Good morning. My name is Dennis, and I will be your conference operator today. At this time, I would like to welcome everyone to the Hamilton Lane Second Quarter Fiscal 2023 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. A supplemental slide presentation to accompany the prepared remarks can be found on the company’s website. After the speakers remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. At this time, I would like to turn the call over to John Oh, Investor Relations Manager. Mr. Oh, you may begin your conference.

Thank you, Dennis. [Technical Difficulty] Hamilton Lane Q2 fiscal 2023 earnings call. Today, I will be joined by Mario Giannini, CEO; Erik Hirsch, Vice Chairman; Brian Gildea, Managing Director, Investments; and Atul Varma, CFO. Before we discuss the quarter’s results, we want to remind you that we will be making forward-looking statements based on our current expectations for the business. These statements are subject to risks and uncertainties that may cause the actual results to differ materially. For a discussion of these risks, please review the risk factors included in Hamilton Lane fiscal 2022 10-K and subsequent reports we filed with the SEC. We will also be referring to non-GAAP measures that we view as important in assessing the performance of our business. Reconciliation of those non-GAAP measures to GAAP can be found in the earnings presentation materials made available on the Shareholders section of the Hamilton Lane website. Our detailed financial results will be made available on our 10-Q is filed. Please note that nothing on this call represents an offer to sell or a solicitation to purchase interest in any of Hamilton Lane’s products. A portion of our presentation will mention an offering of new share classes of our private assets fund that is subject -- that is the subject of your registration statement filed with the Securities and Exchange Commission. The registration statement is not yet effective. We may not sell the securities until the registration statement is effective. This presentation is not an offer to sell or solicitation of an offer to buy any securities in any jurisdiction where the offer or sale is not permitted. Beginning with the financial highlights, year-to-date, our management and advisory fee revenue grew by 19%, while our fee related earnings grew by 10% versus the prior year period. This translated into year-to-date GAAP EPS of $1.88 based on $68.4 million of GAAP net income and non-GAAP EPS of $1.95 based on $104.7 million of adjusted net income. We have also declared a dividend of $0.40 per share this quarter, which keeps us on track with a 14% increase over last fiscal year, equating to the targeted $1.60 per share for fiscal year 2023. With that, I’ll now turn the call over to Mario.

Thanks, John, and good morning, everyone. I’ll start with some commentary on the current state of the private markets and provide context on how we are navigating this environment and where we are deploying resources. Macro backdrop has remained the same throughout much of 2022. Inflation is high and interest rates continue to rise. The results are weakened involve public equity market. The public side is being disproportionately impacted by large technology growth companies. That market weighting is simply not the reality for the private markets and is certainly not the reality for the Hamilton Lane portfolios. While not impacted in the same magnitude the picture is directionally similar and we don’t believe this is likely to change in the near-term. Central banks around the world have signaled that in order to fight rising inflation rates will need to go higher and the reality is economic growth is slowing. What does this mean for private markets? Public Market volatility is a mixed bag for us. On a positive note, it increases attractive investment opportunities and creates return uncertainty for investors, which causes them to pivot towards the private markets for higher returns. On the negative side, capital bases are shrinking around the globe as wealth is being eroded. Market uncertainty can also cause paralysis or delay for some investors as they opt to wait to see how things sort out. At a portfolio level the story is also mixed. Consumer spending in certain areas remains strong as those manufacturing, distribution along with other sectors. Technology valuations are down based on public market comparables, but rising rates are generally aiding credit portfolios. Overall, unrealized markets are down but nowhere in line with what we are seeing in the public sector. Exits, however, are slowing as is new deal doing. Over our…

Thank you, Mario, and good morning, everyone. Moving on to our fee earning AUM, at quarter end, total fee earning AUM stood at $52.7 billion and grew $8.1 billion or 18% relative to the prior year, stemming from positive fund flows across both our specialized funds and our customized separate accounts. Taken separately, $4.9 billion of net fee earning AUM came from our customized separate accounts and over the same time period $3.1 billion came from our specialized funds. Additionally, our blended fee rate across both customized separate accounts and specialized funds remains healthy [ph]. Moving to customized separate account flows. Fee earning AUM from our customized separate accounts stood at $32.3 billion, growing 18% over the past 12 months. We continue to see the growth coming across type, size and geographic location of the clients. Over the last 12 months more than 80% of the gross inflows in the customized separate accounts came from our existing client base, which continues to be a steady source of growth for our separate account business. As for our specialized funds, growth here continues to be strong. Fee earning AUM from our specialized funds stood at $20.4 billion at quarter end. Over the past 12 months, we achieved positive net inflows of $3.1 billion, representing growth of 18% relative to the prior year period. This growth stemmed from additional closes for funds in market, robust investment activity, a continued growth of our Evergreen platform. I’ll provide a quick recap of some of the fundraising activity in our specialized funds and where those stand today. During our last call, we highlighted a number of closings that occurred. Those closings came from our current six secondaries fund, fifth direct equity fund and seventh installment of our direct credit series. For our current secondaries fund in…

