Lexington’s mid-market IV bolsters Q3 fundraising

Lexington Partners‘ fourth mid-market secondaries vehicle accounted for the majority of capital raised for the strategy in the third quarter, which rose by more than a third year-on-year.

Dedicated private equity secondaries vehicles held final closes on a combined $3.2 billion in the three months to 30 September, compared with $2.4 billion a year earlier, according to PEI data.

New York-headquartered Lexington’s Middle Market IV fund, which held its final close on Wednesday, raised $2.7 billion and accounted for more than 80 percent of the capital raised during the period.

Just four funds held final closes during the quarter, including Israel-headquartered Vintage Investment Partners‘ fourth dedicated vehicle and German direct secondaries firm Cipio Partners with its Fund VII. This compares with six funds holding final closes in the third quarter of last year.

Private equity secondaries funds have raised a combined $26.9 billion so far this year, slightly above the $25.1 billion raised by the end of September 2016.

Funds that have surpassed their targets and which are yet to hold a final close include Goldman Sachs Asset Management‘s Vintage VII fund, which had raised at least $7 billion as of June and LGT Capital Partners‘ Crown Global Secondaries IV, which had raised $2.7 billion as of 30 June, according to a filing with the London Stock Exchange. The vehicle’s hard-cap is $2.8 billion, according to PEI data.

Buyers are benefiting from a resurgence in portfolio sales larger than $500 million in size this year as well as LPs selling positions amid uncertain macroeconomic conditions, according to Bernhard Engelien, a managing director at Greenhill Cogent. This is in turn helping firms deploy faster and return to fundraising, he said.

“We’ve seen a fair amount of de-risking sales – people, including secondaries funds, looking at the market and saying valuations are at an all-time high,” Engelien told Secondaries Investor. “A lot of these older funds – 06, 07, 08 vintages – have a lot of public exposure and with a bit of uncertainty going forward, whether that’s in the US or in Europe with Brexit, people think it may be not a bad time to take a bit of money off the table and either redeploy, or give it back to investors.”

Deal volume this year should fall between $40 billion and $45 billion, he added.

Manager Fund name Size Region focus
Lexington Partners Lexington Middle Market Investors IV $2.66bn North America
Vintage Investment Partners Vintage Investment Partners X $215m North America

Western Europe

Central/Eastern Europe

Middle East/Africa

Cipio Partners Cipio Partners Fund VII €175m Western Europe

Central/Eastern Europe

EQ Group eQ Secondaries Fund  €138m

Western Europe

Source: PEI