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HAMILTON LANE INC Management’s Discussion and Analysis of Financial Condition and Results of Operations (form 10-K)

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The following information should be read in conjunction with the accompanying
consolidated financial statements and related notes. See "Index to Consolidated
Financial Statements of Hamilton Lane Incorporated."

The following discussion may contain forward-looking statements that reflect our
plans, estimates and beliefs. Our actual results could differ materially from
those discussed in these forward-looking statements. 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 2022, fiscal 2021 and fiscal 2020 are to our fiscal years
ended March 31, 2022, 2021 and 2020, respectively.

                               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. These solutions are constructed from a range
of investment types, including primary investments in funds managed by
third-party managers, direct investments alongside such funds and acquisitions
of secondary stakes in such funds, with a number of our clients utilizing
multiple investment types. These solutions are offered in a variety of formats
covering some or all phases of private markets investment programs:

•Customized Separate Accounts: We design and build customized portfolios of
private markets funds and direct investments to meet our clients' specific
portfolio objectives with regard to return, risk tolerance, diversification and
liquidity. We generally have discretionary investment authority over our
customized separate accounts, which comprised approximately $83 billion of our
AUM as of March 31, 2022.

•Specialized Funds: We organize, invest and manage specialized primary,
secondary and direct investment funds. Our specialized funds invest across a
variety of private markets and include equity, equity-linked and credit funds
offered on standard terms as well as shorter duration, opportunistically
oriented funds. We launched our first specialized fund in 1997. Since then, our
product offerings have grown steadily and now include evergreen offerings that
invest primarily in secondaries and direct investments in equity and credit and
are available to certain high-net-worth individuals. Specialized funds comprised
approximately $24 billion of our AUM as of March 31, 2022.

•Advisory Services: We offer investment advisory services to assist clients in
developing and implementing their private markets investment programs. Our
investment advisory services include asset allocation, strategic plan creation,
development of investment policies and guidelines, the screening and
recommending of investments, legal negotiations, the monitoring of and reporting
on investments and investment manager review and due diligence. Our advisory
clients include some of the largest and most sophisticated private markets
investors in the world. We had approximately $795 billion of AUA as of March 31,
2022.

•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.


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•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 also provide comprehensive research and analytical
services as part of our investment solutions, leveraging our large, global,
proprietary and high-quality database for transparency and powerful analytics.
Our data, tracking over 47,000 funds and $19 trillion in commitments, as of
March 31, 2022, as well as our benchmarking and forecasting models are
accessible through our proprietary technology solution, Cobalt LP, on a
stand-alone, subscription basis.

Our client base primarily comprises institutional investors that range from
those seeking to make an initial investment in alternative assets to some of the
world's largest and most sophisticated private markets investors. As we offer a
highly customized, flexible service, we are equipped to provide investment
services to institutional clients of all sizes and with different needs,
internal resources and investment objectives. Our clients include prominent
institutional investors in the United States, Canada, Europe, the Middle East,
Asia, Australia and Latin America. We provide private markets solutions and
services to some of the largest global pension, sovereign wealth and U.S. state
pension funds. In addition, we believe we are a leading provider of private
markets solutions for U.S. labor union pension plans, and we serve numerous
smaller public and corporate pension plans, sovereign wealth funds, financial
institutions and insurance companies, endowments and foundations, as well as
family offices and selected high-net-worth individuals.

                         Trends Affecting Our Business

Our results of operations are affected by a variety of factors, including
conditions in the global financial markets and the economic and political
environments, particularly in the United States, Western Europe and Asia. As
interest rates begin to rise in response to increasing inflationary pressures,
along with increased public equity volatility leading to a wider range of equity
returns, we see increasing investor demand for alternative investments to
achieve higher and less correlated relative yields and returns on invested
capital. As a result, some investors have increased their allocation to private
markets relative to other asset classes. In addition, the opportunities in
private markets have expanded as firms have created new vehicles and products in
which to access private markets across different geographies and opportunity
sets.

In addition to the aforementioned macroeconomic and sector-specific trends, we
believe the following factors will influence our future performance:


•The extent to which investors favor alternative investments. Our ability to
attract new capital is partially dependent on investors' views of alternative
assets relative to traditional publicly listed equity and debt securities. 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 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.

•Our ability to generate strong returns. We must continue to generate strong
returns for our investors through our disciplined investment diligence process
in an increasingly competitive market. The ability to attract and retain clients
is partially dependent on returns we are able to deliver versus our peers. The
capital we are able to attract drives the growth of our AUM and AUA and the
management and advisory fees we earn.


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•Our ability to source investments with attractive risk-adjusted returns. An
increasing part of our management fee and incentive fee revenue has been from
our direct investment and secondary investment platforms. The continued growth
of this revenue is dependent on our continued ability to source attractive
investments and deploy the capital that we have raised or manage on behalf of
our clients. Because we are selective in the opportunities in which we invest,
the capital deployed can vary from year to year. Our ability to identify
attractive investments and execute on those investments is dependent on a number
of factors, including the general macroeconomic environment, valuation,
transaction size, and expected duration of such investment opportunity. A
significant decrease in the quality or quantity of potential opportunities could
adversely affect our ability to source investments with attractive risk-adjusted
returns.

•Our ability to maintain our data advantage relative to competitors. We believe
that the general trend towards transparency and consistency in private markets
reporting will create new opportunities for us to leverage our databases and
analytical capabilities. We intend to use these advantages afforded to us by our
proprietary databases, analytical tools and deep industry knowledge to drive our
performance, provide our clients with customized solutions across private
markets asset classes and continue to differentiate our products and services
from those of our competitors. Our ability to maintain our data advantage is
dependent on a number of factors, including our continued access to a broad set
of private market information on an on-going basis, as well as our ability to
maintain our investment scale, considering the evolving competitive landscape
and potential industry consolidation.

•Our ability to continue to expand globally. We believe that many institutional
investors outside the United States are currently underinvested in private
markets asset classes and that capturing capital inflows into private capital
investing from non-U.S. global markets represents a significant growth
opportunity for us. Our ability to continue to expand globally is dependent on
our ability to continue building successful relationships with investors
internationally and subject to the evolving macroeconomic and regulatory
environment of the various countries where we operate or in which we invest.

•Increased competition to work with top private equity fund managers. 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. This has resulted in some investors, primarily smaller investors
or less strategically important investors, not being able to gain access to
certain funds. 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.

•Unpredictable global macroeconomic conditions. 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.

•Increasing regulatory requirements. The complex regulatory and tax environment
could restrict our operations and subject us to increased compliance costs and
administrative burdens, as well as restrictions on our business activities.


