Lexington Partners, the US secondary player that is in the midst of recruiting for its London office, closed its international fund Lexington Capital Partners IV at the end of April. One third of investors in this fund originated in Europe and the remainder from the US. The international split of investments is expected to be roughly 80 per cent European with the remainder targeting Asia and Latin America. Lexington Capital Partners IV is currently 42 per cent invested.
Lexington Partners US investments are currently made from three funds. These are: Lexington Capital Partners I at $242 million, which invests in mezzanine secondary positions, Lexington Capital Partners II at $1.1 billion, which invests in buyout secondary positions and Lexington Capital Partners III at $656 million, which invests in venture capital secondary positions.
All three of the US funds are around 75 per cent invested which has necessitated the firm to start fund raising Lexington Capital Partners IV. Lexington Capital Partners V seeks to raise $2.5 billion and will invest in mezzanine, buyouts and venture positions. The reason for this, says Lexington Partners New York-based international partner Marshall Parke, is that investor feedback suggests that investors see secondary funds as a type of asset class but do not subdivide the secondary fund category further. Once the international Lexington Capital Partners IV is fully invested Lexington Capital Partners V will be able to start investing in European secondary positions.
Lexington Capital Partners V can have up to 10 per cent allocated to primary investments, which enables Lexington Partners to incentivise GPs in a similar way to other secondary players that operate fund-of-funds businesses. Likewise the recently closed Lexington Capital Partners IV fund permits up to 15 per cent to be invested in primary positions.
Lexington Partners was erroneously omitted from the list of secondary players with funds to spend in Europe see April issue, p52.