Investments

6 Months Ended

Sep. 30, 2019

Equity Method Investments and Joint Ventures [Abstract]

Investments consist of the following:


	September 30,		March 31,
	2019		2019
Equity method investments in Partnerships	$	140,560	$	122,505
Equity method investments in Partnerships held by consolidated VIEs	11,485		11,648
Other equity method investments	1,461		1,086
Other investments	15,913		12,488
Investments valued under the measurement alternative	4,715		6,764
Total Investments	$	174,134	$	154,491

Equity method investments

The Company’s equity method investments in Partnerships represent its ownership in certain specialized funds and customized separate accounts. The strategies and geographic location of investments within the Partnerships vary by fund. The Company has a 1% interest in substantially all of the Partnerships. The Company’s other equity method investments represent its ownership in a technology company that provides benchmarking and analytics of private equity data and its ownership in a joint venture that automates the collection of fund and underlying portfolio company data from general partners. The Company recognized equity method income related to its investments in Partnerships and other equity method investments of $3,664 and $9,877 for the three and six months ended September 30, 2019, respectively, and $5,276 and $5,162 for the three and six months ended September 30, 2018, respectively.

Other investments

The Company’s other investments represent investments in private equity funds and direct credit and equity co-investments. The private equity fund investments can only be redeemed through distributions received from the liquidation of underlying investments of the fund, and the timing of distributions is currently indeterminable. The direct credit co-investments are debt securities classified as trading securities. The direct equity co-investments and private equity funds are measured at fair value with unrealized holding gains and losses included in earnings. The Company’s other investments are recorded at estimated fair value utilizing significant unobservable inputs and are therefore classified in Level 3 of the fair value hierarchy.

The following is a reconciliation of other investments for which significant unobservable inputs (Level 3) were used in determining value:


	Private equity funds		Direct credit co-investments		Direct equity co-investments		Total other investments
Balance as of June 30, 2019	$	5,911	$	4,013	$	6,689	$	16,613
Purchases	—		—		—		—
Sales / Maturities	—		(973)		—		(973)
Net (loss) gain	(75)		53		295		273
Balance as of September 30, 2019	$	5,836	$	3,093	$	6,984	$	15,913



	Private equity funds		Direct credit co-investments		Direct equity co-investments		Total other investments
Balance as of March 31, 2019	$	3,734	$	3,940	$	4,814	$	12,488
Purchases	2,092		—		1,875		3,967
Sales / Maturities	—		(973)		—		(973)
Net gain	10		126		295		431
Balance as of September 30, 2019	$	5,836	$	3,093	$	6,984	$	15,913

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:

Significant

Fair

Valuation

Unobservable

Weighted

Value

Methodology

Inputs

Range

Average

Private equity funds

5,836

Adjusted net asset value

Selected market return

3.8%

5.2%

4.7%

Direct credit co-investments

3,093

Recent precedent transactions

Discounted cash flow

Market yield

10.2%

11.5%

10.7%

Direct equity co-investments

6,984

Recent precedent transactions

Market approach

EBITDA multiple

10.25x

12.75x

11.2x

Market approach

Equity multiple

1.25x

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; (2) a significant increase or decrease in the market yield would result in a significantly lower or higher fair value measurement, respectively; and (3) a significant increase or decrease in the selected multiple would result in a significantly higher or lower fair value measurement, respectively.

During the six months ended September 30, 2019, the Company transferred these investments for an agreed amount of cash of $15,750 to a Partnership that is a Variable Interest Entity (“VIE”) of which the Company is the general partner but does not consolidate as the Company is not the primary beneficiary. Due to continuing involvement with these assets at the Partnership, the Company accounted for this transfer as a secured financing as it has not met the criteria in ASC 860, “Transfers and Servicing” to qualify as a sale and therefore has recorded a financial liability for the secured financing which is included in other liabilities in the Condensed Consolidated Balance Sheets. The cash received was recorded as secured financing in financing activities in the Condensed Consolidated Statements of Cash Flows. As of September 30, 2019, all other investments were pledged as collateral on the Company’s secured financing.

The Company accounts for this financial liability at fair value under the fair value option. The primary reason for electing the fair value option is to mitigate volatility in earnings from using different measurement attributes. The significant input to the fair value of the secured financing is the fair value of the other investments delivered as collateral. As of September 30, 2019, the secured financing had a fair value of $15,913 and an amortized cost of $14,614. The fair value of the secured financing is estimated using Level 3 inputs with the significant input being the fair value of the other investments utilized as collateral as shown above.

The Company recognized a gain of $273 and $431 on other investments during the three and six months ended September 30, 2019, respectively, and a loss of $273 and $1,136 on the secured financing during the three and six months ended September 30, 2019, respectively, that are recorded in other non-operating loss.

Investments valued under the measurement alternative

On July 1, 2019, the previously announced sale of an entity in which the Company held an investment closed. The Company received gross proceeds of $6,419 and recorded a gain of approximately $4,973 in connection with the transaction during the three and six months ended September 30, 2019.