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                               Impact of COVID-19

In March 2020, the World Health Organization declared the coronavirus
("COVID-19") outbreak a global pandemic, the effects of which continue to cause
significant disruption and uncertainty in the global economic markets. We are
closely monitoring developments related to the COVID-19 pandemic and assessing
any negative impacts to our business. For a description of the impact that
COVID-19 has had and may in the future have on our business, see "Risk
Factors-Risks Related to Our Industry-The COVID-19 pandemic continues to cause
disruptions in the U.S. and global economies and may adversely impact our
financial condition and results of operations". As of March 31, 2022, we have
adequate liquidity with $72 million in available cash and $75 million in
availability under our Loan Agreements. For more information on our Loan
Agreements, see "-Liquidity and Capital Resources-Loan Agreements".

                      Key Financial and Operating Measures

Our key financial measures are discussed below.

Revenues

We generate revenues primarily from management and advisory fees, and to a
lesser extent, incentive fees. See “-Critical Accounting Estimates-Revenue
Recognition of Incentive Fees” and Note 2 of the consolidated financial
statements included in Part II, Item 8 of this Form 10-K for additional
information regarding the manner in which management and advisory fees and
incentive fees are generated.


Management and advisory fees comprise specialized fund and customized separate
account management fees, advisory and reporting fees and distribution management
fees.

Revenues from customized separate accounts are generally based on a contractual
rate applied to committed capital or net invested capital under management.
These fees often decrease over the life of the contract due to built-in declines
in contractual rates and/or as a result of lower net invested capital balances
as capital is returned to clients. In certain cases, we also provide advisory
and/or reporting services, and, therefore, we also receive fees for services
such as monitoring and reporting on a client's existing private markets
investments. In addition, we may provide for investments in our specialized
funds as part of our customized separate accounts. In these cases, we generally
reduce the management 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.

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. The management fee during the commitment period is often
charged on capital commitments and after the commitment 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.
In the case of certain funds, we charge management fees on capital commitments,
with the management fee increasing during the early years of the fund's term and
declining in the later years. Management fees for certain funds are discounted
based on the amount of the limited partners' commitments, whether the limited
partner commits early in the offering period or if the limited partners are
investors in our other funds.

Revenues from advisory and reporting services are generally annual fixed fees,
which vary depending on the services we provide. In limited cases, advisory
service clients are charged basis point fees annually based on the amounts they
have committed to invest pursuant to their agreements with us. In other cases
where our services are limited to monitoring and reporting on investment
portfolios, clients are charged a fee based on the number of investments in
their portfolio.


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Distribution management fees are generally earned by applying a percentage to
AUM or proceeds received. Certain active management clients may elect a fee
structure under which they are charged an asset-based fee plus a fee based on
net realized and unrealized gains and income net of realized and unrealized
losses.

Incentive fees comprise carried interest earned from our specialized funds and
certain customized separate accounts structured as single-client funds in which
we have a general partner commitment, and performance fees earned on certain
other customized separate accounts.

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%. 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.

We recognize carried interest when it is probable that a significant reversal
will not occur. The primary contingency regarding incentive fees is the
"clawback," or the obligation to return distributions in excess of the amount
prescribed by the applicable fund or separate account documents. 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. In the event that a payment is made before it can be recognized as
revenue, this amount would be included as deferred incentive fee revenue on our
Consolidated Balance Sheet and recognized as income in accordance with our
revenue recognition policy.

Performance fees, which are a component of incentive 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 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 are recognized when the risk of clawback or reversal
is not probable.

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 awards and (c) incentive fee compensation, which consists of
carried interest and performance fee allocations. We expect to continue to
experience a general rise in compensation and benefits expense commensurate with
expected growth in headcount and with the need to maintain competitive
compensation levels as we expand geographically and create new products and
services.

Our compensation arrangements with our employees contain a significant bonus
component driven by the results of our operations. Therefore, as our revenues,
profitability and the amount of incentive fees earned by our customized separate
accounts and specialized funds increase, our compensation costs rise.

Certain current and former employees participate in a carried interest program
whereby approximately 25% of incentive fees from certain of our specialized
funds and customized separate accounts are awarded to plan participants. We
record compensation expense payable to plan participants as the incentive fees
become estimable and collection is probable.

General, administrative and other includes travel, accounting, legal and other
professional fees, commissions, placement fees, office expenses, depreciation
and other costs associated with our operations.


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Our occupancy-related costs and professional services expenses, in particular,
generally increase or decrease in relative proportion to the number of our
employees and the overall size and scale of our business operations.

Other Income (Expense)


Equity in income (loss) of investees primarily represents our share of earnings
from our investments in our specialized funds and certain customized separate
accounts in which we have a general partner commitment. Equity income primarily
comprises our share of the net realized and unrealized gains (losses) and
investment income partially offset by the expenses from these investments.

We have general partner commitments in our specialized funds and certain
customized separate accounts that invest solely in primary funds, secondary
funds and direct investments, as well as those that invest across investment
types. Equity in income (loss) of investees will increase or decrease as the
change in underlying fund investment valuations increases or decreases. Since
our direct investment funds invest in underlying portfolio companies, their
quarterly and annual valuation changes are more affected by individual company
movements than our primary and secondary funds that have exposures across
multiple portfolio companies in underlying private markets funds. 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.

Interest expense includes interest paid and accrued on our outstanding debt,
along with the amortization of deferred financing costs, amortization of
original issue discount and the write-off of deferred financing costs due to the
repayment of previously outstanding debt.

Interest income is income earned on cash and cash equivalents.


Non-operating income (loss) consists primarily of gains and losses on certain
investments, changes in liability under the tax receivable agreement and other
non-recurring or non-cash items.

Other income (expense) of consolidated Variable Interest Entities ("VIEs")
consists primarily of the share of earnings of investments of consolidated
general partner entities, which are not wholly-owned by us, in our specialized
funds and certain customized separate accounts in which they have a general
partner commitment and changes in fair value of liabilities of our sponsored
SPAC.

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. HLA is treated as a pass-through entity for U.S. federal and
state income tax purposes. As such, income generated by HLA flows through to its
limited partners, including us, and is generally not subject to U.S. federal or
state income tax at the partnership level. 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 in HLA is borne by the holders of such non-controlling
interests.

Non-controlling interests

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%


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owned by us. Non-controlling interests are presented as separate components in
our consolidated statements of income to clearly distinguish between our
interests and the economic interests of third parties and employees in those
entities.

Fee-Earning AUM

Fee-earning AUM is a metric we use to measure the assets from which we earn
management fees. 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. We classify customized separate account revenue as management fees if the
client is charged an asset-based fee, which includes the majority of our
discretionary AUM accounts but also includes certain non-discretionary AUA
accounts. Our fee-earning AUM is equal to the amount of capital commitments, net
invested capital and NAV of our customized separate accounts and specialized
funds depending on the fee terms. Substantially all of our customized separate
accounts and specialized funds earn fees based on commitments or net invested
capital, which are not affected by market appreciation or depreciation.
Therefore, revenues and fee-earning AUM are not significantly affected by
changes in market value.

Our calculations of fee-earning AUM may differ from the calculations of other
asset managers, and as a result, this measure may not be comparable to similar
measures presented by other asset managers. 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.



