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Innovative Fund Targets Middle Market Interests in Global Secondary Market

Lexington Partners (“Lexington”), the largest dedicated manager of secondary acquisition funds, today announced the final close of Lexington Middle Market Investors III, L.P. (“LMMI III”) at $1.070 billion. The fund, which is the third in Lexington’s specialized middle market series, significantly exceeded its $750 million target.

LMMI III will acquire interests in growth capital, small, and middle market buyout funds in the global secondary market. LMMI III also has the ability to help facilitate the spin-out of established private equity teams from banks and financial institutions, and to invest in new middle market funds.

LMMI III has been formed with commitments from over 50 limited partners, concentrated among major public and corporate pension funds in North America, Europe, Latin America, and the Asia- Pacific region. Global endowments, foundations, and high net worth individuals also subscribed, with existing investors contributing a majority of the fund’s capital.

Commenting on the fund closing, Brent Nicklas , Managing Partner of Lexington, said, “We are pleased that so many existing Lexington investors chose to commit significant capital to LMMI III. Together with our newest investors, we look forward to building upon these important relationships during the life of LMMI III.”

Lexington estimates that industry-wide over $23 billion was invested in secondary transactions in 2013, a level that is expected to be surpassed in 2014 with projected volume of $30 billion or more. Heightened regulation of global banks and financial institutions together with more active management of private investment allocations by fiduciaries, suggests that the secondary market will continue to experience significant volumes and growth in the years ahead.

Lexington has already committed 40% 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. Eight of LMMI III’s committed transactions have been sourced exclusively by Lexington.

“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,” said Mr. Nicklas.

Separately, Lexington also recently announced the formation of Lexington Emerging Partners, L.P. (“LEP”), a $150 million managed account, to acquire young middle market buyout interests in Asian and Latin American funds.

Including LMMI III and LEP, Lexington has approximately $25 billion of committed secondary capital. Lexington’s secondary funds have acquired over 2,000 secondary interests through 350 transactions with a total value in excess of $27 billion, including $10 billion in syndications.

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About Lexington

Lexington Partners is one of the world’s largest and most successful managers of secondary private equity and co-investment funds. Lexington helped pioneer the development of the institutional secondary market over 30 years ago and created one of the first independent, discretionary co-investment programs 25 years ago. Lexington has total capital in excess of $75 billion and has acquired over 5,000 interests through more than 1,000 transactions. Lexington’s global team is strategically located in major centers for private equity and alternative asset investing across North America, Europe, Asia, and Latin America. Lexington is the global secondary private equity and co-investments specialist investment manager of Franklin Templeton.


Todd Fogarty
(212) 521-4854