are customary and commensurate with the level of effort required to provide services.
We expect that our primary short-term and long-term liquidity needs will comprise cash to: (1) provide capital to facilitate the growth of our business; (2) fund commitments to our investments; (3) pay operating expenses, including cash compensation to our employees; (4) make payments and/or exercise early termination buyout rights under the tax receivable agreement; (5) fund capital expenditures and make strategic investments ; (6) pay interest and principal due on our outstanding debt; (7) pay income taxes; (8) make dividend payments to our stockholders and distributions to holders of HLA units in accordance with our distribution policy; (9) settle exchanges of HLA membership interests by direct and indirect owners of HLA pursuant to our exchange agreement from time to time; and (10) fund purchases of our Class A common stock pursuant to the Stock Repurchase Program. 95 We are required to maintain minimum net capital balances for regulatory purposes for certain of our foreign subsidiaries and our broker-dealer subsidiary.
We expect that our primary short-term and long-term liquidity needs will comprise cash to: (1) provide capital to facilitate the growth of our business; (2) fund commitments to our investments; (3) pay operating expenses, including cash compensation to our employees; (4) make payments and/or exercise early 90 termination buyout rights under the tax receivable agreement; (5) fund capital expenditures, make strategic investments and warehouse investments for our funds ; (6) pay interest and principal due on our outstanding debt; (7) pay income taxes; (8) make dividend payments to our stockholders and distributions to holders of HLA units in accordance with our distribution policy; (9) settle exchanges of HLA membership interests by direct and indirect owners of HLA pursuant to our exchange agreement from time to time; and (10) fund purchases of our Class A common stock pursuant to the Stock Repurchase Program.
Our ability to invest and maintain our sphere of influence with these high-performing fund managers is critical to our investors’ success and our ability to maintain our competitive position and grow our revenue. 76 • Unpredictable global macroeconomic conditions .
Our ability to invest and maintain our sphere of influence with these high-performing fund managers is critical to our investors’ success and our ability to maintain our competitive position and grow our revenue. 74 • Unpredictable, volatile and uncertain macroeconomic conditions .
We are in compliance with these regulatory requirements. Dividend Policy The declaration and payment by us of any future dividends to holders of our Class A common stock is at the sole discretion of our board of directors. We intend to continue to pay a cash dividend on a quarterly basis.
Dividend Policy The declaration and payment by us of any future dividends to holders of our Class A common stock is at the sole discretion of our board of directors. We intend to continue to pay a cash dividend on a quarterly basis.
Specialized funds comprised approximately $31.9 billion of our AUM as of March 31, 2024. • Advisory Services : We offer non-discretionary investment advisory services to assist clients in developing and implementing their private markets investment programs.
Specialized funds comprised $39.5 billion of our AUM as of March 31, 2025. • Advisory Services : We offer non-discretionary investment advisory services to assist clients in developing and implementing their private markets investment programs.
Valuation allowances are established when necessary to reduce deferred tax assets to the amount more likely than not to be realized. As of March 31, 2024, we had a valuation allowance of $90.5 million.
Valuation allowances are established when necessary to reduce deferred tax assets to the amount more likely than not to be realized. As of March 31, 2025, we had a valuation allowance of $79.4 million.
Distributions were $5.0 billion for fiscal 2024 due to $2.6 billion from accounts moving from a committed to net invested capital fee base, $1.4 billion from returns of capital in accounts earning fees on a net invested capital or NAV fee base, and $1.0 billion from accounts reaching the end of their fund term.
Distributions were $4.9 billion for fiscal 2025 due primarily to $1.9 billion from accounts moving from a committed to net invested capital fee base, $1.8 billion from returns of capital in accounts earning fees on a net invested capital or NAV fee base, and $1.2 billion from accounts reaching the end of their fund term.
As of March 31, 2024, we did not have an outstanding balance under the Revolving Loan Agreement. The 2020 Multi-Draw Term Loan Agreement provides for a term loan in the aggregate principal amount of $100 million with a maturity date of July 1, 2030. The interest rate is a fixed per annum rate of 3.50%.
The 2020 Multi-Draw Term Loan Agreement provides for a term loan in the aggregate principal amount of $100 million with a maturity date of April 1, 2030. The interest rate is a fixed per annum rate of 3.50%. As of March 31, 2025, we had an outstanding balance of $100 million under the 2020 Multi-Draw Term Loan Agreement.