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                   Annual Consolidated Results of Operations

The following is a discussion of our consolidated results of operations for
fiscal 2022 compared to fiscal 2021. This information is derived from our
accompanying consolidated financial statements prepared in accordance with GAAP.
Refer to Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations in our 2021 Annual Report on Form 10-K for management's
discussion and analysis of financial condition and results of operations for
fiscal 2021 compared to fiscal 2020.

                                                                         Year Ended March 31,
(in thousands)                                                2022               2021               2020
Revenues
Management and advisory fees                              $ 314,228          $ 289,444          $ 244,920
Incentive fees                                               48,133             31,134             21,437
Consolidated variable interest entities related:
Incentive fees                                                5,558             21,057              7,691
Total revenues                                              367,919            341,635            274,048
Expenses
Compensation and benefits                                   129,165            136,319            100,138
General, administrative and other                            68,040             49,210             57,481
Consolidated variable interest entities related:
General, administrative and other                             1,150                378                  -
Total expenses                                              198,355            185,907            157,619
Other income (expense)
Equity in income of investees                                78,813             32,389             20,731
Interest expense                                             (4,634)            (2,044)            (2,816)
Interest income                                                 500              1,676                709
Non-operating income                                         64,469              5,894              6,172
Consolidated variable interest entities related:
Equity in loss of investees                                     483             (2,123)              (481)
Unrealized gains                                              4,485              2,141                  -
Interest expense                                                 (4)              (459)                 -
Total other income (expense)                                144,112             37,474             24,315
Income before income taxes                                  313,676            193,202            140,744
Income tax expense                                           66,423             24,417             13,968
Net income                                                  247,253            168,785            126,776

Less: Income (loss) attributable to non-controlling
interests in general partnerships

                               376               (250)                85

Less: Income attributable to non-controlling interests in
Hamilton Lane Advisors, L.L.C.

                               96,548             69,720             65,866

Less: Income attributable to non-controlling interests in
Hamilton Lane Alliance Holdings I, Inc.

                       4,343              1,293                  -

Net income attributable to Hamilton Lane Incorporated $ 145,986

 $  98,022          $  60,825




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Revenues

                                               Year Ended March 31,
(in thousands)                          2022           2021           2020
Management and advisory fees
Specialized funds                    $ 150,079      $ 148,023      $ 

111,803

Customized separate accounts           103,229         93,963         90,750
Advisory                                24,972         26,439         24,160
Reporting and other                     23,327         11,134          9,102
Distribution management                 10,466          6,701          4,920
Fund reimbursement revenue               2,155          3,184          4,185
Total management and advisory fees     314,228        289,444        244,920
Incentive fees                          53,691         52,191         29,128
Total revenues                       $ 367,919      $ 341,635      $ 274,048

Year ended March 31, 2022 compared to year ended March 31, 2021

Total revenues increased $26.3 million, or 8%, to $367.9 million, for fiscal
2022 compared to fiscal 2021, due to an increase in management and advisory
fees.


Management and advisory fees increased $24.8 million, or 9%, to $314.2 million
for fiscal 2022 compared to fiscal 2021. Specialized funds revenue increased by
$2.1 million compared to the prior year, due primarily to a $17.5 million
increase in revenue from our evergreen funds and a $8.2 million increase in
revenue from our latest direct equity fund, which added $1.5 billion and $1.1
billion, respectively, in fee-earning AUM year-over-year. These increases were
partially offset by a $17.8 million decrease in revenue from our latest
secondary fund, which reflects $18.2 million in retroactive fees earned in
fiscal 2021. 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. Customized
separate accounts revenue increased $9.3 million in fiscal 2022 due to a $5.3
billion increase in fee-earning AUM from the addition of several new accounts
and additional allocations from existing accounts during the fiscal year.
Reporting and other fees increased $12.2 million in fiscal 2022 due to $8.7
million in revenue added from the acquisition of 361 Capital, LLC in the current
year period. Distribution management revenue increased $3.8 million in fiscal
2022 due to increased distribution activity.

Incentive fees increased $1.5 million to $53.7 million for fiscal 2022 compared
to fiscal 2021.


Expenses

Year ended March 31, 2022 compared to year ended March 31, 2021

Total expenses increased $12.4 million, or 7%, for fiscal 2022 compared to
fiscal 2021 due to an increase in general, administrative and other expenses,
partially offset by a decrease in compensation and benefits expenses.


Compensation and benefits expenses decreased $7.2 million, or 5%, to $129.2
million for fiscal 2022 compared to fiscal 2021, due primarily to a decrease in
base compensation and benefits. Base compensation and benefits decreased $8.0
million, or 7%, for fiscal 2022 compared to fiscal 2021, due primarily to a


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decrease in our bonus plan accrual. Incentive compensation increased $0.5
million
for fiscal 2022 compared to fiscal 2021 due to the increase in incentive
fee revenue.


General, administrative and other expenses increased $19.6 million for fiscal
2022 compared to fiscal 2021. This change consisted primarily of a $4.5 million
increase related to the 361 Capital, LLC funds, a $2.9 million increase in
consulting and professional fees, a $3.0 million increase in rent expense, which
included expenses for our new headquarters in the current year period, a $2.2
million increase in technology related expenses driven by the growth in our
reporting and analytics offering and a $1.7 million increase in third-party
commissions.

Other Income (Expense)


The following shows the equity in income (loss) of investees included in other
income (expense):

                                                  Year Ended March 31,
(in thousands)                              2022          2021          2020
Equity in income of investees
Primary funds                            $  9,016      $  2,443      $  2,550
Direct investment funds                    19,519         8,553         8,869
Secondary funds                            15,725         6,226         2,514
Customized separate accounts               25,223         9,508         

5,729

Other equity method investments             9,813         3,536           

588

Total equity in income of investees $ 79,296 $ 30,266 $ 20,250

Year ended March 31, 2022 compared to year ended March 31, 2021


Other income (expense) increased $106.6 million to $144.1 million for fiscal
2022 compared to fiscal 2021, due primarily to increases in equity in income of
investees and other non-operating income.

Equity in income of investees increased $49.0 million to $79.3 million for
fiscal 2022 compared to fiscal 2021. This increase was due primarily to a $15.7
million increase in gains across our customized separate accounts, a $11.0
million increase in gains in our direct investment funds, and a $9.5 million
increase in gains in our secondary fund product.

Non-operating income increased $60.9 million for fiscal 2022 compared to fiscal
2021, due primarily to $55.1 million in gains on two technology investments and
a $4.3 million gain on the early extinguishment of a portion of the tax
receivable liability due to termination payments to certain recipients.

Other income of consolidated VIEs increased $5.4 million for fiscal 2022
compared to fiscal 2021, due to increases in equity in income (loss) of
investees discussed above and a change in fair value of the warrants of our
sponsored SPAC.

Income Tax Expense


Income tax expense reflects U.S. federal and applicable state income taxes with
respect to our allocable share of any taxable income of HLA subsequent to the
Reorganization.

