Lexington Aims at Middle Market

Interest in middle-market funds has reached over to the secondary market. Secondary buyer Lexington Partners held a final close on Lexington Middle Market Investors, a $550 million fund to purchase LP interests in middle-market buyout funds, according to documents filed with the Securities and Exchange Commission.

The filing states that the firm closed with $550 million in commitments and 20 accredited investors. Limited partners in the fund include the California Public Employees’ Retirement System, which invested $50 million; the San Bernardino County Employees’ Retirement Association, which invested $25 million; and the New York State Teachers’ Retirement System, which invested $150 million.

The New York-based firm will use the fund to acquire LP stakes in younger funds, which typically have less than 50% of their committed capital invested.

Lexington Partners is also raising two other funds. The firm is raising its next dedicated secondary fund, Lexington Partners VI, which is targeted to be between $2 billion and $2.5 billion. The firm hopes to have a final close by the end of 2005.

The firm is also raising Lexington Co-Investment Partners II, a joint co-investment program with the New York State Teachers’ Retirement System and the Florida State Board of Administration. Lexington will raise the fund in two tranches of $500 million each and the fund will invest $1 billion over the next five years.