As of March 31, 2024, we had an outstanding balance of $100 million under the 2020 Multi-Draw Term Loan Agreement. 93 The 2022 Multi-Draw Term Loan Agreement has a maturity date of October 1, 2029 and the interest rate is a floating per annum rate equal to the prime rate minus 1.50% subject to a floor of 3.00%.
The 2022 Multi-Draw Term Loan Agreement has a maturity date of October 1, 2029 and the interest rate is a floating per annum rate equal to the prime rate minus 1.50% subject to a floor of 3.00%. As of March 31, 2025, we did not have an outstanding balance under the 2022 Multi-Draw Term Loan Agreement.
Revenue Recognition of Incentive Fees Incentive fees include both carried interest earned from certain specialized funds and performance fees received from certain specialized funds and customized separate accounts. We recognized $101.9 million of incentive fees in fiscal 2024 and have $1.2 billion of unrecognized carried interest as of March 31, 2024.
Revenue Recognition of Incentive Fees Incentive fees include both carried interest and performance fees earned from certain specialized funds and customized separate accounts. We recognized $199.1 million of incentive fees in fiscal 2025 and have $1.3 billion of unrecognized carried interest as of March 31, 2025.
Our non-U.S. subsidiaries generally operate as corporate entities in non-U.S. jurisdictions, with certain of these entities subject to non-U.S. income taxes. Additionally, certain of our subsidiaries are subject to local jurisdiction income taxes at the entity level. Accordingly, the tax liability with respect to income attributable to non-controlling interests (“NCI”) in HLA is borne by the holders of such NCI.
Additionally, certain of our subsidiaries are subject to local jurisdiction income taxes at the entity level. Accordingly, the tax liability with respect to income attributable to non-controlling interests (“NCI”) in HLA is borne by the holders of such NCI.
We generally have discretionary investment authority over our customized separate accounts, which comprised approximately $92.5 billion of our AUM as of March 31, 2024. • Specialized Funds : We organize, invest and manage specialized primary, secondary and direct investment funds.
We generally have discretionary investment authority over our customized separate accounts, which comprised $98.8 billion of our AUM as of March 31, 2025. • Specialized Funds : We organize, invest and manage commingled specialized primary, secondary and direct investment funds.
Performance fees are recognized when the risk of clawback or reversal is not probable. 78 Expenses Compensation and benefits is our largest expense and consists of (a) base compensation comprising salary, bonuses and benefits paid and payable to employees, (b) equity-based compensation associated with the grants of restricted stock and performance awards and (c) incentive fee compensation, which consists of carried interest and performance fee allocations.
Expenses Compensation and benefits is our largest expense and consists of (a) base compensation comprising salary, bonuses and benefits paid and payable to employees, (b) equity-based compensation associated with the grants of restricted stock and performance awards and (c) incentive fee compensation, which consists of carried interest and performance fee allocations.
For the years ended March 31, 2024, 2023 and 2022, our net cash used in investing activities was driven primarily by purchases of furniture, fixtures and equipment, purchase of other investments and net contributions to our funds.
For the years ended March 31, 2025, 2024 and 2023, our net cash used in (provided by) investing activities was driven primarily by purchases of furniture, fixtures and equipment, purchase of investments and convertible notes, and net contributions to our funds partially offset by the sale of investments.
These net capital requirements are met by retaining cash. As a result, we may be restricted in our ability to transfer cash between different operating entities and jurisdictions. As of March 31, 2024, we were required to maintain approximately $5.0 million in liquid net assets within these subsidiaries to meet regulatory net capital and capital adequacy requirements.
As a result, we may be restricted in our ability to transfer cash between different operating entities and jurisdictions. As of March 31, 2025, we were required to maintain approximately $6.3 million in liquid net assets to meet regulatory net capital and capital adequacy requirements. We are in compliance with these regulatory requirements.
As of March 31, 2024, we had deferred tax assets of $261.9 million primarily due to our acquisitions of HLA units.
As of March 31, 2025, we had deferred tax assets of $308.5 million due primarily to our acquisitions of HLA units.
Customized separate accounts revenue increased $11.1 million in fiscal 2024 due to a $2.9 billion increase in fee-earning AUM from the addition of several new accounts, additional allocations from existing accounts and continued investment activity during the fiscal year.