Our effective income tax rate in fiscal 2022 and 2021 was 21.2% and 12.6%,
respectively. The fiscal 2022 effective income tax rate was different from the
statutory tax rate due to the portion of income allocated to the non-controlling
interest and change in the valuation allowance. The effective income tax rate
for fiscal


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2022 was higher than fiscal 2021 primarily due to less income allocated to the
non-controlling interest in fiscal 2022 and an increase in the valuation
allowance for deferred tax assets not expected to be realized.

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,
                                                          2022                                                     2021
                                                                                  (in millions)
                                      Customized                                               Customized
                                       Separate                                                 Separate
                                       Accounts       Specialized Funds      Total              Accounts       Specialized Funds      Total
Balance, beginning of period       $      25,664    $           16,341    $ 42,005          $      24,545    $           14,118    $ 38,663
Contributions (1)                          8,994                 4,228      13,222                  5,761                 3,436       9,197
Distributions (2)                         (4,194)               (2,584)     (6,778)                (4,904)               (1,306)     (6,210)
Foreign exchange, market value and
other (3)                                    474                   208         682                    262                    93         355
Balance, end of period             $      30,938    $           18,193    $ 49,131          $      25,664    $           16,341    $ 42,005



(1)Contributions represent new commitments from customized separate accounts and
specialized funds that earn fees on a committed capital fee base and capital
contributions to underlying investments from customized separate accounts and
specialized funds that earn fees on a net invested capital or NAV fee base.
(2)Distributions represent returns of capital in customized separate accounts
and specialized funds that earn fees on a net invested capital or NAV fee base,
reductions in fee-earning AUM from separate accounts and specialized funds that
moved from a committed capital to net invested capital fee base and reductions
in fee-earning AUM from customized separate accounts and specialized funds that
are no longer earning fees.
(3)Foreign exchange, market value and other consists primarily of 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
market value appreciation (depreciation) from customized separate accounts and
specialized funds that earn fees on a NAV fee base.

Year ended March 31, 2022 compared to year ended March 31, 2021

Fee-earning AUM increased $7.1 billion, or 17%, to $49.1 billion for fiscal
2022, due to contributions from customized separate accounts and specialized
funds.


Customized separate accounts fee-earning AUM increased $5.3 billion, or 21%, to
$30.9 billion for fiscal 2022. Customized separate accounts contributions were
$9.0 billion for fiscal 2022 due to new allocations from existing clients and
new clients. Distributions were $4.2 billion for fiscal 2022 due to $1.6 billion
from returns of capital in accounts earning fees on a net invested capital or
NAV fee base, $1.5 billion from accounts moving from a committed to net invested
capital fee base, and $1.1 billion from accounts reaching the end of their fund
term.

Specialized funds fee-earning AUM increased $1.9 billion, or 11%, to $18.2
billion for fiscal 2022. Specialized fund contributions were $4.2 billion for
fiscal 2022, due primarily to $1.3 billion from our evergreen funds and $1.1
billion from our latest direct equity fund. Distributions were $2.6 billion for
fiscal 2022, due to $1.4 billion from returns of capital in funds earning fees
on a net invested capital or NAV fee base, $0.7 billion from funds reaching the
end of their fund term, and $0.5 billion from accounts moving from a committed
to net invested capital fee base.




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                          Non-GAAP Financial Measures

Below is a description of our unaudited non-GAAP financial measures. These are
not measures of financial performance under GAAP and should not be considered a
substitute for the most directly comparable GAAP measures, which are reconciled
below. These measures have limitations as analytical tools, and when assessing
our operating performance, you should not consider these measures in isolation
or as a substitute for GAAP measures. Other companies may calculate these
measures differently than we do, limiting their usefulness as a comparative
measure.

Adjusted EBITDA


Adjusted EBITDA is an internal measure of profitability. We believe Adjusted
EBITDA is useful to investors because it enables them to better evaluate the
performance of our core business across reporting periods. 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) other non-operating income and (f)
certain other significant items that we believe are not indicative of our core
performance.

Fee Related Earnings

Fee Related Earnings ("FRE") is used to highlight our earnings from recurring
management fees. 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) other non-operating income and (f)
certain other significant items that we believe are not indicative of our core
performance. We believe FRE is useful to investors because it provides
additional insight into the operating profitability of our business. FRE is
presented before income taxes.



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The following table shows a reconciliation of net income attributable to
Hamilton Lane Incorporated to Fee Related Earnings and Adjusted EBITDA for
fiscal 2022, 2021, and 2020:

                                                                         Year Ended March 31,
                                                              2022               2021               2020

Net income attributable to Hamilton Lane Incorporated $ 145,986

$ 98,022 $ 60,825
Income (loss) attributable to non-controlling interests
in general partnerships

                                         376               (250)                85

Income attributable to non-controlling interests in
Hamilton Lane Advisors, L.L.C.

                               96,548             69,720             65,866

Income attributable to non-controlling interests in
Hamilton Lane Alliance Holdings I, Inc.

                       4,343              1,293                  -
Incentive fees (1)                                          (53,691)           (52,191)           (29,128)
Incentive fee related compensation (2)                       25,395             24,438             13,677
SPAC related compensation                                         -              1,686                  -

SPAC related general, administrative and other expenses 1,176

        378                  -
Non-operating income related compensation                     1,810                  -                  -
Interest income                                                (500)            (1,676)              (709)
Interest expense                                              4,638              2,503              2,816
Income tax expense                                           66,423             24,417             13,968
Equity in income of investees                               (79,296)           (30,266)           (20,250)

Non-operating income                                        (68,954)            (8,035)            (6,172)
Fee Related Earnings                                      $ 144,254          $ 130,039          $ 100,978
Depreciation and amortization                                 5,495              4,134              3,291
Equity-based compensation                                     7,404              7,079              7,183
Incentive fees (1)                                           53,691             52,191             29,128

Incentive fees attributable to non-controlling interests
(1)

                                                            (228)              (756)              (320)
Incentive fee related compensation (2)                      (25,395)           (24,438)           (13,677)
SPAC related compensation                                         -             (1,686)                 -
Non-operating income related compensation                    (1,810)                 -                  -
Interest income                                                 500              1,676                709
Adjusted EBITDA                                           $ 183,911          $ 168,239          $ 127,292


(1)  Incentive fees for the years ended March 31, 2022, 2021, and 2020 included
$0.2 million, $0.8 million and $0.3 million, respectively, of non-cash carried
interest attributable to non-controlling interests.

(2) Incentive fee related compensation includes incentive fee compensation
expense, bonus and other revenue sharing related to carried interest that is
classified as base compensation.

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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. 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 non-controlling interest. 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.

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 2022,
2021, and 2020:

                                                                              Year Ended March 31,
                                                                2022                  2021                  2020

(in thousands, except share and per-share amounts)
Net income attributable to Hamilton Lane Incorporated $ 145,986

$ 98,022 $ 60,825
Income attributable to non-controlling interests in
Hamilton Lane Advisors, L.L.C.

