Lexington closes mid-market secondaries fund on $2.7bn

The vehicle held a final close on its hard-cap, at more than 130% of its initial $2bn target. The fund is understood to have a 12.5% carried interest rate and a 7% hurdle.

The predecessor fund, Lexington Mid Market III, held a final close on $1.07bn and was 52% deployed as of March 2017, according to unquote" data.

Lexington recently agreed a $1bn stapled secondary deal for commitments in funds managed by BC Partners. The figure included both secondary acquisitions in BC Partners' €6.7bn ninth fund and new commitments to the GP's 10th fund [Editor's note: BC Partners is the majority owner of Acuris, the parent company of unquote"].

Law firm Proskauer Rose advised Lexington on the structuring of the fund and will also support the GP in negotiating primary and secondary investments.

Investors
Lexington said the majority of its commitments are from existing investors. Geographically, 40% are from North America, 30% from Asia and the Middle East, 20% from Europe and 7% from Latin America.

Minnesota State Board of Investment made a $100m commitment to the vehicle, according to unquote" data. Houston Police Officers' Pension System and the West Yorkshire Pension Fund also made commitments.

Investments
Like its predecessor funds, LMMI IV will acquire interests in growth capital, as well as small- and mid-market buyout funds globally, mainly targeting GP-led transactions such as spin-outs, restructurings, tender offers and strip sales.

The fund has already completed 15 secondary transactions in the US and Europe, committing to invest 22% of the fund's capital to mid-market interests managed by 25 sponsors.

People
Lexington Partners – Marshall Parke (managing partner).

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