Customized separate accounts revenue increased $5.6 million compared to the prior year due primarily to a $1.8 billion increase in fee-earning AUM from the addition of new accounts, additional allocations from existing accounts and continued investment activity during the fiscal year.
Other companies may calculate these measures differently than we do, limiting their usefulness as a comparative measure. Fee Related Earnings Fee Related Earnings (“FRE”) is used to highlight earnings from recurring management fees.
Other companies may calculate these measures differently than we do, limiting their usefulness as a comparative measure. Fee Related Earnings Fee Related Earnings (“FRE”) is used to highlight earnings from revenues that are measured and received on a recurring basis.
Fee-Earning AUM The following table provides the period to period roll-forward of our fee-earning AUM: Year Ended March 31, Year Ended March 31, 2024 2023 (in millions) Customized Separate Accounts Specialized Funds Total Customized Separate Accounts Specialized Funds Total Balance, beginning of period $ 34,684 $ 22,662 $ 57,346 $ 30,938 $ 18,193 $ 49,131 Contributions (1) 7,689 6,198 13,887 7,802 5,098 12,900 Distributions (2) (5,035) (1,100) (6,135) (4,030) (949) (4,979) Foreign exchange, market value and other (3) 236 415 651 (26) 320 294 Balance, end of period $ 37,574 $ 28,175 $ 65,749 $ 34,684 $ 22,662 $ 57,346 (1) Contributions represent (i) new commitments from customized separate accounts and specialized funds that earn fees on a committed capital fee base and (ii) capital contributions to underlying investments from customized separate accounts and specialized funds that earn fees on a net invested capital or NAV fee base.
Fee-Earning AUM The following table provides the year to year roll-forward of our fee-earning AUM: Year Ended March 31, Year Ended March 31, 2025 2024 (in millions) Customized Separate Accounts Specialized Funds Total Customized Separate Accounts Specialized Funds Total Balance, beginning of period $ 37,574 $ 28,175 $ 65,749 $ 34,684 $ 22,662 $ 57,346 Contributions (1) 6,652 7,124 13,776 7,689 6,198 13,887 Distributions (2) (4,903) (3,268) (8,171) (5,035) (1,100) (6,135) Foreign exchange, market value and other (3) 20 673 693 236 415 651 Balance, end of period $ 39,343 $ 32,704 $ 72,047 $ 37,574 $ 28,175 $ 65,749 (1) Contributions represent (i) new commitments from customized separate accounts and specialized funds that earn fees on a committed capital fee base and (ii) capital contributions to underlying investments from customized separate accounts and specialized funds that earn fees on a net invested capital or NAV fee base.
Income Tax Expense We are a corporation for U.S. federal income tax purposes and therefore are subject to U.S. federal and state income taxes on our share of taxable income generated by HLA. Prior to our IPO, we operated as a partnership for U.S. federal income tax purposes and therefore were not subject to U.S. federal and state income taxes.
Income Tax Expense We are a corporation for U.S. federal income tax purposes and therefore are subject to U.S. federal and state income taxes on our share of taxable income generated by HLA. HLA is treated as a pass-through entity for U.S. federal and state income tax purposes.
We received $201.7 million in net proceeds from the sale of our shares and used all of the proceeds to settle exchanges by certain members of HLA of a total of 1,744,872 Class B units and 122,450 Class C units.
We received $248.4 million in net proceeds from the sale of our shares and used all of the proceeds to settle exchanges by certain members of HLA of a total of 1,486,223 Class B units and 76,058 Class C units.
As of March 31, 2024 and March 31, 2023, our cash and cash equivalents were $114.6 million and $99.7 million, respectively.
As of March 31, 2025 and March 31, 2024, our cash and cash equivalents were $229.2 million and $114.6 million, respectively.
In these cases, we generally reduce the asset-based and/or incentive fees or carried interest on customized separate accounts to the extent that assets in the accounts are invested in our specialized funds so that our clients do not pay duplicate fees. 77 Revenues from specialized funds are based on a percentage of limited partners’ capital commitments to, net invested capital or net asset value in, our specialized funds.
In these cases, we generally reduce the asset-based and/or incentive fees on customized separate accounts to the extent that assets in the accounts are invested in our specialized funds so that our clients do not pay duplicate fees.
