Lexington sets $2 bln target for new mid-market fund

  • Mid-market secondaries funds acquire buyout, growth capital funds
  • Fund IV would be almost double the size of Fund III
  • Fund III returning 25.6 pct as of June 30

Lexington Partners is marketing a new mid-market secondaries fund with a $2 billion target, according to a recent SEC filing.

At its target, Lexington Middle Market Investors IV would be almost double the size of its predecessor. The firm closed Fund III on a little more than $1 billion in 2014.

Lexington used Fund III to acquire stakes in growth capital, small and mid-market buyout funds on the secondary market. The firm had already invested around 40 percent of Fund III’s capital upon final close, according to a press release.

Most PE funds take several years to invest the capital their limited partners pledge, which means the vehicles often take three or more years to deliver meaningful returns.

Secondary funds like those managed by Lexington acquire stakes in PE vehicles that have already invested much of their committed capital. As a result, secondary funds take less time to generate cash.

Fund III was delivering a 25.6 percent return as of June 30, documents from the North Carolina State Treasurer’s office show.

Rebecca John, a partner in the firm’s investor relations unit, couldn’t immediately be reached for comment.

Lexington Partners, founded in 1990, maintains offices in New York, Boston, Menlo Park, California, London, Hong Kong and Santiago. The firm has raised 18 secondary funds and nine co-investment pools totaling $35 billion since inception.

Action Item: More about Lexington Partners: www.lexingtonpartners.com

Visitors view “Lexington Avenue Express,” an exhibit of subway graffiti on a reproduction of a New York City subway car, on Oct. 18, 2013. Photo courtesy Reuters/Mike Segar