Secondary acquisition fund manager Lexington Partners has held a final close of Lexington Capital Partners VIII, LP (LCP VIII) at its $10.1 billion hard cap. According to Lexington, the new fund is the largest dedicated secondary fund ever raised. The firm’s earlier fund, LCP VII, closed with $7.1 billion in commitments in 2011.
LCP VIII will acquire private equity and alternative assets through a range of negotiated secondary market transactions including portfolio acquisitions, balance sheet spin-outs, equity co-investments, private equity purchases, and fund recapitalizations. LCP VIII also has the ability to invest in new private investment funds.
The new fund has more than 300 limited partners including major public pensions, corporate pensions, and sovereign wealth funds in the US, Canada, UK, Europe, Asia, Latin America, Australia, and the Middle East. Insurance companies, endowments, foundations, family offices, and high net worth investors also subscribed, with existing investors contributing a majority of the fund’s capital.
“We are grateful for the strong support of our existing and new investors who have chosen to commit significant capital to LCP VIII,” said Brent Nicklas, Managing Partner of Lexington. “Our global investor base and the substantial capital they have entrusted to Lexington will enhance the fund’s secondary capabilities with global counterparties and sponsors.”
Lexington has already committed approximately 30% of LCP VIII’s capital, investing in six transactions with banks and financial institutions, five transactions with fiduciaries, one hedge fund transaction, and a fund restructuring.
According to Lexington Partners, secondary industry volume in 2014 was the highest on record with over $35 billion of completed transactions, a level that is expected to be surpassed in 2015 with projected volume exceeding $40 billion. This higher volume is the results of regulatory-driven selling by banks and financial institutions, more active management of alternative investment allocations by fiduciaries, and general partner led fund restructurings.
“Today’s secondary market is increasingly characterized by transaction diversity, complexity, and scale. Over a long period of time, Lexington has developed the proven execution experience, counterparty reputation, breadth of sponsor relationships, and strength of capital to provide differentiated and innovative solutions to investors seeking to rebalance their alternative investment portfolios,” said Mr. Nicklas.
Lexington Partners is 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 2,400 secondary and co-investment interests through 550 transactions with a total value in excess of $35 billion, including $11 billion of syndications. Lexington also invests in private investment funds during their initial formation and has committed to more than 280 new funds in the US, Europe, and the Asia-Pacific region. The firm has offices in New York, Boston, Menlo Park, London, and Hong Kong (www.lexingtonpartners.com).
© 2015 PEPD • Private Equity’s Leading News Magazine • 4-21-15