Revenue from our latest secondary fund included $19.6 million in retroactive fees during fiscal 2024 compared to $2.4 million in retroactive fees from our latest direct equity fund during fiscal 2023.
Revenue from our latest secondary fund included $20.7 million in retroactive fees during fiscal 2025 compared to $19.6 million during fiscal 2024.
Income Tax Expense Our effective income tax rate in fiscal 2024 and 2023 was 19.3% and 22.8%, respectively. The fiscal 2024 effective income tax rate was different from the statutory tax rate due to the portion of income allocated to non-controlling interests and valuation allowance recorded against deferred tax assets.
Income Tax Expense Our effective income tax rate in fiscal 2025 and 2024 was 13.4% and 19.3%, respectively. The fiscal 2025 effective income tax rate was different from the statutory tax rate due primarily to the portion of income allocated to NCI and a reduction in valuation allowance recorded against deferred tax assets.
Specialized funds revenue increased by $64.7 million compared to the prior year, due primarily to a $41.3 million increase in revenue from our latest secondary fund and a $25.3 million increase in revenue from our evergreen funds, which added $2.4 billion and $2.7 billion, respectively, in fee-earning AUM year-over-year.
Specialized funds revenue increased by $54.2 million compared to the prior year, due primarily to increases of $52.1 million in revenue from our evergreen funds and $10.6 million in revenue from our latest secondary fund, which added $4.1 billion and $1.2 billion, respectively, in fee-earning AUM year-over-year.
Incentive fees are typically only required to be returned on a net of tax basis due to a clawback. As such, the tax-related portion of incentive fees is typically not subject to clawback and is therefore recognized as revenue immediately upon receipt.
As such, the tax-related portion of incentive fees is typically not subject to clawback and is therefore recognized as revenue immediately upon receipt.
Distributions were $1.1 billion for fiscal 2024, due to $1.0 billion from returns of capital in funds earning fees on a net invested capital or NAV fee base and $0.1 billion from funds moving from a committed to net invested capital fee base. Non-GAAP Financial Measures Below is a description of our unaudited non-GAAP financial measures.
Distributions were $3.3 billion for fiscal 2025, due primarily to $2.0 billion from returns of capital and redemptions in funds earning fees on a net invested capital or NAV fee base and $1.1 billion from accounts reaching the end of their fund term. 81 Non-GAAP Financial Measures Below is a description of our unaudited non-GAAP financial measures.
Performance fees range from 5.0% to 12.5% of net profits, subject to a compounded annual preferred return that varies by account but is generally 6.0% to 8.0%.
Performance fees range from 5.0% to 12.5% of net profits, with some subject to a compounded annual preferred return that varies by account but is generally 6.0% to 8.0%. Performance fees are recognized when it is probable that a significant reversal will not occur.
(3) Foreign exchange, market value and other consists primarily of (i) the impact of foreign exchange rate fluctuations for customized separate accounts and specialized funds that earn fees on non-U.S. dollar denominated commitments and (ii) market value appreciation (depreciation) from customized separate accounts and specialized funds that earn fees on a NAV fee base. 86 Year ended March 31, 2024 compared to year ended March 31, 2023 Fee-earning AUM increased $8.4 billion for fiscal 2024 compared to fiscal 2023 due to contributions from customized separate accounts and specialized funds.
(3) Foreign exchange, market value and other consists primarily of (i) the impact of foreign exchange rate fluctuations for customized separate accounts and specialized funds that earn fees on non-U.S. dollar denominated commitments and (ii) market value appreciation (depreciation) from customized separate accounts and specialized funds that earn fees on a NAV fee base.
As of March 31, 2024, the tax receivable agreement resulted in a liability of $201.4 million.
As of March 31, 2025, the tax receivable agreement resulted in a liability of $240.6 million.
The following table shows a reconciliation of adjusted net income to net income attributable to Hamilton Lane Incorporated and adjusted shares outstanding to weighted-average shares of Class A common stock outstanding for fiscal 2024, 2023, and 2022: Year Ended March 31, 2024 2023 2022 (in thousands, except share and per-share amounts) Net income attributable to Hamilton Lane Incorporated $ 140,858 $ 109,120 $ 145,986 Income attributable to non-controlling interests in Hamilton Lane Advisors, L.L.C. 80,835 71,027 96,548 Income tax expense 54,454 55,425 66,423 Adjusted pre-tax net income $ 276,147 $ 235,572 $ 308,957 Adjusted income taxes (1) (64,618) (56,066) (73,532) Adjusted net income $ 211,529 $ 179,506 $ 235,425 Weighted-average shares of Class A common stock outstanding - diluted 53,902,467 53,698,681 53,674,293 Adjusted shares outstanding (2) 53,902,467 53,698,681 53,674,293 Non-GAAP earnings per share $ 3.92 $ 3.34 $ 4.39 (1) For the year ended March 31, 2024, represents corporate income taxes at our estimated statutory tax rate of 23.4% applied to adjusted pre-tax net income.
