Daily News: July 9, 2014

Lexington Partners Closes Lexington Middle Market Investors III

Lexington Partners announced the final close of Lexington Middle Market Investors III at $1.070 billion. The fund, which is the third in Lexington’s specialized middle market series, significantly exceeded its $750 million target.

LMMI III will acquire interests in growth capital, small, and middle market buyout funds in the global secondary market. LMMI III also has the ability to help facilitate the spin-out of established private equity teams from banks and financial institutions, and to invest in new middle market funds.

LMMI III has been formed with commitments from more than 50 limited partners, concentrated among major public and corporate pension funds in North America, Europe, Latin America and the Asia-Pacific region. Global endowments, foundations and high-net-worth individuals also subscribed, with existing investors contributing a majority of the fund’s capital.

Brent Nicklas, managing partner of Lexington, said, “We are pleased that so many existing Lexington investors chose to commit significant capital to LMMI III. Together with our newest investors, we look forward to building upon these important relationships during the life of LMMI III.”

Lexington estimates that industry-wide more than $23 billion was invested in secondary transactions in 2013, a level that is expected to be surpassed in 2014 with projected volume of $30 billion or more.

Lexington has already committed 40% of LMMI III’s capital, investing in four transactions with banks and financial institutions, three transactions with pension and sovereign wealth funds and three transactions with asset management firms. Eight of LMMI III’s committed transactions have been sourced exclusively by Lexington.

“Lexington Middle Market Investors has quadrupled in size since we began the program 10 years ago. The strategy is innovative because it allows large investors, interested in efficient middle market exposure, to benefit from favorable secondary market opportunities and Lexington’s strong relationships with middle market sponsors,” said Nicklas.

Separately, Lexington also recently announced the formation of Lexington Emerging Partners, a $150 million managed account, to acquire young middle market buyout interests in Asian and Latin American funds.