                                   96,548                69,720                65,866
Income tax expense                                               66,423                24,417                13,968

Adjusted pre-tax net income                                $    308,957          $    192,159          $    140,659
Adjusted income taxes (1)                                       (73,532)              (45,734)              (33,336)
Adjusted net income                                        $    235,425          $    146,425          $    107,323

Weighted-average shares of Class A common stock
outstanding - diluted                                        53,674,293            33,362,365            28,438,772
Exchange of Class B and Class C units in HLA (2)                      -            20,240,035            25,067,540
Adjusted shares outstanding                                  53,674,293            53,602,400            53,506,312

Non-GAAP earnings per share                                $       4.39          $       2.73          $       2.01



(1)   For the years ended March 31, 2022 and March 31, 2021, represents
corporate income taxes at our estimated statutory tax rate of 23.8% applied to
adjusted pre-tax net income. The 23.8% is based on a federal tax statutory rate
of 21.0% and a combined state income tax rate net of federal benefits of 2.8%.
For the year ended March 31, 2020, represents corporate income taxes at our
estimated statutory tax rate of 23.7% applied to adjusted pre-tax net income.
The 23.7% is based on a federal tax statutory rate of 21.0% and a combined state
income tax rate net of federal benefits of 2.7%.

(2)  Assumes the full exchange of Class B and Class C units in HLA for Class A
common stock of HLI pursuant to the exchange agreement. For the year ended March
31, 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.



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                             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. The
data are presented from the date indicated through December 31, 2021 and have
not been adjusted to reflect acquisitions or disposals of investments subsequent
to that date.

When considering the data presented below, note that the historical results of
our specialized funds are not indicative of the future results you should expect
from such investments, from any future investment funds we may raise or from an
investment in our Class A common stock, 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 the net
asset value ("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; and
•the performance of particular funds also will be affected by risks of the
industries and businesses in which they invest.

The historical and potential future returns of the investment funds we manage
are not directly linked to returns on our Class A common stock. Therefore, you
should not conclude that continued positive performance of the investment funds
we manage will necessarily result in positive returns on an investment in our
Class A common stock. As used in this discussion, internal rate of return
("IRR") is calculated on a pooled basis using daily cash flows. See
"-Performance Methodology" below for more information on how our returns are
calculated.

Specialized Fund Performance

We organize, invest and manage specialized primary, secondary and direct
investment funds. Our specialized funds invest across a variety of private
markets and include equity, equity-linked and credit funds offered on standard
terms, as well as shorter duration, opportunistically oriented funds. Below is
performance information across our various specialized funds. Substantially all
of these funds are globally focused, and they are grouped by the investment
strategy utilized.


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Gross Returns – Realized


                                                                                Realized            Realized         Realized        Realized Gross       Realized Gross
                                            Vintage                              Capital             Gross            Gross            Spread vs.           Spread vs.
Fund                                         year        Fund size ($M)       invested ($M)         multiple         IRR (%)          S&P 500 PME         MSCI World PME
Primaries (Diversified)
PEF I                                        1998              122                 117                1.3              5.4%             378 bps               322 bps
PEF IV                                       2000              250                 238                1.7             16.2%            1,302 bps             1,170 bps
PEF V                                        2003              135                 133                1.7             14.2%             841 bps               950 bps
PEF VI                                       2007              494                 499                1.7             12.2%             110 bps               444 bps
PEF VII                                      2010              262                 245                1.7             15.5%              86 bps               489 bps
PEF VIII                                     2012              427                 202                1.8             17.1%             196 bps               552 bps
PEF IX                                       2015              517                 219                2.2             27.1%            1,017 bps             1,359 bps
PEF X                                        2018              278                 N/A                N/A              N/A                N/A                   N/A
Secondaries
Pre-Fund                                       -                -                  362                1.5             17.1%            1,330 bps             1,172 bps
Secondary Fund I                             2005              360                 353                1.2              5.2%             113 bps               341 bps
Secondary Fund II                            2008              591                 596                1.5             19.9%             459 bps               875 bps
Secondary Fund III                           2012              909                 805                1.5             15.2%             108 bps               499 bps
Secondary Fund IV                            2016             1,916                275                2.1             36.0%            1,960 bps             2,279 bps
Secondary Fund V                             2019             3,929                20                 2.2             134.5%           10,494 bps           10,799 bps
Direct/Co-investments
Pre-Fund                                       -                -                  244                1.9             21.3%            1,655 bps             1,600 bps
Co-Investment Fund                           2005              604                 561                1.0              0.2%            (554) bps             (304) bps
Co-Investment Fund II                        2008             1,195                884                2.4             21.0%             869 bps              1,248 bps
Co-Investment Fund III                       2014             1,243                640                3.0             34.2%            1,846 bps             2,192 bps
Co-Investment Fund IV                        2018             1,698                271                4.4             73.6%            5,306 bps             5,682 bps
Equity Opportunities Fund V                  2021             1,229                N/A                N/A              N/A                N/A                   N/A

                                                                           
    Realized            Realized         Realized        Realized Gross       Realized Gross
                                            Vintage                              Capital             Gross            Gross            Spread vs.           Spread vs.
Fund                                         year        Fund size ($M)       invested ($M)         multiple         IRR (%)          CS HY II PME           CS LL PME
Strategic Opportunities (Tail-end secondaries and credit)
Strat Opps 2015                              2015              71                  62                 1.3             14.5%             612 bps               911 bps
Strat Opps 2016                              2016              214                 155                1.3             17.7%            1,082 bps             1,276 bps
Strat Opps 2017                              2017              435                 322                1.3             15.6%            1,100 bps             1,163 bps
Strat Opps 2018                              2018              889                 434                1.2             13.8%             940 bps              1,179 bps
Strat Opps 2019                              2019              762                 270                1.2             19.4%            1,335 bps             1,482 bps
Strat Opps 2020                              2021              898                 20                 1.0             11.6%             276 bps               716 bps



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Gross Returns – Realized and Unrealized


                                        Vintage                        Capital invested                                                            Net         Gross Spread vs.   Net Spread vs.  Gross Spread vs.   Net Spread vs.
Fund                                     year       Fund size ($M)           ($M)          Gross multiple    Net Multiple     Gross IRR (%)      IRR (%)         S&P 500 PME        S&P 500 PME    MSCI World PME    MSCI 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                514                 1.7              1.6             11.8%            9.0%             63 bps           (181) bps         397 bps          147 bps
PEF VII                                  2010             262                287                 1.6              1.7             13.5%            9.6%           (123) bps          (502) bps         277 bps         (106) bps
PEF VIII                                 2012             427                418                 1.5              1.5             11.2%            8.7%           (418) bps          (696) bps        (63) bps         (335) bps
PEF IX                                   2015             517                487                 2.0              1.9             23.4%           21.7%            565 bps            358 bps          921 bps          717 bps
PEF X                                    2018             278                190                 1.5              1.4             29.0%           24.4%            455 bps           (165) bps         901 bps          275 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                596                 1.5              1.4             19.9%           13.5%            459 bps           (191) bps         875 bps          214 bps
Secondary Fund III                       2012             909                836                 1.5              1.4             14.4%           12.2%             26 bps           (224) bps         415 bps          171 bps
Secondary Fund IV                        2016            1,916              2,033                1.7              1.7             23.6%           25.0%            409 bps            531 bps          792 bps          910 bps
Secondary Fund V                         2019            3,929              2,721                1.5              1.5             60.3%           73.7%           3,263 bps          4,364 bps        3,857 bps        5,007 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                577                 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                2.0              1.7             17.8%           14.1%            528 bps            141 bps          909 bps          517 bps
Co-Investment Fund III                   2014            1,243              1,262                2.1              1.9             20.8%           17.6%            490 bps            169 bps          843 bps          518 bps
Co-Investment Fund IV                    2018            1,698              1,459                2.1              1.9             37.6%           36.8% 

