Lexington raises largest ever secondaries fund
Lexington Partners reached a final close on its eighth global secondaries fund at the hard cap of $10.1 billion. It is the largest dedicated secondaries vehicle ever raised.
There are more than 300 LPs in the fund, with significant commitments from leading public and corporate pension funds and sovereign wealth funds in North America, Europe, Asia Pacific, Latin America and the Middle East. Existing investors account for the majority of the corpus.
Lexington closed its seventh fund at $7.1 billion in 2011, which was then the largest ever secondaries vehicle. Ardian surpassed this in 2014, raising $9 billion, but now Lexington has taken the honor back. The firm has also raised a $1.75 billion credit facility intended to provide the main fund with additional transaction flexibility.
Lexington Capital Partners VIII is already 30% deployed having completed six transactions with banks and financial institutions, five with fiduciaries, one hedge fund deal, and a fund restructuring. It is targeting a range of negotiated secondary market transactions, including portfolio acquisitions, balance sheet spin-outs, equity co-investments, hedge fund PE purchases, and fund recapitalizations.
A total of $35 billion in secondary transactions were completed in 2014, a record high. However, 2015 is likely to surpass this with projected volume of at least $40 billion. Deals are expected from banks and financial institutions selling fund interests for regulatory reasons, more active portfolio management by fiduciaries, and GP-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," Brent Nicklas (pictured), managing partner at Lexington, said in a statement.
The firm now has $33 billion in committed capital spread across secondary and co-investment funds. It has acquired over 2,400 interests through 550 transactions with a total value in excess of $35 billion, including $11 billion of syndications. Lexington has also made primary commitments to over 280 funds.
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