The following table shows a reconciliation of adjusted net income to net income attributable to Hamilton Lane Incorporated and adjusted shares outstanding to weighted-average shares of Class A common stock outstanding for fiscal 2025, 2024, and 2023: Year Ended March 31, 2025 2024 2023 (in thousands, except share and per-share amounts) Net income attributable to Hamilton Lane Incorporated $ 217,417 $ 140,858 $ 109,120 Income attributable to non-controlling interests in Hamilton Lane Advisors, L.L.C. 92,843 80,835 71,027 Income tax expense 48,509 54,454 55,425 Adjusted pre-tax net income $ 358,769 $ 276,147 $ 235,572 Adjusted income taxes (1) (85,028) (64,618) (56,066) Adjusted net income $ 273,741 $ 211,529 $ 179,506 Weighted-average shares of Class A common stock outstanding - diluted 40,307,818 53,902,467 53,698,681 Exchange of Class B and Class C units in HLA (2) 14,016,324 — — Adjusted shares outstanding (2) 54,324,142 53,902,467 53,698,681 Non-GAAP EPS $ 5.04 $ 3.92 $ 3.34 (1) For the year ended March 31, 2025, represents corporate income taxes at our estimated statutory tax rate of 23.7% applied to adjusted pre-tax net income.
Adjusted EBITDA represents net income excluding (a) interest expense on our outstanding debt, (b) income tax expense, (c) depreciation and amortization expense, (d) equity-based compensation expense, (e ) non-operating (loss) gain and (f) certain other significant items that we believe are not indicative of our core performance. 87 The following table shows a reconciliation of net income attributable to Hamilton Lane Incorporated to Fee Related Earnings and Adjusted EBITDA for fiscal 2024, 2023, and 2022: Year Ended March 31, 2024 2023 2022 ($ in thousands) Net income attributable to Hamilton Lane Incorporated $ 140,858 $ 109,120 $ 145,986 Income attributable to non-controlling interests in general partnerships 534 986 376 Income attributable to non-controlling interests in Hamilton Lane Advisors, L.L.C. 80,835 71,027 96,548 Income attributable to redeemable non-controlling interests in Hamilton Lane Alliance Holdings I, Inc. — 5,617 4,343 Income attributable to non-controlling interests in consolidated funds 4,980 435 — Incentive fees (101,906) (156,879) (53,691) Incentive fee related compensation (1) 48,406 74,374 25,395 Consolidated VIE related general, administrative and other expenses 566 846 1,176 Revenue related to consolidated funds 394 61 — Non-operating income related compensation 59 367 1,810 Interest income (10,008) (5,114) (500) Interest expense 11,175 8,617 4,638 Income tax expense 54,454 55,425 66,423 Equity in income of investees (36,491) (6,543) (79,296) Non-operating (gain) loss (519) 470 (68,954) Fee Related Earnings $ 193,337 $ 158,809 $ 144,254 Depreciation and amortization 8,186 7,442 5,495 Equity-based compensation 12,133 9,950 7,404 Incentive fees 101,906 156,879 53,691 Incentive fees attributable to non-controlling interests — (302) (228) Incentive fee related compensation (1) (48,406) (74,374) (25,395) Non-operating income related compensation (59) (367) (1,810) Interest income 5,427 1,789 500 Adjusted EBITDA $ 272,524 $ 259,826 $ 183,911 (1) Incentive fee related compensation includes incentive fee compensation expense, bonus and other revenue sharing related to carried interest that is classified as base compensation. 88 Non-GAAP Earnings Per Share Non-GAAP earnings per share measures our per-share earnings excluding certain significant items that we believe are not indicative of our core performance and assuming all Class B and Class C units in HLA were exchanged for Class A common stock in HLI.
