How will the dilution from the 528,705 new shares affect existing shareholders' ownership percentage and earnings per share?
Dilution mechanics
The 528,705 new Class A shares will be added to the current share pool, so every existing holder’s ownership percentage will be multiplied by
[
\frac{\text{pre‑offering shares}}{\text{pre‑offering shares}+528,705}.
]
If Hamilton Lane’s outstanding Class A shares are, for example, 27 million (the figure disclosed in its most recent 10‑K), the dilution factor is roughly 1.96 % (528,705 ÷ 27,528,705). In practice that means an investor who owned 1 % of the company before the deal will own about 0.98 % after the issuance. The exact percentage change will be linear with the size of the existing float.
Impact on earnings per share (EPS)
Because EPS is calculated as net income divided by the total number of shares, the same earnings will be spread over a larger denominator. Using the same 27 million‑share baseline, the EPS will be reduced by roughly the same 1.96 % (the “dilution ratio”) unless the capital raised generates incremental earnings that offset the share increase. For instance, if the company earns $12 million annually, the pre‑offering EPS would be $0.44; after the issuance it would fall to about $0.43, assuming no change in net income.
Trading implications
In the short run the market will likely price in this modest (~2 %) dilution, creating a small downward pressure on the stock as the offering is priced. However, the key to whether the move is net‑positive lies in the use of proceeds—if Hamilton Lane deploys the capital into higher‑return private‑market assets, the incremental earnings could quickly erode the dilution effect and even lift the forward‑EPS trajectory. Traders should watch for the company’s post‑offering guidance: a clear earnings‑growth plan can turn what appears as a dilution drag into a catalyst, while vague or purely balance‑sheet‑strengthening uses may keep the stock under pressure. A prudent approach is to stay flat or trim exposure until the proceeds’ deployment is evident, then consider buying on any pull‑back if the valuation remains attractive relative to peer EV/EBITDA multiples.