Hamilton Lane Incorporated (HLNE): PESTLE Analysis [Nov-2025 Updated]

You're not just looking at Hamilton Lane Incorporated's past performance; you need to see the external forces defining their future, and the big picture is clear: HLNE is poised to capitalize on the massive 'retailization' of private markets, but the path isn't smooth. We're talking about a global private market projected to hit around $18.3 trillion by the end of 2025, which is a huge opportunity they are built to capture. But, honestly, new SEC Private Fund Adviser Rules are creating real compliance friction-potentially pushing costs up by 10-15% for some mid-sized managers-plus the talent wars are still fierce. Let's dig into the Political, Economic, Social, and Tech currents that will actually dictate where their next dollar comes from.

Hamilton Lane Incorporated (HLNE) - PESTLE Analysis: Political factors

You're operating a global private markets firm with $957.8 billion in assets under management and supervision as of March 31, 2025, so political and regulatory shifts in the US and abroad are not just headlines-they directly impact your revenue and client returns. The political environment in 2025 is defined by a push for greater transparency and a high degree of US tax uncertainty, which is a major risk for investor capital.

Increased scrutiny from US regulators (e.g., SEC) on private fund transparency and fees

The US Securities and Exchange Commission (SEC) continues its intense focus on private fund advisers, which is a direct headwind for firms like Hamilton Lane Incorporated. The SEC's 2025 and 2026 examination priorities explicitly target the private markets, driven by the expansion of alternative investments into the retail space. This is a big deal because the SEC is scrutinizing how funds calculate and allocate fees and expenses, and whether conflict of interest disclosures are adequate.

For a firm with $513.9 million in management and advisory fees for fiscal year 2025, compliance is not a minor cost; it's an operational imperative. The SEC has already brought enforcement actions against managers for vague fees and inadequate disclosure of conflicts. The compliance deadline for registered investment advisers with over $1.5 billion in assets under management for some new rules is December 3, 2025, meaning new compliance frameworks must be fully operational now.

• Review fee and expense allocation policies immediately.
• Ensure valuation practices are transparent and consistent.
• Audit all conflict of interest disclosures for retail products.

Potential for higher capital gains tax rates under new US administration impacting investor returns

The US tax landscape is the single largest political variable impacting your investors' take-home returns in 2025. With a new administration, the expiration of key provisions from the 2017 Tax Cuts and Jobs Act (TCJA) at the end of 2025 has created a high-stakes legislative battle.

If the political pendulum swings toward a higher-tax environment, the impact on carried interest (the General Partner's share of profits) and capital gains is substantial. For high-income taxpayers, a Democratic proposal has aimed to raise the long-term capital gains tax rate to 28% for taxable income exceeding $1 million, up from the current 20%. Plus, there is a push to tax all carried interest as ordinary income. Conversely, the 'One Big Beautiful Bill Act' (OBBBA), signed in July 2025, generally favored private equity by making 100% bonus depreciation permanent and maintaining the current 20% capital gains rate for high earners, which is a massive incentive for dealmaking. The difference between these two scenarios can mean a difference of millions in after-tax returns for your Limited Partners (LPs).

US Tax Policy Scenarios Impacting Private Equity (2025)

Tax Provision	Current/Favorable Scenario (OBBBA)	Higher-Tax Scenario (Democratic Proposal)	Impact on Investor Returns
Long-Term Capital Gains Rate (High Income)	Maintained at 20%	Raised to 28% (for income > $1M)	Significant reduction in after-tax LP returns.
Carried Interest Taxation	Taxed at Capital Gains Rate (subject to 3-year holding)	Taxed as Ordinary Income (up to 39.6% + 5% NIIT)	Directly reduces General Partner (GP) compensation and alignment.
Bonus Depreciation	Permanent 100% reinstatement	Scheduled to expire or phase down	Favorable business provision reduces taxable income from portfolio companies.

Geopolitical instability slowing cross-border capital deployment in emerging markets

Geopolitical risk is no longer a fringe concern; it's a core investment factor. A staggering 88% of investors report that geopolitical factors pose a substantial risk to returns over the next two to three years. This instability directly affects Hamilton Lane's global strategy, particularly in emerging markets where cross-border capital deployment is slowing down.