1,455 bps 1,252 bps 1,847 bps 1,649 bps
Equity Opportunities Fund V

              2021            1,229               660                 1.1              1.1             17.4%           23.4%           (140) bps           707 bps          518 bps         1,447 bps

                                        Vintage                        Capital invested                                                            Net         Gross Spread vs.   Net Spread vs.  Gross Spread vs.   Net Spread vs.
Fund                                     year       Fund size ($M)           ($M)          Gross multiple    Net Multiple     Gross IRR (%)      IRR (%)         CS HY II PME      CS HY II PME       CS LL PME        CS LL PME
Strategic Opportunities (Tail-end secondaries and credit)
Strat Opps 2015                          2015             71                  68                 1.3              1.2             14.1%           10.8%            552 bps            221 bps          863 bps          527 bps
Strat Opps 2016                          2016             214                216                 1.3              1.2             11.9%            9.4%            521 bps            282 bps          704 bps          465 bps
Strat Opps 2017                          2017             435                448                 1.3              1.2             13.0%           10.4%            783 bps            513 bps          889 bps          633 bps
Strat Opps 2018                          2018             889                851                 1.2              1.2             11.5%            9.4%            598 bps            348 bps          815 bps          565 bps
Strat Opps 2019                          2019             762                694                 1.2              1.1             15.1%           12.1%            812 bps            365 bps          956 bps          500 bps
Strat Opps 2020                          2021             898                614                 1.0              1.0             9.2%             7.8%            411 bps            249 bps          502 bps          352 bps


Performance Methodology

The indices presented for comparison are the S&P 500, MSCI World, Credit Suisse
High Yield II ("CS HY II") and Credit Suisse Leverage Loan ("CS LL"), calculated
on a public market equivalent ("PME") basis. We believe these indices are
commonly used by private markets and credit investors to evaluate performance.
The PME calculation methodology allows private markets investment performance to
be evaluated against a public index and assumes that capital is being invested
in, or withdrawn from, the index on the days the capital was called and
distributed from the underlying fund managers. The S&P 500 Index is a total
return capitalization-weighted index that measures the performance of 500 U.S.
large cap stocks. The MSCI World Index is a free float-adjusted market
capitalization-weighted index of over 1,600 world stocks that is designed to
measure the equity market performance of developed markets. The CS HY II Index,
formerly known as the DLJ High Yield Index, is designed to mirror the investable
universe of the U.S. dollar denominated high yield debt market. Prices for the
CS HY II Index are available on a weekly basis. 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.



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Our IRR represents the pooled IRR for all discretionary investments for the
period from inception to December 31, 2021. Gross IRR is presented net of
management fees, carried interest and expenses charged by the general partners
of the underlying investments, but does not include our management fees, carried
interest or expenses. Our gross IRR would decrease with the inclusion of our
management fees, carried interest and expenses. Net IRR is net of all management
fees, carried interest and expenses charged by the general partners of the
underlying investments, as well as by us. Net IRR figures for our funds do not
include cash flows attributable to the general partner. Note that secondary
portfolio IRRs can be initially impacted by purchase discounts (or premiums)
paid at the closing of a transaction, the impact of which will diminish over
time.

The "Realized IRR" represents the pooled IRR for those discretionary investments
that we consider realized for purposes of our track record, which are
investments where the underlying investment fund has been fully liquidated, has
generated a distributions to paid-in capital ratio ("DPI") greater than or equal
to 1.0 or is older than six years and has a residual value to paid-in capital
ratio ("RVPI") less than or equal to 0.2. Hamilton Lane Secondary Realized
includes investments that have been fully liquidated, have a DPI greater than or
equal to 1.0 or a RVPI less than or equal to 0.2. Hamilton Lane Realized
Direct/Co-Investment and Hamilton Lane Realized Strategic Opportunities include
investments that have been fully liquidated or have a DPI greater than or equal
to 1.0. "Unrealized" includes all investments that do not meet the
aforementioned criteria. DPI represents total distributions divided by total
invested capital. RVPI represents the remaining market value divided by total
invested capital. "Capital Invested" refers to the total amount of all
investments made by a fund, including commitment-reducing and
non-commitment-reducing capital calls. "Multiple" represents total distributions
from underlying investments to the fund plus the fund's market value divided by
total contributed capital. "Gross Multiple" is presented net of management fees,
carried interest and expenses charged by the fund managers of the underlying
investments.

Specialized fund and pre-fund performance does not include ten funds-of-funds
that have investor-specific investment guidelines.


Many of our specialized funds utilize revolving credit facilities, which provide
capital that is available to fund investments or pay partnership expenses and
management fees. Borrowings may be paid down from time to time with investor
capital contributions or distributions from investments. The use of a credit
facility affects the fund's return and magnifies the performance on the upside
or on the downside.


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                        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 primary cash
flow activities involve: (1) generating cash flow from operations, which largely
includes management and advisory fees; (2) realizations generated from our
investment activities; (3) funding capital commitments that we have made to
certain of our specialized funds and customized separate accounts; (4) making
dividend payments to our stockholders and distributions to holders of HLA units;
and (5) borrowings, interest payments and repayments under our outstanding debt.
As of March 31, 2022 and March 31, 2021, our cash and cash equivalents were
$72.1 million and $87.0 million, respectively.

Our material sources of cash from our operations include: (1) management and
advisory fees, which are collected monthly or quarterly; (2) incentive fees,
which are volatile and largely unpredictable as to amount and timing; and
(3) fund distributions related to investments in our specialized funds and
certain customized separate accounts that we manage. We use cash flow from
operations primarily to pay compensation and related expenses, general,
administrative and other expenses, debt service, capital expenditures and
distributions to our owners and to fund commitments to certain of our
specialized funds and customized separate accounts. If cash flow from operations
were insufficient to fund distributions to our owners, we expect that we would
suspend paying such distributions.

We have also accessed the capital markets and used 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.

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.

