Lexington partners with Moonfare to buy stakes from individuals

Lexington Partners has planted its flag in a market that has long been hard to access for secondaries buyers.

The New York-based firm will become a buyer of stakes sold by investors on Moonfare, a platform that allows individuals to invest in private funds, according to a statement.

Moonfare investors will be able to sell their fund stakes to Lexington and other investors on the platform through a “formal process” held twice a year. The Berlin-headquartered company will run a digital bidding round and “endeavour to find the best liquidity solution possible for sellers”.

In the event a Moonfare investor wants to sell outside of the formal window, the firm will “work with the client to prepare an offer for Lexington to review”, the statement noted.

“We listened to the market, and illiquidity was one of the main concerns left standing between individual investors and allocations to private equity,” said Moonfare founder and chief executive Steffen Pauls.

“We are excited to sign this partnership with Moonfare, which will make Lexington an important liquidity provider to individual investors, an underserved portion of the market,” added Pal Ristvedt, a partner with Lexington.

Moonfare has more than 25 private markets funds, which clients can access for as little as €50,000, according to the statement. Clients have invested upwards of €500 million through the platform so far.

The firm aggregates individual commitments through a Luxembourg-domiciled feeder fund which invests directly into “top tier” funds across private equity, technology, healthcare and infrastructure, according to its website.

EQT, Carlyle Group and Warburg Pincus are among the general partners Moonfare clients can invest with, sister publication Private Equity International reported in December. The vast majority of Moonfare’s assets come from individuals, such as bankers, lawyers and private equity managers, rather than wealth managers or private banks, said head of Asia-Pacific Mathieu Forcioli.

The small size of deals in the high-net-worth market has long made it difficult to access for larger private equity buyers.

“Buying positions from private wealth investors is complicated and finickity,” said a managing director from one non-traditional buyer. “There are guys who do that but they are tiny and you need to work with the banks and the private wealth providers to find ways of structuring those deals.” 

Lexington is investing its ninth flagship secondaries fund, which closed on $14 billion in January 2020.

Moonfare was founded in 2017 by former KKR executives Steffen Pauls and Alexander Argyros.