For instance, in the first half of 2025, Private Equity deal values in Southeast Asia nearly halved, falling by 46.6% year-over-year, as tariff uncertainty and trade tensions disrupted transactions. The US-China tensions are cited as a top geopolitical risk by 54% of Limited Partners (LPs). The US Treasury's new Outbound Investment Regulations, effective January 2, 2025, also impose notification requirements or prohibitions on US investments in China, Hong Kong, and Macau in sensitive sectors like semiconductors and AI systems. This regulation forces a fundamental re-evaluation of deal structures in Asia.

US Treasury focus on systemic risk from large, interconnected private equity firms

While the June 2025 Federal Reserve stress tests concluded that private credit and hedge funds are not major sources of systemic risk to the banking system-even under a severe scenario where five large hedge funds fail, causing only $8 billion in bank losses-the regulatory spotlight remains on non-bank financial intermediaries (NBFIs).

The rapid growth of private credit, a significant component of the private markets, has increased complexity and interconnections with leveraged financial entities, which Fed Governor Lisa Cook highlighted as a key vulnerability in November 2025. The concern is not necessarily that a firm like Hamilton Lane would fail, but that unexpected losses in the private credit space could spread through leveraged funding chains. This political focus means that liquidity management and leverage ratios within your private credit and co-investment strategies will face continued regulatory scrutiny, even if the systemic risk is deemed manageable.

Hamilton Lane Incorporated (HLNE) - PESTLE Analysis: Economic factors

You're looking for a clear map of the economic forces shaping the private markets right now, and honestly, the picture is one of massive growth tempered by a real cost-of-capital shock. The key takeaway for Hamilton Lane Incorporated is that while the overall asset pool is expanding significantly, the cost of doing deals and managing portfolio companies is higher than it has been in a decade, forcing a pivot from financial engineering to deep operational value creation.

Global private market assets projected to reach around $18.3 trillion by the end of 2025.

The sheer size of the private markets continues to be the dominant economic tailwind. As of the start of September 2025, the global value of private assets held in funds hit an all-time high of $14.05 trillion, reflecting a strong 9.6% increase year-to-date. This growth is driven by institutional investors and, increasingly, high-net-worth individuals seeking diversification and higher returns outside of public markets. It's a massive, growing opportunity set for a firm like Hamilton Lane Incorporated that specializes in accessing these assets.

Here's the quick math: Private Equity assets alone reached $9.92 trillion by early September 2025. This market is forecast to climb over 70% to nearly $24 trillion by 2030, with Private Equity nearly doubling to $17.4 trillion. That kind of structural growth means a persistent demand for advisory and management services, which is Hamilton Lane Incorporated's core business.

Private Asset Class	Value (Start of September 2025)	Projected Value by 2030
Private Equity	$9.92 trillion	$17.4 trillion
Private Debt	$1.36 trillion	$2.4 trillion
Infrastructure	$1.35 trillion	$2.3 trillion
Real Estate	$1.48 trillion	$1.8 trillion
TOTAL Private Assets	$14.05 trillion	$23.9 trillion

Higher-for-longer interest rates increasing the cost of debt for leveraged buyouts (LBOs).

The era of 'free money' is defintely over, and higher-for-longer interest rates are the biggest headwind for traditional leveraged buyouts (LBOs). The rapid run-up in global interest rates, which saw more than a 500-basis-point increase in the United States from 2022 to 2023, has fundamentally changed the financial engineering playbook. For Hamilton Lane Incorporated's underlying funds, this translates to a much higher cost of debt.

Portfolio companies that need to refinance debt in 2025 are facing interest rates that could be 2-3 percentage points higher than when the original loans were issued. This increased debt servicing burden erodes cash flow, putting pressure on equity returns. Firms are now focused on operational improvements to offset these costs, with over 70% of private equity executives planning to increase operational budgets in 2025 specifically to combat rising debt costs. The value is shifting from junior equity holders to senior debt holders.

Inflationary pressures driving up operating costs for portfolio companies, squeezing margins.