Thank you, Brian. I’ll start with a quick update regarding some recent developments around the 361 Capital acquisition we closed on in April of 2021. For quick background when we embarked on the launch of the U.S. sleeve of our Evergreen product, we identified 361 Capital as a great partner to help us build out our distribution capabilities within the fragmented RIA channel. After we closed on the acquisition, the goal for the 361 team was to sell and grow Hamilton Lane’s U.S. Evergreen product, which they have done and continue to do successfully. The acquisition of 361 included to existing long-short products, which while not core to our strategy, we’re generating revenue to cover the full cost of the 361 team. Now having successfully transitioned the team to be solely focused on the Hamilton Lane’s retail products, we’ve entered into a transaction agreement whereby management of the two funds is expected to be transferred to a third-party. On August 19th we along with Allspring Global Investments, announced that the respective boards of those two funds have approved the proposed transaction whereby the 361 funds will merge into new entities managed by Allspring. Allspring is the current sub advisor to both funds. The transaction is still subject to certain closing conditions, including approval of funds shareholders, but we expect that the deal will close sometime before the end of 2022. We remain very focused on growing our presence across the retail channel and are continuing to add additional resources. We are also focused on broadening out our product offering within the channel. Our newest addition to our Evergreen platform is the Hamilton Lane’s Strategic Credit Opportunities Fund or simply, SCOPE. This fund will invest in private credit transactions with a focus on current cash yield and capital preservation. The credit…

Thank you, Erik, and good morning, everyone. Year-to-date we achieved strong growth in our business with management advisory fees up 19% versus the prior year period. Our specialized funds revenue increased by $21.1 million or 30%, compared to the prior year, driven primarily by $1.2 billion increase the fee earning AUM in our Evergreen platform, approximately $450 million raised in our latest secondaries fund in the quarter and approximately $1.8 billion raise to September from our latest direct equity fund. Retro fees for the year were approximately $1.2 million, stemming primarily from our direct equity fund versus a minimal amount in the prior year period. As a reminder, investors that come into later closes during the fundraise pay retroactive fee getting back to the fund first close. We expect to generate additional retro fees as we hold subsequent closes for both our remaining direct equity fund, as well as our latest secondaries fund. Moving on to customized separate accounts, revenue increased $8.2 million or 17% compared to the prior year period, due to reabsorb from existing clients, the addition of several new accounts and continued investment activity. Revenue from our advisory, reporting and other offerings decreased to $0.4 million compared to the prior year period, primarily due to a decrease in revenue from our distribution management business, partially offset by an increase in funding reimbursement revenue. Lastly, the final component for our revenue is incentive fees. Incentive fees year-to-date totaled $110.1 million. As we touched on last quarter, the relative increase in incentive fees compared to the prior quarters is due primarily to the fact that a number for specialized funds entered into the GP catchup portion of their respective fund waterfalls. You typically find GP catchup in connection with European style waterfalls, which is the most conservative method related…

[Operator Instructions] Your first question is from the line of Ken Worthington with JPMorgan. Please go ahead.

Hi. Good morning. Thanks for taking the questions. So, first, I’d love to dig into -- in deeper into tokenization and the use of blockchain technology to improve access to the products. So maybe, first, can you talk a little bit more about how tokenization improves distribution and access to the products? So flush out the comments that you made? In terms of cost, is there a savings element in terms of the back and/or mid-office to pursuing this sort of tokenization and listing? And then, lastly, to what extent do you retain either greater control over the client or the client data from a relationship when you utilize sort of the blockchain technology, I know there’s little fishing in there, but you could comment?

