Hamilton Lane’s Strategic Partnership with Russell Investments to Boost Growth

Hamilton Lane, a leading alternative investment management firm, said it has entered into a strategic partnership with a leading outsourced chief investment office provider, Russell Investments, and is taking a $90 million minority stake in Russell Investments.

Given increasing market complexities and rising needs around financial security, fiduciaries are looking for partners that can seamlessly provide tailored, differentiated investment solutions,” said Michelle Seitz, Chairman and CEO of Russell Investments.

“This partnership demonstrates our 85-year fiduciary commitment to provide comprehensive, leading-edge investment solutions and risk management to our clients. The resulting one-stop access to extensive private and public markets capabilities is, I believe, unmatched in our industry today.”

Hamilton Lane shares, which surged more than 30% in 2020, rose over 1% to $86.23 on Tuesday. The stock gained over 10% so far this year.

Analyst Comments

“We view the partnership as an avenue to accelerate Hamilton Lane’s (HLNE) growth, with a Bull case that could see $13b-$26b of incremental assets over time, which assumes Russell’s clients increase allocations in private markets to 8%-12% from 4% today,” noted Michael J. Cyprys, equity analyst at Morgan Stanley.

“Hamilton Lane (HLNE) is not the exclusive private markets manager for Russell, but given HLNE’s access to best in class managers and deals, the benefits of HLNE’s scale, and access to HLNE’s propriety private markets data and technology, we would expect Russell to channel the majority of future private markets allocations to HLNE while still upholding its fiduciary responsibilities. The partnership is also cost-effective, as HLNE will service Russell as if it were a large, single client, while Russell will continue to service the numerous underlying customer relationships. Thus, providing HLNE with scaled distribution access.”

Hamilton Lane Stock Price Forecast

Three analysts who offered stock ratings for Hamilton Lane in the last three months forecast the average price in 12 months of $85.00 with a high forecast of $88.00 and a low forecast of $82.00.

The average price target represents a -1.51% decrease from the last price of $86.30. All those three analysts rated “Hold”, according to Tipranks.

Morgan Stanley gave the base target price of $88 with a high of $125 under a bull scenario and $44 under the worst-case scenario. The firm gave an “Equal-weight” rating on the investment management firm’s stock.

Several other analysts have also updated their stock outlook. KBW raised the stock price forecast to $87 from $84. JP Morgan lifted the target price to $81 from $69. Wells Fargo increased the price objective to $77 from $70.

Upside and Downside Risks

Risks to Upside: 1) Successful fundraising of larger successor funds (within primary, secondary, and co-invest investments strategies) and newer products/strategies. 2) Extension into retail/HNW channel – highlighted by Morgan Stanley.

Risks to Downside: 1) Deeper recession leads to weaker investment performance, delaying performance fee realization and slowing AUM growth. Regulatory risk: increased political and regulatory scrutiny of private equity business model.