Persistent inflation continues to be a major challenge, especially for portfolio companies with less pricing power. Input cost inflation, particularly in energy and labor costs, is squeezing margins and forcing private equity firms to focus less on financial leverage and more on hands-on operational transformation.

In the current environment, revenue growth has become the largest contributor to value creation, accounting for 35%, while margin improvement contributes only 15%. This shift means that managers who can drive efficiency, optimize supply chains, and invest in automation are outperforming those who rely on market multiple expansion. Hamilton Lane Incorporated benefits when its managers have deep operational expertise to navigate these pressures.

Strong US dollar challenging returns on international investments for US-based funds.

The narrative around the US dollar has actually flipped in 2025, which is a crucial point for international investors. While a strong dollar historically acted as a headwind, dampening the returns of foreign investments for US-based funds, the trend has reversed this year.

The U.S. Dollar Index (DXY) was down roughly 10% year-to-date as of July 2025. This weakening dollar is a significant tailwind for unhedged international assets. For example, the dollar's decline has enhanced returns, with Developed Market equities (MSCI EAFE ETF) up 21% year-to-date in USD terms as of July 2025. This currency tailwind boosts the dollar-denominated returns of Hamilton Lane Incorporated's international investments, effectively making foreign gains worth more when translated back to US dollars.

• Dollar Index (DXY) down approximately 10% YTD as of July 2025.
• Developed Market equities up 21% YTD in USD terms.
• Weak dollar acts as a tailwind for unhedged international portfolio returns.

Finance: Mandate all underlying fund managers to provide a 12-month operational cost inflation forecast by the end of the quarter.

Hamilton Lane Incorporated (HLNE) - PESTLE Analysis: Social factors

Growing demand from high-net-worth and retail investors for access to private markets ('retailization').

You are seeing a massive shift in who wants a piece of the private markets pie, and it's no longer just the massive pension funds and endowments. This trend, which we call the retailization of private markets, is a huge opportunity for Hamilton Lane Incorporated. The sheer size of this new capital pool is staggering: products tailored for high-net-worth (HNW) and retail investors-like open-end funds, interval funds, and perpetual-life business development companies (BDCs)-already represent over $1 trillion in Assets Under Management (AUM) globally. That pool has been growing at about 16% per year since 2020.

This is a structural tailwind for a firm like Hamilton Lane, which has made accessible private market solutions a core strategy. To be fair, this influx of retail money is a double-edged sword; it demands more transparent, liquid, and regulated products, which increases operational complexity. Still, the growth potential is undeniable: a State Street survey from Q1 2025 found that 56% of institutional investors expect retail-style vehicles to account for at least half of all private market flows within the next two years. This is defintely a key driver for our Fee-Earning Assets (FEA), which stood at $72 billion for the fiscal year ended March 31, 2025.

Increased focus on Diversity, Equity, and Inclusion (DEI) metrics in fund manager selection.

The conversation around Diversity, Equity, and Inclusion (DEI) has moved past simple compliance and is now a critical factor in capital allocation. Limited Partners (LPs)-your institutional clients-are increasingly using DEI metrics as a non-negotiable part of their due diligence process. In fact, 45% of LPs now explicitly prioritize diversity metrics when they are selecting which private equity funds to back. This is a material risk if a firm lags, but a clear opportunity if it leads.

The industry still has a long way to go, though. Women hold only about 17% of senior roles in private equity, which means there is a significant talent gap to fill. For Hamilton Lane, demonstrating a commitment here is not just about social responsibility; it's a competitive edge for attracting capital. We know that 55% of LPs plan to increase their allocations to diverse-led funds over the next two years, so having a strong, measurable DEI strategy translates directly into future fundraising success.

Shift in institutional investor preference toward sustainable and impact-focused private assets.

Institutional investors are not just talking about Environmental, Social, and Governance (ESG) anymore; they are demanding measurable outcomes, especially in the private markets where managers have more direct influence. The data is clear: 86% of asset owners expect the proportion of their total assets allocated to sustainable funds to increase over the next two years. That's a huge mandate for change. Furthermore, a remarkable 89% of asset owners now require their external asset managers to have a formal sustainable investing policy or strategy.

