Lexington closes Fund VIII on $10.1bn

The New York-based firm surpassed its $8bn target and closed the market’s largest secondaries fund to date.

Lexington Partners has closed its eighth secondaries fund on $10.1 billion, making it the largest secondaries fund ever raised, according to a statement.

Lexington Capital Partners VIII (LCP VIII) had an $8 billion target and a $10 billion hard-cap. It launched in 2013 and had collected $3 billion as of March 2014 and $6 billion as of November, Secondaries Investor reported.

LCP VIII received commitments from more than 300 limited partners, which are mostly public and corporate pensions and sovereign wealth funds. The majority of the capital came from existing investors. Known LPs include the New Hampshire Retirement System, the Boston City Retirement System and UK-based Tyne and Wear Pension Fund, according to PEI’s Research and Analytics division.

“Our high-quality global investor base and the substantial capital they have entrusted to Lexington will enhance the fund’s secondary capabilities with global counterparties and sponsors,” managing partner Brent Nicklas said in the statement.

Lexington has also established a $1.75 billion credit facility which gives LCP VIII more flexibility for its transactions, the statement disclosed. The fund acquires private equity and alternative assets through portfolio acquisitions, spin-outs, equity co-investments, hedge fund private equity purchases and fund recapitalisations.

About 30 percent of LCP VIII has already been deployed in 13 transactions including six deals with banks and financial institutions, five deals with fiduciaries, one hedge fund transaction and one fund restructuring.

It is understood the deals include the restructuring of GMT Communications Fund II, which Lexington backed alongside Newbury Partners last year.  GMT offered three options to its LPs: to sell up, roll over into a new fund, or maintain the status quo. The overall price was approximately 90 percent of net asset value including a claw-back amount, a source familiar with the matter had said.

Lexington also picked up a portfolio of private equity fund stakes from Mizuho Financial Group, including positions in Carlyle Asia Partners III and 3i Eurofund V. Other private equity stakes were purchased from Citigroup and charitable foundation The Wellcome Trust.

“Today’s secondary market is increasingly characterised by transaction diversity, complexity, and scale,” Nicklas said in the statement.

Lexington’s previous secondaries fund closed on $7.1 billion in 2011. New Hampshire and Boston were also LPs in LCP VII and Park Hill worked as a placement agent for the fund.

Before the final closing of LCP VIII, Ardian Secondary Fund VI (ASF VI) was the largest secondaries fund to date. ASF VI raised $9 billion in April 2014. About 40 percent of ASF VI investors are North America-based and 39 percent come from the Middle East.