Lexington Hits Hard Cap
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Lexington Hits Hard Cap

Lexington Partners, one of the largest managers of secondary acquisition funds, has closed its latest fund, Lexington Middle Market Investors IV LP (Fund IV) at just over $2.6 billion. The new fund exceeded its initial $2 billion target and accepted commitments up to its hard cap. Fund IV will acquire growth capital, small, and middle market buyout interests in the secondary market.

Fund IV secured the majority of its commitments from existing Lexington investors and also received commitments from new investors from around the world. Of the total committed capital, over 40% was raised from investors in North America, approximately 30% from investors in Asia and the Middle East, 20% from investors in Europe, and 7% from investors in Latin America. Limited partners included pension funds, insurance companies, financial institutions, endowments, foundations, and high net worth individuals.

“We are grateful for the strong support for Fund IV from a distinguished investor base consisting of many longstanding investors as well as prominent new investors commencing or increasing their private equity programs,” said Marshall Parke, International Managing Partner of Lexington.

According to Lexington, the annual volume of all secondary transactions has averaged $30 billion per year from 2012 to 2016. It is expected that 2017 will surpass that average with total secondary transactions exceeding $40 billion. Further, Lexington believes that the secondary market will continue to experience growth in the years ahead due to the substantial amount of capital committed to private equity funds, the trend towards more active portfolio management, and the desire among some investors for earlier liquidity.

Lexington began investing Fund IV at the beginning of 2017 and has already completed 15 secondary transactions representing 22% of the fund’s capital. “We look forward to continuing to provide high-quality middle market buyout exposure to our limited partners on a diversified, lower-risk basis through attractive acquisitions in the global secondary market,” said Wilson Warren, a Partner at Lexington. The 15 completed transactions involve middle market investments that are managed by 25 sponsors in the US and Europe.

In addition to Fund IV, which specializes in middle market investments, Lexington is active with two other secondary investment strategies: Lexington Capital Partners VIII, the firm’s $10.1 billion global secondary acquisition fund which had a final close in April 2015, and Lexington Emerging Partners, a $150 million fund which closed in June 2014 and focuses on the acquisition of middle-market buyout interests in Asian and Latin American funds. Together, these three secondary funds have nearly $13 billion of committed capital.

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 its founding in 1994, Lexington has acquired over 2,800 secondary and co-investment interests through 710 transactions with a total value in excess of $44 billion. Lexington also invests in private investment funds during their initial formation and has committed to more than 350 new funds in the US, Europe, Latin America, and the Asia-Pacific region. The firm employs more than 90 people and has offices in New York, Boston, Menlo Park, London, Hong Kong, and Santiago (www.lexingtonpartners.com).

© 2017 Private Equity Professional | September 27, 2017

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