This preference is driving capital flows into specific areas like renewable energy, which was cited as a top priority by 30% of investors in a 2025 survey, followed by energy efficiency at 28%. Private markets are seen as a key vehicle for achieving net-zero targets because they offer a more direct path to real-world decarbonization. This means Hamilton Lane must continue to embed sustainability into its investment thesis to capture this growing pool of capital. The firm's total AUM reached $138 billion as of March 31, 2025, and the next leg of growth will be heavily dependent on how successfully it taps into this sustainable mandate.

Talent wars in asset management pushing up compensation, impacting operating expenses.

The competition for top-tier talent in private markets is fierce, and it directly impacts the firm's bottom line-its operating expenses. The 'talent war' is most visible at the elite level, where compensation packages for star portfolio managers (PMs) in multi-manager hedge funds are reportedly reaching $100 million. While Hamilton Lane is a private markets firm, the bidding war for skilled professionals-especially those in high-demand areas like fundraising, investor relations, and technology-creates upward pressure across the entire compensation structure.

Private equity recruitment accelerated in the first half of 2025, particularly for roles focused on securing new capital. Hamilton Lane employs approximately 760 professionals globally, and retaining this team requires competitive pay and incentives. Here's the quick math on the cost pressure:

• Top firms are willing to overpay for fundraising talent.
• The demand for private credit expertise remains consistently high.
• Equity and senior titles are increasingly important to attract talent.

This means that maintaining the firm's strong management and advisory fees of $513.9 million for fiscal 2025 requires careful management of the compensation line item to ensure profitability isn't eroded by escalating salary demands. Firms are now recruiting like NFL teams, and the cost of entry is rising fast.

Social Factor Trend	Impact on Hamilton Lane (HLNE)	Key 2025 Metric/Value
Retailization of Private Markets	Significant growth opportunity for new capital sources and product development.	Retail-focused products exceed $1 trillion in AUM, growing at 16% annually.
DEI in Fund Selection	A competitive necessity; failure to meet LP demands risks losing mandates.	45% of LPs prioritize DEI metrics in fund selection.
Shift to Sustainable/Impact Assets	Mandate for strategy evolution; a key driver for future AUM growth.	86% of asset owners expect increased allocations to sustainable funds.
Talent Wars in Asset Management	Increased operating expenses due to escalating compensation for retention and recruitment.	Hamilton Lane employs approximately 760 professionals. Top PM pay packages reportedly reach $100 million.

Hamilton Lane Incorporated (HLNE) - PESTLE Analysis: Technological factors

Adoption of Artificial Intelligence (AI) to enhance due diligence and portfolio monitoring efficiency

The core of Hamilton Lane Incorporated's technological edge remains its data-driven approach, particularly through the use of Artificial Intelligence (AI) and proprietary analytics. You can't manage nearly a trillion dollars without serious tech. The firm's proprietary software, Cobalt, acts as the central nervous system for portfolio construction and analytics, giving clients the same insights the firm's own experts use. This isn't just a dashboard; it's a tool for systematic due diligence.

To further enhance this, the firm launched an AI-powered investment assistant in a 2023 joint venture with TIFIN. This assistant merges TIFIN's AI capabilities with Hamilton Lane's massive data warehouse, which contains information on more than $16.7 trillion in private markets commitments. This is a huge competitive advantage, translating complex private markets data into actionable benchmarking and forecasting for both institutional and wealth advisors.

Here's the quick math on the data scale:

• Hamilton Lane's proprietary database covers more than 58,000 funds across 57 vintage years.
• The AI assistant leverages data from over $16.7 trillion in private markets commitments.
• The 2025 Market Overview explicitly calls out the need to invest in portfolio analytics for construction and analysis.

Use of blockchain technology to streamline fund administration and secondary market trading

Blockchain, or distributed ledger technology (DLT), is defintely moving from a buzzword to a fundamental utility for private markets, and Hamilton Lane is leading the charge in tokenization. This technology is critical for breaking down the high barriers to entry and improving liquidity.

The firm uses tokenization to create fractional ownership, which drastically simplifies fund administration and opens up the secondary market. For example, a portion of the firm's latest fund, Secondary Fund VI, which closed at a record $5.6 billion in June 2024, was made available to individual investors via a tokenized feeder fund on the Polygon blockchain. This is huge because it reduced the typical minimum investment from $5 million to just $20,000.

