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Lexington buys Lloyds’ £470m PE portfolio

Lexington will purchase 33 LP stakes, most of which Lloyds had reportedly acquired when it took over HBOS.

Lexington Partners is the latest to purchase private equity assets from Lloyds Banking Group, having agreed to buy a portfolio of limited partnership interests valued at £470 million (€553 million; $738 million).

Terms were not disclosed for the deal, which is expected to close early next year. It includes 33 LP interests.

Lexington described the portfolio as one that includes a number of private equity funds focused on the European mid-market sector. The New York-based secondaries investment specialist has $18 billion in committed capital in secondaries funds and co-investments funds.

The transaction marks Lexington’s latest expansion of its secondaries holdings, a strategy that has seized upon a wider trend that began last year as banks sought to relieve financial, as well as political, stress by selling off private equity portfolios. Lexington has been raising capital for its seventh secondaries fund since 2008, which had an initial target of $5 billion. That fund had collected around $3.3 billion in the autumn, according to regulatory filings with the Securities and Exchange Commission.

Earlier this year, Lexington was a co-lead in a deal to buy $1.1 billion in private equity assets from Citigroup. Lexington had previously purchased an undisclosed portion of a $1.2 billion private equity portfolio sold by Bank of America.

The most recent deal continues Lloyds’ divestiture of private equity assets, which began last year when the firm began to unload portfolios it had come to own after acquiring HBOS, the holding company for Bank of Scotland and Halifax.

In 2009, Lloyds sold a portfolio of 40 private equity assets, originating from the Bank of Scotland Integrated Finance Group, to Coller Capital-backed Cavendish Square Partners for £332 million. The 2009 sale of private equity assets to Coller came as the bank was under pressure to sell non-core businesses as part of its accepting substantial government bailout funds from the UK.