Lexington bets on mid-market secondary growth with $2.6 billion fund
Lexington Partners has raised the firm's fourth middle market fund, Lexington Middle Market Investors IV LP valued at around $2.6 billion. LMMI IV will target growth capital and other middle-market buyout interests in the secondary market.
LMMI IV will also seek restructurings, spinouts and tender offers. The fund has received "significiant commitments from new" investors who are interested in "increasing their private equity programs," according to Lexington managing director Marshall Parke. Proskauer represented Lexington. LMMI IV has already completed about 15 secondary transactions.
"We look forward to continuing to provide high-quality middle market buyout exposure to our limited partners on a diversified, lower-risk basis through attractive acquisitions in the global secondary market," Lexington partner Wilson Warren. Lexington closed a $10 billion secondary fund in 2015.
Lexington estimates that the secondary market generates about $30 billion in annual volume and expects that number to surpass $40 billion by the end of 2017. Private equity firms becoming more active with in managing their portfolio companies are among the main drivers in rising interest in the secondary market. New York-based Lexington is an independent manager of secondary and co-investment private equity funds.
Other middle-market fund raises include: New Mountain Capital LLC's fifth private equity fund; Private Advisors’ raising the firm’s seventh small business private equity fund; Saw Mill Capital’s closing of a new investment fund with $340 million in commitments.