This move is part of a broader strategy, which includes partnerships with platforms like Securitize and Sygnum, to offer tokenized vehicles and streamline the entire subscription process. The tokenization process cuts down on the administrative work, which is the operational lift that usually keeps minimums high.

Need for robust cybersecurity infrastructure to protect sensitive investor and portfolio data

With $957.8 billion in assets under management and supervision as of March 31, 2025, the risk of a cybersecurity breach is a top-tier threat. The firm's regulatory filings for 2025 explicitly list 'heightened cybersecurity risk' as a significant operational factor, especially as digital platforms expand and remote work continues.

The risk isn't just internal; it's also tied to third-party service providers. The firm must ensure its data protection protocols comply with stringent international standards like the General Data Protection Regulation (GDPR), which is a massive compliance effort. To be fair, the digital onboarding partnership with IDR, which handles Know Your Customer (KYC) and Anti-Money Laundering (AML) checks, is a key piece of the security puzzle, streamlining a highly sensitive process securely.

The technology risk is a cost of doing business at this scale.

Development of 'feeder fund' technology to simplify retail investor onboarding and minimums

The development of technology-enabled feeder funds is the practical application of the blockchain and digital strategy to democratize private markets access. This is a clear, near-term opportunity to capture a new class of wealth.

The most concrete example in 2025 is the launch of the Hamilton Lane Private Infrastructure Fund (HLPIF) in March 2025, in partnership with Republic. This fund is the first private infrastructure offering available to pure retail (non-accredited) investors in the U.S. with an initial minimum investment as low as $500. This is a massive shift from the typical multi-million-dollar institutional minimums.

The technology simplifies the entire investor journey:

Technology/Platform	Impact on Retail Access	Key Metric (2025)
Republic Partnership (HLPIF)	First access for non-accredited U.S. retail investors.	Minimum investment of $500.
Securitize Tokenized Feeder Fund	Access to institutional funds like Secondary Fund VI.	Minimum reduced from $5 million to $20,000.
IDR Onboarding Platform	Streamlines subscription, KYC, and AML compliance.	Creates a 'digital passport' for faster, secure onboarding.

This aggressive use of technology to broaden the investor base is a direct response to the market's demand for access to the historically high-performing private markets.

Hamilton Lane Incorporated (HLNE) - PESTLE Analysis: Legal factors

Implementation of the SEC's Private Fund Adviser Rules (PFAR) requiring new compliance and disclosure.

The biggest legal headline for private fund advisers like Hamilton Lane Incorporated is actually the

vacatur of the SEC's Private Fund Adviser Rules (PFAR) in June 2024

by the Fifth Circuit Court of Appeals. This means the most sweeping new rules-like the mandatory quarterly statements and preferential treatment prohibitions-are not in effect. Still, you can't relax. The SEC's Division of Examinations has made it clear they will continue to scrutinize the very issues PFAR tried to address: fees, expenses, and conflicts of interest. It's a shift from new rulemaking to aggressive enforcement of existing fiduciary duties.

The regulatory calendar for 2025 remains busy, though. Hamilton Lane, with its $957.8 billion in assets under management and supervision as of March 31, 2025, must still meet key deadlines. For instance, the compliance deadline for amendments to

Form PF was extended to June 12, 2025

, requiring more detailed reporting on fund strategies and investor information. Plus, new

Regulation S-P

(data breach notification) for large Registered Investment Advisers (RIAs) with over $1.5 billion in AUM has a compliance deadline of

December 3, 2025

, forcing a major upgrade to cybersecurity incident response plans. One clean one-liner: Compliance is now about proving fiduciary duty, not just checking new boxes.

Increased litigation risk related to valuation practices and conflicts of interest in co-investments.

The risk of litigation and enforcement is definitely rising, especially around the opaque areas of valuation and co-investment conflicts. The SEC is actively pursuing cases where disclosures are inadequate, even under the new, less aggressive administration. For Hamilton Lane, whose strategy includes a focus on the co-investment side, this is a critical area to manage.