Thanks, Ken. It’s Erik. I will dive in there. There’s a lot. So let me do my best. I think the way we look at this is, to-date our asset class has operated in a very traditional environment, lots of documentation, lots of manual processes, lots of lawyers. I think as you look forward, there are a number of companies, I think, especially, the ones that we’ve recently partnered with, that are focused on trying to use different kinds of technology to make access easier. So if you think about a world where to-date every investor needs to go through a KYC process for every individual investment, because there’s no tie between in a world where you have a centralized digital wallet, that’s housed on chain and you’re offering fun products via tokens in that world, you can streamline a lot of the legal processes, and yes, that would bring cost savings. But I think, more importantly, you start to more rapidly enter into a point-and-click environment, where simply making acquisitions and investments in our industry begins to look much more similar to what you experienced today in the public markets, where we can all sort of pull out our phone, as we’re walking down the sidewalk and go into whatever app we favor and buy a stock. I think this is really just reflecting that there’s a move afoot with some very sophisticated technology, with some very interesting firms that are trying to drive more towards that. And so, no different than the evolution you saw on the public markets where things got easier, access became more broad, and frankly, costs came down for your interface in costs. We expect the same thing over time here to be the case, as this all begins to mature and take hold.

Okay. And control of data and the customer, anything there or is that far fetch?

Well, it’s different. I mean, you’re again you’re selling digital securities and digital tokens. So your customer base is really the entity that sort of holds the wallet. But today, I mean, that’s such a tiny part of our world. That’s not having -- there’s no positive or negative impact as it relates to that.

Okay. And then follow up on the Evergreen side. I think you said the prepared remarks, inflows this year, in all, but one month of the year, was the one month of outflows in September and if it was September, do you see September as sort of a one-off or is it sort of near-term inflection point, given the macro environment that we’re seeing?

I believe it was.

September…

Go ahead, Mario.

I believe it was August or September. I have to check on that. And it was -- we view it as a one-off, not something that we have seen since then in terms of the outflows. So, no, we don’t take that as a harbinger of what’s happened since.

Awesome. Thank you very much.

Your next question is from the line of Adam Beatty with UBS. Please go ahead.

Thank you and good morning. Just, first of all, a quick follow up on a bit of the blockchain discussion and maybe I know the answer from the tone of Erik’s remarks so far. But just wondering about product suitability for that kind of environment, do you see this as something where all private markets products and vehicles would eventually migrate to that or are there certain products or vehicles that, you would think even long-term would just stay in kind of a more conventional environment? Thank you.

Sure, Adam. It’s Erik, I’ll take that. I mean, let’s leave aside the registration and legalities and what type of investor you’re going to, because there’s different rules across all the different geographies. And you can see even in the firms that we’re doing business with today, they’re all kind of taking a slightly different approach. But if you just take a more macro perspective, accessing private market investments funds is easier in this tokenized-blockchain world and easier also means less friction points, which also means less cost and expenses for the customer. So our belief is that over time and others no way of knowing what time means today, will this transition be two years, 20 years or 200 years. But over time, you’re talking about a customer base, who is going to want to access more things and wants to access them easier, faster, cheaper, and so our view is that it’s all are appropriately suited for it, how that migration occurs, how quickly it occurs and sort of to be determined. I think you can see very clearly, strategically what we’re doing, which is, we’ve identified a variety of partners who we think are bringing an interesting value-add perspective with very interesting technology and we’re aligning with a variety of them. Because it’s not clear today, which piece is going to ultimately resonate in the market, and I suspect, just like in the public markets, there’s no single platform today that you utilize to access the public markets, there are lots of market leading platforms, and I suspect over time, that will be true here as well.

Make sense. Thank you, Erik. And then just shifting over to the credit opportunities product, just wanted to get a little bit more detail around the underlying kind of strategies that you’re targeting with that? Is it something that’s fairly opportunity -- opportunistic, more of a core, core plus orientation? And also kind of maybe some background about what drove those decisions as to how and where to focus the fund, was it opportunities that you’re seeing from your in-house research or more around client demand or some mix of that? Thank you.

Sure. This is Brian. I’ll take that one. So across our private credit, we’re broadly investing in the private credit strategy. So think, small- to mid-sized companies cash flow positive in a segment of the market that is moved away from bank financing. And that provides a little bit better return, it’s generally a floating rate return part of the market and very attractive risk and reward characteristics compared to the public credit markets.

Excellent. Any concerns around kind of the potential credit cycle that we might be heading into?

Oh! I think as an investor, of course, we’re always very much focused on where we are in the market, as we’re shaping the investments that we’re making. We’ve been doing that for a number of years leading into this market, recognizing that we were late cycle, so high quality is, of course, the focus. And the underlying credit statistics have remained strong across portfolios. But, of course, we’re mindful of the environment that we’re in.

Excellent. Thank you, Brian. Appreciate it.