Adjusted EBITDA represents net income excluding (a) interest expense on our outstanding debt, (b) income tax expense, (c) depreciation and amortization expense, (d) equity-based compensation expense, (e ) non-operating (loss) gain and (f) certain other significant items that we believe are not indicative of our core performance. 82 The following table shows a reconciliation of net income attributable to Hamilton Lane Incorporated to FRE and Adjusted EBITDA for fiscal 2025, 2024, and 2023: Year Ended March 31, 2025 2024 2023 (in thousands) Net income attributable to Hamilton Lane Incorporated $ 217,417 $ 140,858 $ 109,120 Income attributable to non-controlling interests in general partnerships 739 534 986 Income attributable to non-controlling interests in Hamilton Lane Advisors, L.L.C. 92,843 80,835 71,027 Income attributable to redeemable non-controlling interests in Hamilton Lane Alliance Holdings I, Inc. — — 5,617 Income attributable to non-controlling interests in consolidated funds 2,769 4,980 435 Incentive fees (199,099) (101,906) (156,879) Incentive fee related compensation (1) 66,254 47,277 74,273 Fee related performance revenues 59,587 2,378 213 Equity-based compensation 31,407 12,133 9,950 Consolidated fund related general, administrative and other expenses 980 566 846 Revenue related to consolidated funds — 394 61 Non-operating income related compensation 784 59 367 Interest income (8,079) (10,008) (5,114) Interest expense 13,332 11,175 8,617 Income tax expense 48,509 54,454 55,425 Equity in income of investees (30,629) (36,491) (6,543) Non-operating (gain) loss (20,349) (519) 470 Fee Related Earnings $ 276,465 $ 206,719 $ 168,871 Depreciation and amortization 9,285 8,186 7,442 Incentive fees 199,099 101,906 156,879 Incentive fees attributable to non-controlling interests (29) — (302) Incentive fee related compensation (1) (66,254) (47,277) (74,273) Fee related performance revenues (59,587) (2,378) (213) Non-operating income related compensation (784) (59) (367) Interest income 7,874 5,427 1,789 Adjusted EBITDA $ 366,069 $ 272,524 $ 259,826 (1) Incentive fee related compensation includes incentive fee compensation expense and bonus related to carried interest that is classified as base compensation. 83 Non-GAAP Earnings Per Share Non-GAAP earnings per share (“EPS”) measures our per-share earnings excluding certain significant items that we believe are not indicative of our core performance and assuming all Class B and Class C units in HLA were exchanged for Class A common stock in HLI.
The purpose of the March 2024 Offering was to provide liquidity to significant direct and indirect owners of HLA. The shares sold consisted of 55,000 shares held by the selling stockholder and 1,867,322 shares newly issued by us.
The purpose of the February 2025 Offering was to provide liquidity to significant direct and indirect owners of HLA. The shares sold consisted of 10,255 shares held by the selling stockholder and 1,562,281 shares newly issued by us.
Recent Transactions March 2024 Offering In March 2024, we and a selling stockholder completed a registered offering of an aggregate of 1,922,322 shares of Class A common stock at a price to the underwriter of $108 per share (the “March 2024 Offering”).
Recent Transactions February 2025 Offering In February 2025, we and a selling stockholder completed a registered offering of an aggregate of 1,572,536 shares of Class A common stock at a price to the underwriter of $159.00 per share (the “February 2025 Offering”).
Finally, we have used available cash and borrowings from our Loan Agreements to make strategic investments in companies that seek to offer technology-driven private markets data and wealth management solutions.
Finally, we have used available cash and borrowings from our Loan Agreements to make strategic investments in companies that seek to offer technology-driven private markets data and wealth management solutions. We have used proceeds from the issuance of our Senior Notes to seed new specialized funds and for general corporate purposes.
For the years ended March 31, 2024, 2023 and 2022, our net cash used in financing activities was driven primarily by dividends paid to stockholders, payments under the tax receivable agreement, distributions to HLA members and drawdowns and repayments under our Revolving Credit Agreement.
For the years ended March 31, 2025, 2024 and 2023, our net cash used in (provided by) financing activities was driven primarily by dividends paid to stockholders, payments under the tax receivable agreement, distributions to HLA members, proceeds from and repayment of debt and contributions from NCI in consolidated funds.
Principles of Consolidation We consolidate all entities that we control through a controlling financial interest or as the primary beneficiary of VIEs.
