Lexington Partners Closes Midmarket Fund

Lexington Partners said it has already invested roughly 40% of its record-setting $7 billion secondary fund, while wrapping up a companion fund designed to acquire “young” private equity interests.

LBO Wire reported on July 1 that the firm held a final close on Lexington Capital Partners VII LP.

The companion fund, Lexington Middle Market Investors II LP has held a final close on $650 million, compared with the $555 million its predecessor raised in 2004 but below its initial target of $750 million.

Lexington has been out on the road with Fund II since 2008, before it came to market with its leviathan secondary fund.

Fund II will pursue a similar strategy to its predecessor, investing in secondary deals involving small or mid-sized funds that are primarily less than 50% invested. Like its mammoth counterpart, the vehicle may also back newly-formed funds.

The fund has completed 14 transactions acquiring 26 secondary interests and is approximately 40% invested as well, said Rebecca John, a partner at the firm.

Limited partners for Fund II include New York State Teachers’ Retirement System, South Carolina Retirement System, San Bernardino County Employees’ Retirement System and Montana Board of Investments.

Lexington tapped 200 institutional investors for fund VII including public and corporate pension funds, sovereign wealth funds, financial institutions, endowments, foundations, family offices and high net worth individuals. Around 60% of those were based in the U.S., with the remaining 40% coming from the U.K., Europe, China, Canada, the Middle East, South America, Australia, and the Asia-Pacific region.

LCP VII will acquire portfolios of private equity partnership interests and make co-investments in the secondary market. It may also acquire direct investments in operating companies through secondary market purchases, facilitate the spin-out of private equity teams from banks and corporations, and invest in newly formed funds.

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