Loan Agreements


We maintain the Term Loan Agreement, the Revolving Loan Agreement and the
Multi-Draw Term Loan Agreement with First Republic. The Term Loan Agreement has
a maturity date of July 1, 2027 and the interest rate is a floating per annum
rate equal to the prime rate minus 1.50% subject to a floor of 2.25%. As of
March 31, 2021, we had an outstanding balance of $72 million under the Term Loan
Agreement. We are entitled to request additional uncommitted term advances not
to exceed $25 million in the aggregate, as well as additional committed term
advances not to exceed $25 million in the aggregate through March 24, 2023.

The Revolving Loan Agreement provides that the aggregate outstanding balance
will not exceed $25 million and has a maturity date of March 24, 2023. The
interest rate is a floating per annum rate equal to the prime rate minus 1.50%
subject to a floor of 2.25%. As of March 31, 2022, we had no outstanding balance
under the Revolving Loan Agreement.

The 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. Advances
could be drawn through March 31, 2022 and the interest rate is a fixed per annum
rate of 3.50%. As of March 31, 2022, we had an outstanding balance of $100
million under the Multi-Draw Term Loan Agreement.

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, make distributions,
engage in transactions with affiliates and take certain actions with respect to


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management fees. The Loan Agreements also require HLA to maintain, among other
requirements, (i) a specified amount of management fees, (ii) a specified amount
of adjusted EBITDA, as defined in the Loan Agreements, and (iii) a specified
minimum tangible net worth, during the term of each of the Loan Agreements. The
obligations under the Loan Agreements are secured by substantially all the
assets of HLA. As of March 31, 2022 and 2021, the principal amount of debt
outstanding equaled $171.8 million and $163.6 million, respectively.

Cash Flows

                                                                Year Ended March 31,
                                                         2022           2021           2020
                                                                   (in thousands)
Net cash provided by operating activities             $ 169,523      $ 188,158      $ 116,373
Net cash used in investing activities                   (70,487)      

(421,781) (49,900)
Net cash (used in) provided by financing activities (113,216) 270,660 (64,709)



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 and
depreciation and amortization, all of which are included in earnings. For the
years ended March 31, 2022 and 2021, our net cash provided by operating
activities was driven primarily by receipts of management fees and incentive
fees offset by payment of operating expenses, which includes compensation and
benefits and general, administrative and other expenses.

Investing Activities


Our investing activities generally reflect cash used for acquisitions, fixed
asset purchases and contributions to and distributions from our investments. For
the years ended March 31, 2022 and 2021, 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.
Additionally, during the year ended March 31, 2022, we received a distribution
from one of our investments valued under the measurement alternative and
proceeds from the sale of one of our investments valued under the measurement
alternative, which was partially offset by the cash paid to acquire 361 Capital,
LLC.

Financing Activities

Our financing activities generally reflect cash received from debt and equity
financings, payments to owners in the form of dividends, distributions and
repurchases of shares and scheduled repayments of our outstanding debt. For the
years ended March 31, 2022 and 2021, our net cash used in financing activities
was driven primarily by dividends paid to stockholders, payments under the tax
receivable agreement and distributions to HLA members. Additionally, during the
year ended March 31, 2022, we repaid the outstanding balance on our Revolving
Loan Agreement and borrowed an additional amount under our Multi-Draw Term Loan.

Future Sources and Uses of Liquidity


We generate significant cash flows from operating activities. We believe that we
will be able to continue to meet our short-term and long-term liquidity and
capital requirements through our cash flows from operating activities, existing
cash and cash equivalents and our ability to obtain future external financing.


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We believe we will also continue to evaluate opportunities, based on market
conditions, to access the capital markets and 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. The timing
or size of any potential transactions will depend on a number of factors,
including market opportunities and our views regarding our capital and liquidity
positions and potential future needs. There can be no assurance that any such
transactions will be completed on favorable terms, or at all.

We will also continue to evaluate opportunities to make strategic investments in
companies that seek to offer technology-driven private markets data and wealth
management solutions.

We currently sponsor a SPAC and may sponsor additional SPACs in the future,
depending on market and other conditions, which will require an initial
investment of capital from us that we may be unable to recover if a suitable
target company for the SPAC is not identified within the prescribed timeframe.


In November 2018, we authorized a program to repurchase up to 6% of the
outstanding shares of our Class A common stock, not to exceed $50 million (the
"Stock Repurchase Program"). The Stock Repurchase Program does not include
specific price targets or timetables and may be suspended or terminated by us at
any time. We intend to finance the purchases using available working capital
and/or external financing. The Stock Repurchase Program expires 12 months after
the date of the first acquisition under the authorization. We have not
repurchased any 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, on December
16, 2021, re-approved it on the same terms as those approved in 2018.

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;
(10) fund SPACs sponsored by us; and (11) fund purchases of our Class A common
stock pursuant to the Stock Repurchase Program.

We are required to maintain minimum net capital balances for regulatory purposes
for certain of our foreign subsidiaries and our broker-dealer subsidiary. 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, 2022, we were required to maintain
approximately $4.0 million in liquid net assets within these subsidiaries to
meet regulatory net capital and capital adequacy requirements. 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. Subject to funds
being legally available, we will cause HLA to make pro rata distributions to its
members, including us, in an amount at least sufficient to allow us to pay all
applicable taxes, to make payments under the tax receivable agreement, and to
pay our corporate and other overhead expenses.

Tax Receivable Agreement


We expect that periodic exchanges of membership units of HLA by members of HLA
will result in increases in the tax basis in our share of the assets of HLA that
otherwise would not have been available.


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These increases in tax basis are expected to increase our depreciation and
amortization deductions and create other tax benefits and therefore may reduce
the amount of tax that we would otherwise be required to pay in the future. The
tax receivable agreement will require us to pay 85% of the amount of these and
certain other tax benefits, if any, that we realize (or are deemed to realize in
the case of an early termination payment, a change in control or a material
breach by us of our obligations under the tax receivable agreement) to the
pre-IPO members of HLA.

            Contractual Obligations, Commitments and Contingencies

The following table represents our contractual obligations as of March 31, 2022,
aggregated by type:


                                                         Contractual 

Obligations, Commitments and Contingencies

                                                             Less than 1                                               More than 5
           (in thousands)                 Total                 year             1-3 years          3-5 years             years
Operating leases                     $     106,153          $    7,951      

$ 14,676 $ 13,253 $ 70,273
Debt obligations payable (1)

               171,754               1,828             11,425             60,031              98,470
Interest on debt obligations payable
(2)                                         28,142               4,314              8,467              7,787               7,574
Capital commitments to our
investments (3)                            186,164             186,164                  -                  -                   -
Total                                $     492,213          $  200,257          $  34,568          $  81,071          $  176,317



(1) Represents scheduled debt obligation payments under our Loan Agreements.


(2)   Represents interest to be paid over the maturity of the related debt
obligations, which has been calculated assuming no pre-payments will be made and
debt will be held until its final maturity date. The future interest payments
are calculated using the variable interest rate of 2.25% on our Term Loan
Agreement and the fixed interest rate of 3.50% on our Multi-Draw Term Loan
Agreement in effect as of March 31, 2022.

