Lexington Partners, a leading name in secondary acquisition funds, has announced the successful closing of its Lexington Capital Partners X, L.P. (LCP X) fund, reaching a substantial $22.7 billion in total capital commitments. This achievement significantly surpasses the fund’s initial $15 billion target and outstrips its predecessor, LCP IX, which closed at $14 billion in 2020. The news highlights robust investor confidence and the growing appeal of secondary markets in private equity.
The LCP X fund is strategically designed to capitalize on the increasing opportunities within the secondary market. Its primary focus is acquiring private equity and alternative asset partnership portfolios from large institutional investors. These investors often seek to rebalance their asset allocations or generate liquidity. LCP X also aims to leverage Lexington’s extensive industry network to pursue smaller, specialized opportunities. Furthermore, the fund is structured to collaborate directly with general partners, offering tailored secondary solutions for their limited partners. Already a 2022 vintage fund, LCP X has committed over 40% of its capital across a diverse portfolio of more than 50 transactions. These transactions involve a wide array of sellers, including public and corporate pensions, banks, and various financial institutions, demonstrating the fund’s broad market reach and strategic deployment.
Wil Warren, President of Lexington, commented on this landmark fundraise, stating, “This milestone fundraise reflects the tremendous opportunity in the global secondary market and Lexington’s proven ability to leverage our scale, experience, relationships, and worldwide platform to unlock value for our investors. We are incredibly grateful for the trust and support from existing and new investors around the globe who have provided us with the capital to continue to perform and innovate in the secondary market.” His statement underscores the significance of this fund closure for Lexington and the broader secondary investment landscape.
Lexington’s analysis indicates that 2023 is poised to be the third consecutive year where secondary industry volume exceeds $100 billion. As a specialist investment manager under Franklin Templeton, Lexington anticipates continued expansion in the global secondary market. This growth is fueled by the considerable capital allocated to private market funds and the increasing acceptance of secondary markets by limited partners as a vital portfolio management tool. The trend of fund sponsors seeking liquidity options for their limited partners through structured transactions is also expected to further drive secondary deal flow, making it an opportune time for funds like LCP X.
Pål Ristvedt, Partner at Lexington, further elaborated on the market conditions: “We believe we’re in the early stages of a generational secondary buying opportunity in private markets that will take multiple years to play out. During times of economic uncertainty and slowing portfolio company exits, the secondary market can be an important release valve to provide liquidity to investors. Lexington’s cycle-tested investment strategy, tenured team, and counterparty reputation enable us to provide sophisticated and innovative secondary solutions.” This perspective highlights the strategic advantage of secondary funds in the current economic climate.
LCP X has garnered interest from a diverse investor base, attracting over 400 investors globally. This group includes public and corporate pensions, sovereign wealth funds, insurance companies, endowments, foundations, family offices, and wealth channel distribution partners spanning North America, Europe, Asia-Pacific, Latin America, and the Middle East. The broad geographical and institutional diversity of investors underscores the global appeal and confidence in Lexington’s strategy and execution.
Lexington Partners L.P. operates as a wholly-owned subsidiary of Franklin Templeton, a global investment management organization. Franklin Templeton, with over 75 years of investment experience and over $1.4 trillion in assets under management as of November 30, 2023, provides a robust platform for Lexington’s operations. Franklin Templeton’s mission is centered on delivering superior investment outcomes, wealth management, and technology solutions to clients across more than 150 countries. Through its specialist investment managers, Franklin Templeton offers deep expertise across fixed income, equity, alternatives, and multi-asset solutions, reinforcing Lexington’s position within a leading global financial institution.
For more detailed information, you can visit franklintempleton.com. Further updates and insights can also be found by following Franklin Templeton on their social media platforms: LinkedIn, Twitter, and Facebook.
Note: References to LCP X include Lexington Capital Partners X, L.P. and associated vehicles. Total capital commitments include certain commitments to associated vehicles that were in legal process as of December 31, 2023.