Consolidation We consolidate all entities that we control either as the primary beneficiary of a VIE or through a majority voting interest.
Management and advisory fees increased $80.1 million for fiscal 2024 compared to fiscal 2023.
Management and advisory fees increased $61.9 million for fiscal 2025 compared to fiscal 2024.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeCredit Risk We are party to agreements providing for various financial services and transactions that contain an element of risk in the event that the counterparties are unable to meet the terms of such agreements. In such agreements, we depend on the respective counterparty to make payment or otherwise perform.
Biggest changeIn such agreements, we depend on the respective counterparty to make payment or otherwise perform. We generally endeavor to minimize our risk of exposure by limiting the counterparties with which we enter into financial transactions to reputable financial institutions.
Since our management fees are generally based on commitments or net invested capital, our management fee and advisory fee revenue is not significantly impacted by changes in investment values.
Since our 95 management fees are generally based on commitments or net invested capital, our management fee and advisory fee revenue is not significantly impacted by changes in investment values.
Our general partner investments include thousands of unique underlying portfolio investments with no significant concentration in any industry or country outside of the United States. • Management fees from our specialized funds and customized separate accounts are not significantly affected by changes in fair value as the management fees are not generally based on the value of the specialized funds or customized separate accounts, but rather on the amount of capital committed or invested in the specialized funds or customized separate accounts, as applicable. • Incentive fees from our specialized funds and customized separate accounts are not materially affected by changes in the fair value of unrealized investments because they are based on realized gains and subject to achievement of performance criteria rather than on the fair value of the specialized fund’s or customized separate account’s assets prior to realization.
Our general partner investments include thousands of unique underlying portfolio investments with no significant concentration in any industry or country outside of the United States. • Management fees from our specialized funds and customized separate accounts are not significantly affected by changes in fair value as the management fees are not generally based on the value of the specialized funds or customized separate accounts, but rather on the amount of capital committed or invested in the specialized funds or customized separate accounts, as applicable. • Incentive fees from our specialized funds with the exception of certain evergreen funds and customized separate accounts are not materially affected by changes in the fair value of unrealized investments because they are based on realized gains and subject to achievement of performance criteria rather than on the fair value of the specialized fund’s or customized separate account’s assets prior to realization.
The annual interest rate on the Term Loan Agreement, which is at the prime rate minus 1.25%, subject to a floor of 3.00%, was 7.25% as of March 31, 2024. The annual interest rate on the Revolving Loan Agreement, which is at the prime rate minus 1.50%, subject to a floor of 2.25%, was 7.00% as of March 31, 2024.
The annual interest rate on the Term Loan Agreement, which is at the prime rate minus 1.25%, subject to a floor of 3.00%, was 6.25% as of March 31, 2025. The annual interest rate on the Revolving Loan Agreement, which is at the prime rate minus 1.50%, subject to a floor of 2.25%, was 6.00% as of March 31, 2025.
Therefore, changes in exchange rates are not expected to materially impact our financial statements. 100 Interest Rate Risk As of March 31, 2024, we had $196.9 million in borrowings outstanding under our Loan Agreements.
Therefore, changes in exchange rates are not expected to materially impact our financial statements. Interest Rate Risk As of March 31, 2025, we had $193.1 million in borrowings outstanding under our Loan Agreements.
Based on the floating rate component of our Loan Agreements payable as of March 31, 2024, we estimate that a 100 basis point increase in interest rates would result in increased interest expense of approximately $1.0 million over the next 12 months.
Based on the floating rate component of our Loan Agreements payable as of March 31, 2025, we estimate that a 100 basis point increase in interest rates would result in increased interest expense of approximately $0.9 million over the next 12 months. 96 Credit Risk We are party to agreements providing for various financial services and transactions that contain an element of risk in the event that the counterparties are unable to meet the terms of such agreements.
We generally endeavor to minimize our risk of exposure by limiting the counterparties with which we enter into financial transactions to reputable financial institutions. In other circumstances, availability of financing from financial institutions may be uncertain due to market events, and we may not be able to access these financing markets.
In other circumstances, availability of financing from financial institutions may be uncertain due to market events, and we may not be able to access these financing markets. There have been no material changes in our market risk exposures since March 31, 2024. 97
Removed
There have been no material changes in our market risk exposures since March 31, 2023. 101

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