We see this risk quantified in recent enforcement actions. In August 2025, the SEC settled charges against a private fund adviser for failing to properly calculate fee offsets and not disclosing the resulting conflict of interest, leading to a total payment of

$683,877

, which included a

$175,000

civil penalty. In another case in March 2025, an adviser was fined

$235,000

for misuse of fund and portfolio company assets, including misappropriating

$223,000

-a stark reminder of the SEC's focus on internal controls and supervision. The focus is on the

$1.3 billion

in unrealized carried interest on Hamilton Lane's balance sheet for FY2025; as these investments exit, the valuation methodology will face intense scrutiny from investors and regulators alike.

Stricter data privacy regulations (e.g., CCPA, GDPR) affecting global client data management.

Operating globally means Hamilton Lane has to navigate a patchwork of data privacy laws, primarily the EU's General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA). Given Hamilton Lane's

$513.9 million

in management and advisory fees for fiscal year 2025, it comfortably exceeds the CCPA's

$25 million

revenue threshold for compliance. The cost to meet these standards is not trivial.

Initial compliance with CCPA for a large firm (over 500 employees, Hamilton Lane has about 760) was estimated at an average of

$2 million

, with annual technology and operational costs projected at

$75,000

per firm just to maintain the systems for data subject requests (DSRs) and policy updates. While a May 2025 revision to California's privacy regulations was projected to save California businesses approximately

$2.25 billion

in the first year by easing some requirements, the core obligation to map, secure, and manage global client data remains a significant, ongoing expense. This complexity requires a centralized data governance structure.

Regulatory Area	2025 Key Action/Deadline	Financial/Operational Impact
SEC Private Fund Adviser Rules (PFAR)	PFAR vacated (June 2024); Form PF amendment deadline: June 12, 2025 .	Increased legal/compliance spend for new Form PF reporting; focus shifts to existing fiduciary duty enforcement (fees, conflicts).
Litigation Risk (Valuation/Conflicts)	SEC settlement with private fund adviser for fee conflict ( August 2025 ).	Risk of fines/disgorgement. Example: $683,877 total payment in a single fee-related settlement.
Data Privacy (CCPA/GDPR/Reg S-P)	Reg S-P compliance deadline: December 3, 2025 (for large RIAs).	Initial compliance costs estimated at $2 million for large firms; ongoing annual technology costs of $75,000 for CCPA compliance.

Antitrust review of large mergers in the asset management space impacting growth via acquisition.

Growth by acquisition is a key strategy for large asset managers, but the antitrust environment in 2025 is more challenging, even with the shift in presidential administrations. The new Hart-Scott-Rodino (HSR) Act rules, which significantly expand the information required for premerger notifications, went into effect in

February 2025

. This means any large-scale acquisition Hamilton Lane pursues will face a longer, more data-intensive review process from the start.

While the new administration has signaled a greater willingness to accept structural remedies, like divestitures, rather than outright blocking deals, the scrutiny of private equity transactions remains high. The Department of Justice (DOJ) sued a major private equity firm, KKR, in

January 2025

for alleged serial violations of the HSR Act, which is a clear warning shot. The average duration of a significant U.S. merger investigation has also increased, reaching

12.6 months

in the first half of 2025, up from 11.3 months in 2024. This extended timeline creates a higher risk of deal breakage and increased transaction costs for any material M&A activity.

Hamilton Lane Incorporated (HLNE) - PESTLE Analysis: Environmental factors

The environmental landscape for Hamilton Lane Incorporated is defined by a critical dual challenge: mandatory reporting from regulators and escalating demands for verifiable climate action from Limited Partners (LPs). Your immediate takeaway should be that the cost of inaction now far exceeds the cost of compliance, and HLNE must capitalize on its data platform advantage to turn reporting into a value-creation tool.

Here's the quick math: If the industry hits that projected $26.6 trillion private markets AUM mark by 2030, even a small percentage point of market share gain translates to billions in new assets under management (AUM) for a firm like Hamilton Lane. Still, the new SEC rules will increase compliance costs by an estimated 10-15% for some mid-sized private fund managers; HLNE needs to absorb that efficiently.

Next step: Finance: Model the potential impact of a 50-basis-point increase in compliance costs on FY2026 operating margins by next Tuesday.

