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Lexington leverages global backing to hold $1.07bn mid-market secondaries fund close

8 Jul 2014

money dollar coins cash capitalSecondaries private equity specialist Lexington Partners has easily beaten its target for its latest fund by holding a final close on just over $1bn.

The firm was initially hoping to gather $750m for Lexington Middle Market Investors III, but closed it on its increased hard cap of $1.07bn thanks to commitments from more than 50 LPs.

Lexington said they included major public and corporate pension funds across North America, Europe, Latin America and the Asia-Pacific region, with existing fund investors providing the bulk of the capital.

The firm estimates that more than $23bn was invested in secondary transactions in 2013, a level that is expected to be surpassed this year with projected volume of $30bn or more.

Heightened regulation of global banks and financial institutions, together with more active management of private investment allocations by fiduciaries, suggests the secondary market will continue to experience significant volumes and growth in the years ahead, it added.

Lexington has already committed 40 per cent 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.

Managing partner Brent Nicklas said, “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.”

Lexington recently announced the formation of Lexington Emerging Partners, a $150m managed account to acquire young middle market buyout interests in Asian and Latin American funds.

The firm now has about $25bn of committed secondary capital.

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