Lexington’s New Secondaries Fund Closes at $14 Billion

Lexington Partners, one of the largest managers of secondary acquisition funds, has held a final close of Lexington Capital Partners IX LP and related investment vehicles (LCP IX) with a combined $14 billion of commitments.

The new fund beat its $12 billion target and was markedly above both its eighth secondary fund which closed with $10.1 billion of commitments in 2015, and its seventh secondary fund which closed with $7.1 billion in commitments in 2011.

LCP IX received commitments from over 450 investors, including public and corporate pensions, sovereign wealth funds, and insurance companies in North America, Europe, Asia-Pacific, Latin America, and the Middle East. Endowments, foundations, family offices, and high net worth individuals also participated, with existing investors from Lexington’s earlier funds contributing a majority of the fund’s capital.

“We are extremely grateful for the strong support from our investors around the globe who have chosen to entrust significant capital with Lexington,” said Wil Warren, the president of Lexington. “The success of this fundraise speaks to Lexington’s strong global platform, highly experienced team, and consistent investment strategy, which position us well to capitalize on an increasingly large secondary market opportunity.”

LCP IX 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 IX also can invest in new private investment funds. The new fund has already committed 30% of its capital through more than 30 transactions with a variety of sellers including public and corporate pensions, foundations and endowments, and banks.

According to Lexington, secondary industry volume reached a new record in 2019 with approximately $85 billion of completed transactions, up significantly from $68 billion in 2018.  Lexington expects that the global secondary market will continue to experience significant growth in the years ahead due to the substantial amount of capital committed to private equity funds, active portfolio management by limited partners, and investors’ desire for earlier liquidity.  In addition, the trend of sponsors seeking liquidity for their limited partners through general partner-led transactions is expected to contribute to significant secondary deal flow.

“Today’s secondary market is well-capitalized, global, and complex.  Over three decades, the Lexington team has developed the sourcing network, substantial capital base, time-tested investment process, and leading counterparty reputation to consistently execute innovative transactions,” said Pål Ristvedt, a partner of Lexington. “With the successful capitalization of LCP IX, we look forward to continuing our leadership in the global secondary market.”

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 3,300 secondary and co-investment interests through 800 transactions with a total value in excess of $54 billion. Lexington also invests in private investment funds during their initial formation and has committed to more than 400 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, Santiago, and Luxembourg.

© 2020 Private Equity Professional | January 16, 2020

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