News & Analysis

Lexington Middle Market IV closes on $2.66bn

The fund, which closed above its target of $2bn, has been in the market for just over a year.

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Lexington Partners‘ fourth mid-market fund has closed above target on $2.66 billion, according to a statement from the firm.

The fund has been in the market since September 2016 and was targeting $2 billion, data from Private Equity International show.

Of the total committed capital, over 40 percet was raised from investors in North America, 30 percent from investors in Asia and the Middle East, 20 percent from investors in Europe, and 7 percent from investors in Latin America, the statement says.

Investors in the fund include Taiwan Life Insurance with a $50 million commitment and Minnesota State Board of Investment with $100 million, data from PEI show.

The fund started investing at the start of 2017 and has made 15 secondaries investments managed by 25 different sponsors, worth around 22 percent of the fund’s capital, according to the statement.

In March 2017 Secondaries Investor unveiled the terms of the fund after seeing documents compiled by Minnesota State Board of Investments.

The fund will focus on established US mid-market buyout funds that are less than 50 percent invested. It has a management fee of 1 percent per year of capital committed, which will be reduced to 0.85 percent after the investment period.

Lexington’s management will commit 2 percent of the total size of Middle Market IV, or $40 million, whichever is lower, according to the documents.

The fee is calculated on the basis of the reported value of all secondaries investments and unfunded commitments.

A key-man clause stipulates that a temporary suspension period will occur if, for any reason, three out of the five key persons fail to devote enough time to the advisor and related entities for three consecutive months. The people identified are managing partner Brent Nicklas and partners Charles Grant, Marshall Parke, Lee Tesconi and Wilson Warren.

Lexington Partners closed its eighth flagship secondaries fund on $10.10 billion, above its target of $8 billion, in April 2015, according to PEI data.