2020 Knowledge Brokers All Stars

Mario Giannini

Hamilton Lane
Bala Cynwyd, Pennsylvania

A lawyer by training, Mario Giannini early on worked at turning around troubled companies. He brought that skill to Hamilton Lane when he joined in 1993, shortly after the firm’s formation. It was a natural fit for him to become involved in private equity, which takes over businesses, some of them distressed, and revamps them. At Hamilton Lane, he evaluated PE investments for clients.

Elevated to chief executive in 2001, he has strengthened its private markets-oriented expertise, including capabilities in private credit, secondaries, co-investing, and real assets. Of course, part of the job is keeping abreast of trends in the various fields the firm advises on. Such as his insight that secondaries—PE stakes that limited partners want to sell to others—are increasingly important, as private equity portfolios are restructured.

In his spare time, Giannini plays guitar as part of The Hamiltones, Hamilton Lane’s company band, which through the years has hosted several charity concerts. Under his leadership, the firm has been recognized as a “Best Place to Work” for eight consecutive years, successfully went public in 2017, and today manages about $68 billion in discretionary assets and another $447 billion in advisory assets, as of June 30.

CIO: What (actionable thing) have you learned over the course of your career that has proven itself this year?

Giannini: There are two quite different things I’ve learned that have proven out this year.

The first is that relationships matter. In this time of greater isolation and uncertainty, the ability to connect with people, whether internal or external, is crucial, and matters for a variety of reasons. One is that it provides a sounding board and allows for the exchange of ideas that are important for making decisions. We all talk about the amount of information that is gained around water coolers and over coffee. When you can’t sit near a water cooler or share a cup of coffee, where do those interactions occur? 

And if you haven’t already nurtured relationships as part of your daily routine, you aren’t going to develop them on Zoom or Microsoft Teams. Those existing relationships, in this environment, are what has enabled Hamilton Lane to function well internally and to keep our clients and general partners informed and active.

The second thing I’ve learned is that data and information matter. Private markets tend to be an anecdotal asset class. Everyone talks about that one deal or that one fund. We have long said that data needs to be more important in informing choices and decisions, and this year is proving that out every day. Early in the pandemic, there were all sorts of rumors and stories about what was happening in the private markets. Valuations were going to be down enormously, credit lines were going to be drawn immediately, huge capital calls were coming. All anecdotal. 

But what was the data saying? That became the basis on which we were able to go to clients and say: Here’s what’s actually going on and here’s, historically, what the data tells us to expect. It becomes more factually based, less emotional. Everyone benefits and the information has a clarity that is important in volatile periods.

CIO: What investments (specific securities or sectors) look good to you now? And why?

Giannini: I think we’ll see the secondary world create real changes in how the private markets operate. Today, we’re seeing secondaries that look and act more like co-investments, restructurings, or single-asset transactions. There’s been a shift from the traditional LP selling its interest to a way to create liquidity around a whole variety of assets within the private markets. And even on the GP side, there are those who may want to keep an asset, so you’re seeing structures that allow for partial liquidity, and so on. It’s a very dynamic part of the market today.

Another area is private credit. Against the backdrop of a lot of liquidity, concerns about general economic conditions in a pandemic, and a low interest rate environment, we’re seeing a specific opportunity set emerge. There has been a continued flight to quality with lenders targeting diverse companies with greater resiliency—this generally means focusing on larger, higher-quality assets. We also see lenders being creative and flexible in how they are structuring those financing solutions. Looking ahead, we expect Q4 and Q1 2021 to be busy given pent-up deal-making activity levels, as well as companies who had been holding off on refinancing or capital raising coming back into the market.

I’d add real assets to this list as well, with some tailwinds within infrastructure, agriculture, and even pockets of real estate, where we’ve seen single-family rentals in the US prove to be a resilient cash flow generator. Infrastructure deal flow for data, fiber, and telecom assets continues to be strong, ag land values that have proven resilient through the pandemic, and rising concerns about inflation will likely attract more capital to the space. This subsector has also benefitted from improving lending markets and fewer supply chain issues of late.

CIO: What ones don’t? And why?

Giannini: The energy sector remains challenged. Equity returns in both the public and private space have been underwhelming, and despite a rebound in commodity prices from the troughs in March, the poor returns, coupled with a secular shift toward renewable energy sources and a growing focus on and prioritization of ESG factors, has contributed to less capital interest in the space. Also, while rig counts have stabilized, they are still well below prior levels and production activity continues to fall. And so, probably unsurprisingly, deal activity here remains very low.

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