Key Takeaways
- • Hamilton Lane's Co-Head of Secondary Investments, Keith Brittain, says the firm rejects more than 90% of secondary deals it evaluates, sometimes as many as 98%, despite a secondary market he describes as roughly $240 billion in annual volume.
- • Hamilton Lane has invested about $470 million in Israel over the past three years since October 7 and about $1.5 billion since beginning operations there, according to Brittain.
- • Hamilton Lane recently raised about $5 billion for its sixth secondary fund, part of a platform managing roughly $20 billion, and can execute deals from about $5 million to over $100 million.
- • Brittain says average discounts on venture fund LP stake purchases currently range from 20% to 25%, and argues a low price alone does not make a deal attractive.
- • Brittain describes a liquidity problem in private markets, with distributions falling to 10%-15% of NAV annually versus about 22% over the prior 25 years.
Summary
Secondary funds are becoming a significant liquidity route for Israeli high-tech employees, founders and investors, as traditional exits through IPOs have slowed and many private companies remain private for longer. These funds buy shares in private companies and stakes in venture capital funds, typically at a discount to the latest funding-round valuation or the fund's carried value, and often hold them for several years.
Hamilton Lane, which oversees approximately $1 trillion in assets, is among the largest global participants. According to Keith Brittain, Co-Head of the firm's Secondary Investment team, the market has grown from about $10 billion in transaction volume when he joined the firm in 2010 to approximately $240 billion today, a 24-fold increase. He told Calcalist that the firm is in Israel to meet local high-tech companies and venture funds it is considering investing in, as well as institutional investors from which it raises capital. Hamilton Lane has invested in Vgames, a venture fund, and has completed transactions giving it exposure to Wiz, Pentera and CyberArk before their public listings.
Brittain said the firm evaluates deals in which funds need liquidity, shareholders want to sell, or managers want to move portfolio companies into new vehicles, and can also provide fresh capital alongside liquidity. Valuation is assessed through business models, financial metrics, target market size, recent and future funding rounds and proprietary tools that benchmark peers. For fund stakes, average discounts currently range from 20% to 25%, while direct share purchases see a much wider range. Brittain said that some investors focus mainly on deep discounts, but Hamilton Lane prioritizes companies it expects to grow in value and the quality of the fund manager.
Brittain described the buyer's market, saying opportunities exceed available capital. He cited PitchBook figures estimating potential technology-sector secondary supply at $10 trillion. He attributed liquidity strains to distributions falling to 10%-15% of net asset value annually over the past three to four years, versus about 22% over the prior 25 years, and to longer holding periods. He characterized the IPO slowdown as a long-term shift, with many private companies no longer seeking public listings, and said M&A accounts for most exits.
Hamilton Lane, which oversees approximately $1 trillion in assets, is among the largest global participants. According to Keith Brittain, Co-Head of the firm's Secondary Investment team, the market has grown from about $10 billion in transaction volume when he joined the firm in 2010 to approximately $240 billion today, a 24-fold increase. He told Calcalist that the firm is in Israel to meet local high-tech companies and venture funds it is considering investing in, as well as institutional investors from which it raises capital. Hamilton Lane has invested in Vgames, a venture fund, and has completed transactions giving it exposure to Wiz, Pentera and CyberArk before their public listings.
Brittain said the firm evaluates deals in which funds need liquidity, shareholders want to sell, or managers want to move portfolio companies into new vehicles, and can also provide fresh capital alongside liquidity. Valuation is assessed through business models, financial metrics, target market size, recent and future funding rounds and proprietary tools that benchmark peers. For fund stakes, average discounts currently range from 20% to 25%, while direct share purchases see a much wider range. Brittain said that some investors focus mainly on deep discounts, but Hamilton Lane prioritizes companies it expects to grow in value and the quality of the fund manager.
Brittain described the buyer's market, saying opportunities exceed available capital. He cited PitchBook figures estimating potential technology-sector secondary supply at $10 trillion. He attributed liquidity strains to distributions falling to 10%-15% of net asset value annually over the past three to four years, versus about 22% over the prior 25 years, and to longer holding periods. He characterized the IPO slowdown as a long-term shift, with many private companies no longer seeking public listings, and said M&A accounts for most exits.
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