Mandatory climate-related risk disclosures (e.g., SEC rules) affecting portfolio company reporting.

The U.S. Securities and Exchange Commission (SEC) climate disclosure rules are now a near-term reality, forcing a standardization of reporting that private markets have historically avoided. As a large accelerated filer (LAF), Hamilton Lane will face the earliest compliance deadlines, with disclosures required in annual reports for the fiscal year ending December 31, 2025. This means the firm must have internal systems ready now.

The direct cost for the registrant (HLNE) to comply with the governance, strategy, and risk management disclosures alone is estimated by the SEC to be around $327,000 in the first year. The rule requires disclosure of material Scope 1 (direct) and Scope 2 (indirect from energy use) greenhouse gas (GHG) emissions, but notably, it does not mandate Scope 3 (value chain) emissions disclosure. This exclusion provides a temporary reprieve but does not eliminate the need to track Scope 3, which is where the vast majority of risk lies for financial services firms.

Growing pressure from Limited Partners (LPs) to integrate Environmental, Social, and Governance (ESG) factors into investment decisions.

LP demand for ESG integration has moved from a preference to a mandate, directly impacting fundraising and asset allocation. This is no longer a soft-touch issue; it's a hard due diligence requirement. Nearly half of investors surveyed, 46%, report that climate change has a significant or moderate impact on their investment decision-making.

LPs are setting concrete, measurable targets that require General Partners (GPs) like Hamilton Lane to follow suit. The firm must be able to demonstrate a clear path to decarbonization across its fund offerings to remain competitive. One in four LPs surveyed-specifically 23%-now have a formal net-zero portfolio target they expect their fund managers to help them meet.

Hamilton Lane FY2025 Financials & ESG Context	Value (as of March 31, 2025)	Relevance to Environmental Factors
Total Assets Under Management & Supervision	$957.8 billion	Scale of assets requiring climate risk screening and ESG reporting to LPs.
Discretionary Assets Under Management	$138.3 billion	Assets over which HLNE has direct investment control and must integrate ESG due diligence.
Management and Advisory Fees (FY2025)	$513.9 million	Revenue base that must efficiently absorb new SEC compliance costs (e.g., the estimated $327,000 first-year disclosure cost).
Projected Global Private Markets AUM (2030)	$26.6 trillion	Market growth opportunity tied to offering best-in-class, ESG-integrated investment solutions.

Physical and transition climate risks requiring new due diligence models for infrastructure and real estate assets.

The firm's significant exposure to infrastructure and real estate assets-sectors that are acutely vulnerable to climate change-necessitates a complete overhaul of traditional due diligence. Physical risks are no longer abstract, but quantifiable financial threats. Globally, chronic hazards, such as extreme heat and flooding, account for a staggering 86% of projected climate-related financial losses.

In the US, the frequency of severe weather has exploded, with 27 confirmed weather or climate disaster events in 2024 that each resulted in losses exceeding $1 billion, dramatically up from the 1980-2024 annual average of nine events. This requires new models to assess asset-level resilience. The transition risk is equally potent, exemplified by local laws like New York City's Local Law 97 (LL97), which imposes carbon caps on buildings and will require compliance action from roughly 50% of covered properties by 2030.

Need to quantify and report portfolio company carbon emissions, a defintely complex task for private firms.

Quantifying carbon emissions across a diverse private portfolio is the single biggest operational challenge. The data is fragmented, and portfolio companies often lack the resources or expertise to provide primary data. This is why only 10% of global firms are able to comprehensively measure and report all relevant emission sources.

The focus must quickly shift to Scope 3 (value chain) emissions, despite the SEC not mandating it for the registrant. For the financial services sector, Scope 3 emissions are, on average, 26 times higher than combined Scope 1 and Scope 2 emissions. Ignoring this is ignoring the true climate risk and the LP's ultimate concern. The key action here is to standardize data collection and leverage technology to estimate and track these indirect emissions.

• Standardize data collection protocols across all portfolio companies.
• Prioritize Scope 3 data collection for high-emitting sectors.
• Use proxy data where primary data is unavailable.
• Integrate climate-related KPIs into portfolio company board mandates.