Your next question comes from a line of Finian O’Shea with Wells Fargo Securities. Please go ahead. Finian O’Shea: Hi. Good morning. Thank you. A follow-on on the SCOPE product. Given its more recurring income oriented nature, will that seek to be marketed more broadly to the retail market versus the other Evergreen funds?

Yeah. This is Brian. I will take that one. I think now we’re envisioning a similar audience. So we’re currently marketing our other Evergreen funds. So we’ve seen that there’s strong demand in the credit space from that investor type. This portfolio will have slightly different characteristics than the equity-oriented portfolios that we have today. But we think that many of the same attributes will really resonate with that market.

Your next question…

Finian, do you have follow-on. Yeah. Yeah. Go ahead.

Your next question is from the line of Chris Kotowski with Oppenheimer. Please go ahead.

Yeah. Just kind of a modeling question. I think most of us have been modeling your incentive fees as a percentage of the carried interest receivable and then kind of what in this environment would normally mitigate that as you think, okay, the markets are down, so I am going to be a slower harvesting environmental, all things being equal, you’d tend to pick less than that. But on the other hand, if you’re in the catch up phase on most of these funds, then there’s a disproportionate amount. And so, I guess, I’m kind of curious, what -- if any guidance you can give us on how many quarters you’re in this invest -- in this catch up phase and/or what percentage of your carry receivable in broad terms comes from those kinds of catch up payments. Any thoughts you could give us just so our numbers aren’t all over the place?

Yeah. Sure. It’s Erik. This will be a very unsatisfactory answer. I think when you’re using a European waterfall…

Okay.

… it’s very difficult to model as we’ve seen. So we’ve been public now for over five years. And I would say, if you take a look at the quarterly history, despite everyone being intelligent and working hard and trying to get all this right, we have been either light or heavy, but rarely have we been right on mark. I think the European waterfall is kind of akin to you spend years sort of pushing the boulder up the hill and when you finally get to the top, it begins to kind of quickly roll down the other side. And so here, that’s what we’ve been doing. We’ve been pushing the boulder for a long time. We’ve continued to have liquidity. We’ve continued to have good performance. We’ve continued to have well diversified portfolios. We finally gotten the boulder to the top of the hill and now it’s beginning to sort of turn and run. The catch up obviously doesn’t last forever. It lasts until we’re caught up. So I think our takeaway would simply be that, because of good performance, we’ve gotten a variety of our sort of flagship specialized funds to the point where they’re in the catch up. You’ve seen that very clearly this quarter. You saw that last quarter. That won’t last forever. Again, eventually, we will be caught up. But the other takeaway I would leave you with is that, despite a challenging market environment, I think, reflecting on kind of the size and diversity of these portfolios, we continue to have exit activity, which is, obviously, what’s driving the fact that we’re able to get the dollars and the catch up, it only comes, because you actually have exits. So all of that’s happening. What can I tell you for the quarter is coming, we’re going to still be working through the catch up with some of these products. We continue to still see exit activity, although, as I noted, it’s certainly lower and slower than what we’ve seen in a more normalized market environment. But predicting beyond that, I would say, I’ll be as accurate as anyone else, which is to say not very accurate.

Okay. All right, Erik. Thank you. That’s it for me.

Your next question comes from the line of Alex Blostein with Goldman Sachs. Please go ahead.

Hey, guys. This is Michael [ph] on for Alex. Just a quick one for me. On PEE [ph] allocation, maybe you can help us think about how things are changing in real time. 2022 was slow, but maybe is there a risk that 2023 new commitments to PEE will be worse and any color you have around there would be helpful? Thanks.

Michael, it’s Mario. Hard to predict on 2023. I think you’re right on 2022. It’s been slower. Because of two factors, really the denominator effect everyone is talking about. LPs don’t have as much capital. And by the way, performance has been great. It’s been their best performing asset classes, the private markets. So that NAV has continued to be pretty steady. But the other factor is there’s just no rush to do anything. There’s a lot of product market, no rush, and so everything is slowed down. I would expect 2023 will also be a difficult market. Will it be as challenging as what we’re experiencing 2022 now? I don’t know. All that will depend on the public markets on where inflation and interest rates are going and everyone has different points of view. But I would expect 2023 we will continue to see LPs with less capital than they’d like to invest and a lot of product coming into market. So it will still be a tough environment for some part of 2023.

Great. Thanks so much.

This concludes the Q&A portion of today’s call. I will now turn the call back to Erik for any closing remarks.

Great. Again, we always appreciate the time and the interest, and we wish you well. Thanks again.

This does conclude the Hamilton Lane second quarter fiscal 2023 earnings conference call. Thank you all for participating. You may now disconnect.