Lexington Partners has held a final close of Lexington Middle Market Investors III, LP (LMMI III) with just over $1 billion in capital commitments exceeding its $750 million target.
LMMI III will acquire interests in growth capital, small, and middle market buyout funds in the secondary market. LMMI III also has the ability to help facilitate the spin-out of private equity teams from banks and financial institutions, and to invest in new middle market funds.
LMMI III has been formed with commitments from over 50 limited partners, concentrated among major public and corporate pension funds in North America, Europe, Latin America, and the Asia-Pacific region. Global endowments, foundations, and high net worth individuals also subscribed, with existing investors contributing a majority of the fund’s capital.
“We are pleased that so many existing Lexington investors chose to commit significant capital to LMMI III. Together with our newest investors, we look forward to building upon these important relationships during the life of LMMI III,” said Brent Nicklas, Managing Partner of Lexington.
Lexington estimates that industry-wide over $23 billion was invested in secondary transactions in 2013, a level that is expected to be surpassed in 2014 with projected volume of $30 billion or more. Heightened regulation of global banks and financial institutions together with more active management of private investment allocations by fiduciaries, suggests that the secondary market will continue to experience significant volumes and growth in the years ahead.
Lexington has already committed 40% of LMMI III’s capital, investing in four transactions with banks and financial institutions, three transactions with pension and sovereign wealth funds, and three transactions with asset management firms.
“Lexington Middle Market Investors has quadrupled in size since we began the program 10 years ago. The strategy is innovative because it allows large investors, interested in efficient middle market exposure, to benefit from favorable secondary market opportunities and Lexington’s strong relationships with middle market sponsors,” said Mr. Nicklas.
Lexington Partners is an alternative investment manager primarily involved in providing liquidity to owners of private equity and other alternative investments and in making co-investments alongside private equity sponsors. Since 1990, Lexington has acquired over 2,200 secondary and co-investment interests through 500 transactions with a total value in excess of $30 billion, including $10 billion of syndications. Lexington also invests in private investment funds during their initial formation and has committed to more than 250 new funds in the US, Europe, and the Asia-Pacific region. The firm employs more than 90 people and has offices in New York, Boston, Menlo Park, London, and Hong Kong (www.lexingtonpartners.com).
2014 PEPD • Private Equity’s Leading News Magazine • 7-8-14
