Hamilton Lane INCHLNE
Hamilton Lane INC Fair Value Disclosure
5. Fair Value Measurement
The following tables summarize the Company’s financial assets and financial liabilities recorded at fair value by fair value hierarchy level:
As of March 31, 2025 | |||||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | NAV (2) | Total | |||||||||||||||||||||||||
| Financial assets: | |||||||||||||||||||||||||||||
Fair value investments | $ | — | $ | — | $ | 12,190 | $ | — | $ | 12,190 | |||||||||||||||||||
Consolidated VIEs | |||||||||||||||||||||||||||||
| Fair value investments | — | — | 3,916 | 73,492 | 77,408 | ||||||||||||||||||||||||
| Total financial assets | $ | — | $ | — | $ | 16,106 | $ | 73,492 | $ | 89,598 | |||||||||||||||||||
| Financial liabilities: | |||||||||||||||||||||||||||||
Secured financing(1) | $ | — | $ | — | $ | 12,190 | $ | — | $ | 12,190 | |||||||||||||||||||
| Total financial liabilities | $ | — | $ | — | $ | 12,190 | $ | — | $ | 12,190 | |||||||||||||||||||
As of March 31, 2024 | |||||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | NAV (2) | Total | |||||||||||||||||||||||||
| Financial assets: | |||||||||||||||||||||||||||||
Fair value investments | $ | 4,913 | $ | — | $ | 13,071 | $ | — | $ | 17,984 | |||||||||||||||||||
| Total financial assets | $ | 4,913 | $ | — | $ | 13,071 | $ | — | $ | 17,984 | |||||||||||||||||||
| Financial liabilities: | |||||||||||||||||||||||||||||
Secured financing(1) | $ | — | $ | — | $ | 13,071 | $ | — | $ | 13,071 | |||||||||||||||||||
| Total financial liabilities | $ | — | $ | — | $ | 13,071 | $ | — | $ | 13,071 | |||||||||||||||||||
(1) Secured financing is recorded within other liabilities in the Consolidated Balance Sheets.
(2) The fair value amounts presented in this column are intended to permit reconciliation of the fair value hierarchy to the amounts presented in Note 4.
The following tables list information regarding all investments recorded at estimated fair value based upon the NAV:
| Fair Value | Unfunded Commitment | ||||||||||
| Direct investment funds | $ | 13,698 | $ | 1,232 | |||||||
| Secondary funds | 59,794 | 11,126 | |||||||||
| $ | 73,492 | $ | 12,358 | ||||||||
The investments valued under NAV can only be redeemed through distributions received from the liquidation of the underlying investments, and the timing of distributions is currently indeterminable.
The following is a reconciliation of fair value investments for which significant unobservable inputs (Level 3) were used in determining value:
| Private equity funds | Direct credit investments | Direct equity investments | Total investments | ||||||||||||||||||||
Balance as of March 31, 2023 | $ | 6,664 | $ | 790 | $ | 6,774 | $ | 14,228 | |||||||||||||||
| Contributions | 167 | — | — | 167 | |||||||||||||||||||
| Distributions | (656) | (798) | — | (1,454) | |||||||||||||||||||
| (656) | 8 | 778 | 130 | ||||||||||||||||||||
Balance as of March 31, 2024 | $ | 5,519 | $ | — | $ | 7,552 | $ | 13,071 | |||||||||||||||
| Contributions | — | — | — | — | |||||||||||||||||||
| Distributions | (452) | — | — | (452) | |||||||||||||||||||
| (802) | — | 373 | (429) | ||||||||||||||||||||
Balance as of March 31, 2025 | $ | 4,265 | $ | — | $ | 7,925 | $ | 12,190 | |||||||||||||||
The following is a reconciliation of investments held by our consolidated VIEs for which significant unobservable inputs (Level 3) were used in determining value:
| Direct credit investments | Direct equity investments | Total investments | |||||||||||||||
Balance as of March 31, 2023 | $ | 21,163 | $ | — | $ | 21,163 | |||||||||||
| Contributions | 24,787 | — | 24,787 | ||||||||||||||
| Distributions | (180) | — | (180) | ||||||||||||||
| Net gain | 494 | — | 494 | ||||||||||||||
Transfer in(1) | 23,117 | — | 23,117 | ||||||||||||||
Transfer out(2) | (69,381) | — | (69,381) | ||||||||||||||
Balance as of March 31, 2024 | $ | — | $ | — | $ | — | |||||||||||
| Contributions | — | 4,391 | 4,391 | ||||||||||||||
| Distributions | — | (116) | (116) | ||||||||||||||
| Net gain | — | 20 | 20 | ||||||||||||||
Transfer out(2) | — | (379) | (379) | ||||||||||||||
Balance as of March 31, 2025 | $ | — | $ | 3,916 | $ | 3,916 | |||||||||||
(1) Represents amounts previously recorded at estimated fair value based upon the NAV of the fund utilizing the practical expedient under ASC 820, “Fair Value Measurement.”
(2) Represents assets held by a previously consolidated fund that was deconsolidated.
The valuation methodologies, significant unobservable inputs, range of inputs and the weighted average input determined based upon relative fair value of the investments used in recurring Level 3 fair value measurements of assets were as follows:
| March 31, 2025 | |||||||||||||||||||||||||||||||||||
| Significant | |||||||||||||||||||||||||||||||||||
| Fair | Valuation | Unobservable | Weighted | ||||||||||||||||||||||||||||||||
| Value | Methodology | Inputs | Range | Average | |||||||||||||||||||||||||||||||
| Private equity funds | $ | 4,265 | Adjusted NAV | Selected market return | (1.0)% | - | 1.4% | (0.7)% | |||||||||||||||||||||||||||
| Direct equity investments | $ | 7,925 | Adjusted NAV | Selected market return | 0.62% | 0.62% | |||||||||||||||||||||||||||||
| Investments of consolidated VIE | |||||||||||||||||||||||||||||||||||
| Direct equity investments | $ | 3,916 | Recent precedent transactions | ||||||||||||||||||||||||||||||||
| March 31, 2024 | |||||||||||||||||||||||||||||||||||
| Significant | |||||||||||||||||||||||||||||||||||
| Fair | Valuation | Unobservable | Weighted | ||||||||||||||||||||||||||||||||
| Value | Methodology | Inputs | Range | Average | |||||||||||||||||||||||||||||||
| Private equity funds | $ | 5,519 | Adjusted NAV | Selected market return | 5.1% | — | 19.2% | 7.9% | |||||||||||||||||||||||||||
| Direct equity investments | $ | 7,552 | Market approach | EBITDA multiple | 7.50x | — | 16.00x | 12.14x | |||||||||||||||||||||||||||
| Market approach | Equity multiple | 1.6x | 1.6x | ||||||||||||||||||||||||||||||||
For the significant unobservable inputs listed in the table above, (1) a significant increase or decrease in the selected market return would result in a significantly higher or lower fair value measurement, respectively; and (2) a significant increase or decrease in the selected multiple would result in a significantly higher or lower fair value measurement, respectively.
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.