(3)  Represents commitments by us to fund a portion of each investment made by
our specialized funds and certain customized separate account entities. These
amounts are generally due on demand and are therefore presented in the less than
one year category.

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. Because the timing of amounts to be paid under the tax receivable agreement
cannot be determined, this contractual commitment has not been presented in the
table above. The tax savings achieved may be substantial and we may not have
sufficient cash available to pay this liability, in which case, we might be
required to incur additional debt to satisfy this liability.


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                         Critical Accounting Estimates

We prepare our consolidated financial statements in accordance with GAAP. In
applying many of these accounting principles, we need to make assumptions,
estimates or judgments that affect the reported amounts of assets, liabilities,
revenues and expenses in our combined and consolidated financial statements. We
base our estimates and judgments on historical experience and other assumptions
that we believe are reasonable under the circumstances. These assumptions,
estimates or judgments, however, are both subjective and subject to change, and
actual results may differ from our assumptions and estimates. If actual amounts
are ultimately different from our estimates, the revisions are included in our
results of operations for the period in which the actual amounts become known.
We believe the following critical accounting estimates could potentially produce
materially different results if we were to change underlying assumptions,
estimates or judgments. See Note 2, "Summary of Significant Accounting
Policies," to our consolidated financial statements included in Part II, Item 8
of this Form 10-K for a summary of our significant accounting policies.

Principles of Consolidation

We consolidate all entities that we control through a controlling financial
interest or as the primary beneficiary of variable interest entities (“VIEs”).

We perform an analysis to determine whether consolidation is required by
determining (1) whether we have a variable interest in each entity, (2) whether
that entity is a VIE and (3) whether we are the primary beneficiary of this
entity and consolidation is required.


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. We consider all
economic interests, including indirect interests, to determine if a fee is
considered a variable interest.

The assessment of whether the entity is a VIE requires an evaluation of
qualitative factors and, where applicable, quantitative factors. These judgments
include: (a) determining whether the equity investment at risk is sufficient to
permit the entity to finance its activities without additional subordinated
financial support, (b) evaluating whether the equity holders, as a group, can
make decisions that have a significant effect on the economic performance of the
entity, (c) determining whether two or more parties' equity interests should be
aggregated, and (d) determining whether the equity investors have proportionate
voting rights to their obligations to absorb losses or rights to receive returns
from an entity.

For entities that are determined to be VIEs, we are required to consolidate
those entities where we have concluded that we are the primary beneficiary. The
primary beneficiary is defined as the variable interest holder with (a) the
power to direct the activities of a VIE that most significantly impact the
entity's economic performance and (b) the obligation to absorb losses of the
entity or the right to receive benefits from the entity that could potentially
be significant to the VIE. In evaluating whether we are the primary beneficiary,
we evaluate our economic interests in the entity held either directly or
indirectly by us.

Changes to our judgments could result in a change in our consolidation
conclusion for an entity.

Revenue Recognition of Incentive Fees


Incentive fees include both carried interest earned from certain specialized
funds and performance fees received from certain customized separate accounts.
We recognized $53.7 million of incentive fees in fiscal 2022 and have $1.2
billion of unrecognized carried interest as of March 31, 2022.


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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. Incentive fees are recognized when it is probable that
a significant reversal will not occur. The primary contingency regarding
incentive fees is the "clawback," or the obligation to return distributions in
excess of the amount prescribed by the applicable fund or separate account
documents. 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.

Investment returns are highly susceptible to market factors and judgments and
actions of third parties that are outside of our control. We estimate the amount
and probability of additional future capital contributions, both unfunded
commitments or follow-on investment opportunities in underlying portfolio
investments, to specialized funds and customized separate accounts, which could
impact the probability of a significant reversal occurring. Incentive fee
revenue can vary significantly year over year based upon the judgments, market
factors, and actions of third parties as discussed above.

Income Taxes


We account for income taxes using the asset and liability method. Deferred
income taxes are recognized for the expected future tax consequences
attributable to temporary differences between the carrying amount of the
existing tax assets and liabilities and their respective tax basis using enacted
tax rates expected to be applied in the years in which temporary differences are
expected to be recovered or settled. As of March 31, 2022, we had gross deferred
tax assets of $312.6 million primarily due to our acquisitions of HLA units.
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.
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, 2022,
we had a valuation allowance of $67.6 million. Changes in judgment as it relates
to the realizability of these assets, as well as potential changes in corporate
tax rates, would have the effect of significantly reducing the value of the
deferred tax assets.

We analyze our tax filing positions in all of the U.S. federal, state, local and
foreign tax jurisdictions where we are required to file income tax returns, as
well for all open tax years in these jurisdictions. We evaluate tax positions
taken or expected to be taken in the course of preparing an entity's tax returns
to determine whether it is "more-likely-than-not" that each tax position will be
sustained by the applicable tax authority.

Tax laws are complex and subject to different interpretations by the taxpayer
and respective governmental taxing authorities. 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.

Tax Receivable Agreement


Our purchase of HLA Class A units concurrent with the IPO, and subsequent
exchanges by holders of HLA units for shares of our Class A common stock
pursuant to the exchange agreement, result in increases in our share of the tax
basis of the tangible and intangible assets of HLA, which increases the tax
depreciation and amortization deductions that otherwise would not have been
available to us. These increases in tax basis and tax depreciation and
amortization deductions are expected to reduce the amount of cash taxes that we
would otherwise be required to pay in the future. We entered into the tax
receivable agreement with the other


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members of HLA, which requires us to pay exchanging HLA unitholders (the "TRA
Recipients") 85% of the amount of cash savings, if any, in U.S. federal, state,
and local income tax that we actually realize (or, under certain circumstances,
are deemed to realize) as a result of the increases in tax basis in connection
with exchanges by the TRA Recipients described above and certain other tax
benefits attributable to payments under the tax receivable agreement. Generally,
if we do not generate sufficient cumulative taxable income in the future to
utilize the tax benefits, then we will not be required to make the related tax
receivable agreement payments - the exception being that our obligation to make
such payments may be accelerated if we elect to terminate the tax receivable
agreement, in whole or in part, or if a change in control of us, or a breach of
the tax receivable agreement by us, occurs. Therefore, we will generally only
recognize a liability for payments under the tax receivable agreement for
financial reporting purposes to the extent we determine it is probable that we
will generate sufficient future taxable income to utilize the related tax
benefits. Estimating and projecting future taxable income is inherently
uncertain and requires judgment. Actual taxable income may differ from
estimates, which could significantly affect the liability under the tax benefit
arrangements and our consolidated results of operations.

Based on current projections, we anticipate having sufficient taxable income to
utilize these tax attributes and receive corresponding tax deductions in future
periods. As of March 31, 2022, the tax receivable agreement resulted in a
liability of $180.5 million. Significant changes in the projected liability
resulting from the tax receivable agreement may occur based on changes in
anticipated future taxable income, changes in applicable tax rates or other
changes in tax attributes that may occur and could affect the expected future
tax benefits to be received by us.

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.

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