Secondary Investments

Leading Secondary Manager

Lexington’s secondary funds have been organized to acquire global private equity interests through negotiated secondary market transactions.

Capitalization

$66+ billion

Limited Partners

More than 1,000 investors in over
40 countries

Target Transactions

Partnership portfolios, GP-led transactions, secondary co-investments, secondary directs, hedge fund private equity assets, and captive spin-outs

Investment Size

Complex, multi-billion dollar portfolios to single interest acquisitions

Advantages of Selling

Lexington’s secondary funds enable investors whose financial situations or investment strategies have changed to:

Sell otherwise illiquid assets
Obtain cash for their capital accounts from a funded buyer
Transfer obligations to fund capital commitments to a reputable substitute limited partner
Rationalize sponsor relationships based on investment results and portfolio objectives
Eliminate or reduce the managerial task and overhead associated with monitoring private equity investments
Rebalance portfolios as investment and liquidity objectives change
Manage private equity and alternative assets in a more active manner as with other investment portfolios

We believe we’re an ideal counterparty for most sellers and sponsors. We’re big enough to offer total solutions, and broad enough to be nimble.

$66+ Billion

of total committed capital

650+

Secondary transactions completed since 1990

1,000+

Investors in over 40 countries

Why Work With Lexington?

Lexington Partners is a leader in the global secondary market because:

We provide liquidity solutions to investors
We are responsive
We are a strong counterparty
We maintain an extensive database of private information
We submit reliable bids
We can facilitate strategic corporate reorganizations
We assist in the transfer process
We are discreet
We excel at closing deals
We are an attractive substitute limited partner

The long-term nature of private equity and alternative investments can present secondary market opportunities when factors such as portfolio rebalancing, government regulation, overallocation, and general liquidity needs give rise to investors actively managing their private investment allocations.

Lexington’s counterparty reputation, breadth of relationships and strength of capital are widely recognized by global sellers.

CASE STUDIES

Lexington Partners completes transactions with pension engaged in active management

A large U.S. public pension fund sold a $1.9 billion portfolio of buyout, venture capital, and debt-related fund interests to create liquidity for reinvestment. Lexington analyzed the entire portfolio of 35 funds managed by 27 GPs and, through a series of negotiations, reached agreement to acquire a select portfolio of four high-quality interests where we had differentiated GP access and informational advantages. Including four other transactions completed over a seven-year period, Lexington has acquired secondary interests from this seller with an aggregate value of over $660 million. As a proven counterparty with low execution risk, we believe Lexington is well positioned to complete additional transactions with this seller.

Lexington Partners provides comprehensive liquidity solution to leading sponsor

Lexington partnered with a leading private equity sponsor in a large-scale secondary transaction involving high-quality assets in Europe and the U.S. Following an agented process, Lexington was selected as the sole underwriter of the liquidity offering to LPs due to its close and longstanding relationship with the sponsor. The portfolio of 22 high-quality assets, well-diversified by value, sector, and geography, were well-known to Lexington and possessed significant value upside potential. With aggregate deal size of approximately $1 billion, this transaction was indicative of the potential for GP-led transactions in the secondary market as a tool for providing liquidity opportunities for limited partners and for allowing sponsors to reshape their investor base and position their firms for future growth.

Lexington Partners provides comprehensive solution to Asian bank seeking regulatory compliance

Lexington purchased a broadly diversified portfolio of high-quality fund interests from a large Asian bank. The bank needed to divest assets on a short timeline in order to comply with changing regulatory and risk capital requirements. Within six weeks, Lexington analyzed a 73-fund portfolio managed by 31 sponsors and outlined a customized, fully-financed solution for the seller. As a proven counterparty with low execution risk, Lexington was selected as the sole buyer for the portfolio and executed the transaction totaling $1.5 billion of exposure. Lexington’s substantial discretionary capital, longstanding sponsor relationships, and extensive secondary and co-investment experience enabled us to close this significant acquisition in a short time frame.

Lexington Partners completes complex spin-out transaction

A large U.S. bank sought to reduce balance sheet exposure and make its captive merchant banking unit an independent GP. The bank sought a buyer for the asset portfolio and a comprehensive plan to spin out the merchant banking team. Lexington had a longstanding relationship with both the team and the seller, having completed 14 prior transactions with the bank. After extensive diligence, Lexington negotiated the purchase of a high-quality subset of 13 companies with an aggregate deal size of approximately $2.1 billion, negotiating attractive secondary terms. Simultaneously, Lexington worked with both the bank and the team to create a strategic plan for the GP’s separation from the bank. Post-spin out, the GP pursues a focused investment strategy consistent with the acquired secondary portfolio, and has raised two funds as an independent sponsor. Lexington was able to leverage its large capital base, deep industry relationships, and negotiating experience to create a complex solution for both the seller and the GP.

Lexington Partners acquires tail-end direct investments from general partner

Lexington teamed up with a secondary direct specialist to purchase investments in 20 venture capital and small-cap companies in an end-of-active life private equity fund managed by a highly respected GP now focusing on large buyouts. Lexington’s consortium distinguished itself from other potential buyers due to its experience in structuring and executing complex secondary direct transactions and also due to Lexington’s longstanding relationship with the selling GP. The consortium recruited key members of the GP responsible for managing the investments.

Lexington Partners acquires secondary co-investment asset from U.S. hedge fund

Lexington purchased an attractive equity co-investment in a leading international pharmacy-led health and beauty company from a U.S. hedge fund through a negotiated secondary market acquisition. The hedge fund seller was primarily a credit/distressed debt investor and had acquired its common equity stake together with a piece of mezzanine financing. Lexington sourced this exclusive transaction by virtue of its prominent outreach program to hedge fund GPs and LPs. Lexington’s analysis was facilitated by a strong relationship with the lead sponsor and insights obtained through existing fund and co-investment holdings.

* The case studies above are for informational purposes only and are intended to be illustrative of some investment techniques and strategies that may be used by Lexington and are not representative of all transactions of a given type or of investments generally.

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