Lexington Partners, the third-largest firm in secondaries according to the SI 30, expects robust transaction volume in secondaries during the investment period of its 10th flagship secondaries fund.
Lexington expects secondary activity to continue at high levels – approximately $90 billion-$110 billion per annum – during the five-year investment period of the fund, according to documents obtained from the Minnesota State Board of Investment.
There was $48 billion of secondaries transactions in the first half of this year, $6 billion more than the previous record first half in 2019, according to Jefferies’ Global Secondary Market Review. At this rate, the market is on track to top 2019’s full-year record high of $88 billion, blowing past 2020’s full-year $60 billion.
Lexington Capital Partners X launched in May, less than 16 months after the previous fund’s record $14 billion close, and is targeting $15 billion, according to Secondaries Investor data. Existing investors include Cathay Life Insurance, which has already committed $600 million to the programme.
If successful, Fund X would be the biggest standalone secondaries vehicle ever raised, knocking out both Ardian and Lexington’s own latest flagships, which each raised $14 billion last year.
Ardian raised $19 billion in total for its latest secondaries programme, including $5 billion of co-investment capital.
In April, Blackstone president and chief operating officer Jonathan Gray said the firm’s Strategic Partners unit, the second largest in the SI 30 ranking, would return to market “shortly” with its next flagship private equity secondaries fund and is expected to hold a first close in the second half of this year. Gray added that he expects the vehicle to be larger than Fund VIII, which closed in 2019 on $11.1 billion.
On the buy side, Lexington recently co-led Kohlberg and Company‘s $1.1 billion inaugural continuation fund alongside BlackRock and GIC.
Lexington has been expanding its strategies over the past year. In January, it partnered with Moonfare to become a buyer of stakes sold by investors on the online fundraising platform, while in March it hired the former president of Banco do Brasil as a senior adviser following the January opening of an office in Brazil.
Investors in Lexington’s ninth flagship include Florida Retirement System Trust Fund, which committed $250 million; Minnesota State Board of Investment, which committed $150 million; and Public School and Education Employee Retirement Systems of Missouri, which committed $300 million, Secondaries Investor data shows.
The firm’s performance as of 31 December 2020 was outlined in the Minnesota SBI documents and is replicated below. A spokesman for Lexington declined to comment.