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After raising an eye-popping $3.8 billion secondary fund less than a year ago, Lexington Partners will soon return to raise a successor with a $5 billion target, according to founder and Managing Partner Brent Nicklas.

If the latest fund – which could hit the fund-raising trail as early as the end of this year but more likely in early 2008 – meets its goal, it will be the largest ever raised by a secondary firm.

Lexington Capital Partners VI LP, which originally closed on $3.5 billion in August 2006 and reopened to bring the total to $3.8 billion in February, is 50% committed. The fund could approach the 75% benchmark – the amount which investors require before a firm can begin raising a new fund – by the end of this year.

“People will be trying to clear out their year-end balance sheets so we expect more opportunities to come from there,” said Nicklas.
The firm is raising its next fund’s target in expectation of record deal flow coming as institutional investors prune their portfolios and hedge funds and co-investors reduce their private equity exposure.

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