Lexington buys UK tail-ends from West Midlands Pension

The firm used its latest fund to acquire positions in funds managed by Scottish Equity Partners and Gresham, having bought several UK-based assets in 2018.

Lexington Partners is continuing to see opportunities in the UK, despite political uncertainty around Brexit.

The New York-headquartered firm used its most recent fund, Lexington Capital Partners IX, to acquire a couple of tail-end stakes in UK-based private equity funds from the West Midlands Pension Fund, according to two public filings.

The stakes were in Scottish Equity Partners III, a 2006-vintage £260 million ($341.8 million; €302.3 million) growth capital vehicle and Gresham 4A, a 2006-vintage vehicle linked to the £340 million Gresham 4.

SEP III invests in European start-ups in the enterprise software, consumer internet and tech-enabled services sectors. Lexington has acquired stakes in the GP’s funds on three previous occasions, the last of which was in March 2017 when it bought a stake in 2012-vintage successor SEP IV from Lloyds Development Capital, Secondaries Investor reported.

Gresham 4 was managed by mid-market buyout firm Gresham Private Equity, which wound down in 2014 following the departure of a number of senior directors.

Lexington picked up a number of UK-based assets in 2018. In October, it bought part of the portfolio of London-listed private equity fund Electra Private Equity, which is in the process of winding down, Secondaries Investor reported.

In August, it upped its exposure to the consumer market by buying stakes in three buyout funds managed by London-headquartered Lion Capital. The stakes were acquired from co-investment vehicles backed by Lion and Houston-based investment firm Carson Private Capital.

Lexington is currently in market seeking $12 billion for its ninth flagship secondaries fund, which is set to close soon.

West Midlands Pension Fund has £1.23 billion in private equity assets under management, according to Secondaries Investor data.

According to data from advisor Evercore, public and private pensions accounted for 23 percent of secondaries sales by transaction volume in 2018, making it the second largest category after sales through GP-led processes.

West Midlands Pension Fund, Lexington Partners and SEP declined to comment. Gresham did not respond to requests for comment.