Lexington Partners

company_name = Lexington Partners
company_type = Private Ownership
foundation = 1994
location =
industry = Private Equity
products = Private Equity Secondaries
assets = $13 billion
homepage = [http://www.lexingtonpartners.com/ www.lexingtonpartners.com]
num_employees = 75+ (2007)

Lexington Partners, founded in 1994 is a private equity fund of funds that focuses on the acquisition of existing investments in private equity funds and portfolios of privately held companies through the private equity secondary market(also known as secondaries).

Lexington was founded by former investment professionals (Brent Nicklas and Richard Lichter) of Landmark Partners, a competing secondaries firm. Lichter subsequently left Lexington to head the secondaries group at another fund of funds before founding [http://www.newburypartners.com Newbury Partners] in 2006.

Lexington has offices in New York, Menlo Park, London and Boston and around 75 employees.

Investment program

Lexington invests primarily as a fund of funds purchasing interests in various investment funds, typically structured as limited partnerships. Lexington Partners acquires positions in venture capital, leveraged buyout and mezzanine capital funds, together with portfolios of companies or stakes in companies from institutions, corporates, government bodies and family offices.

Lexington Partners manages approximately $13 billion of which $3.8 billion was committed to the firm's sixth and latest fund (Lexington Capital Partners VI, closed in 2006) [ [http://www.lexingtonpartners.com/secondary_overview.html Lexington Capital Partners VI] ] . Lexington is reported to be raising a new $5.0 billion secondary fund, which would be the largest active fund in the secondary market, eclipsing Coller Capital's $4.8 billion fund. The two firms have alternated the leadership position in recent years and Coller would be expected to raise a similar amount of capital for its next fund (anticipated in 2009).

Lexington is a dedicated secondaries investor and as such has limited ability to make new commitments to private equity funds. This has affected Lexington's desirability to financial sponsors or other general partners to serve as a replacement limited partner.

Lexington’s returns have increased in recent years after average performance in the mid 1990s. According to the CalPERS website on fund performance, Lexington has generated a net IRR of 30.3% and 19.9% for Lexington Capital Partners funds IV and V, respectively as compared to single digit returns on earlier funds. [ [https://www.calpers.ca.gov/index.jsp?bc=/investments/assets/equities/aim/private-equity-review/aim-perform-review/home.xml CalPERS Alternative Investment Management Program Fund Performance] (Lexington Partners Capital II – V and Lexington Partners Middle Market Investors)] .

History and notable transactions

Since 1994, Lexington has stated that it has completed over 220 secondary market transactions. Although most secondary transactions are private, the following are notable publicly disclosed transactions and firm milestones:

* 2008 — California Public Employees Retirement System (Calpers) agrees to the sale of a portfolio of legacy private equity funds. A buyer group comprising HarbourVest Partners, Lexington Partners, Conversus Capital and Pantheon Ventures acquires the most significant portion of the portfolio. [ [http://www.efinancialnews.com/homepage/content/2449726607/ Five buy record $3bn Calpers portfolio] ] (CalPERS is an existing investor in funds managed by Lexington [ [https://www.calpers.ca.gov/index.jsp?bc=/investments/assets/equities/aim/mgrs/i-l.xml CalPERS Directory of Investment Managers] ]

* 2006 — American Capital Strategies sells a $1 billion portfolio of investments to a consortium of secondary buyers including Lexington Partners, HarbourVest Partners and Partners Group [ [http://sev.prnewswire.com/banking-financial-services/20061004/NYW10004102006-1.html American Capital Raises $1 Billion Equity Fund; Expands Its Asset Management Business] ] [ [http://www.altassets.com/news/arc/2006/nz9445.php American Capital raises $1bn fund] ] [ [http://www.thedeal.com/servlet/ContentServer?pagename=TheDeal/TDDArticle/TDStandardArticle&bn=NULL&c=TDDArticle&cid=1159926373249 ACS spins off stakes into $1B fund] (TheDeal.com)]

* 2005 — Lexington Partners and AlpInvest Partners acquired a portfolio of private equity fund interests from [http://www.dplinc.com Dayton Power & Light] , an Ohio-based electric utility [ [http://www.altassets.com/news/arc/2005/nz6329.php AlpInvest and Lexington Partners buy $1.2bn secondary portfolio from DPL] ] [ [http://www.marketwatch.com/News/Story/Story.aspx?guid={33A29CE8-13FE-499F-AECE-D34A77532D54}&siteid=google&dist=google M&A legal guru urges more diligence] ] ] [ [http://www.thedeal.com/servlet/ContentServer?pagename=TheDeal/TDDArticle/TDStandardArticle&bn=NULL&c=TDDArticle&cid=1107993038709 DPL to sell PE stakes for $850M] (TheDeal.com)]

* 2003 — Lexington closes on $2 billion for its fifth fund after two years of marketing, ultimately falling short of its $2.5 billion target [ [http://www.altassets.com/news/arc/2003/nz2313.php US secondaries specialist Lexington Partners closes fund on $2bn] ] [ [http://www.altassets.com/news/arc/2001/nz428.php Lexington holds first close of its latest $2.5bn secondaries fund] ]

* 2000 — Lexington Partners and Hamilton Lane acquire $500 million portfolio of private equity funds interests from Chase Capital Partners

* 2000 — Coller Capital and Lexington Partners complete the purchase of over 250 direct equity investments valued at nearly $1 billion from NatWest [ [http://www.collercapital.com/assets/html/pressrelease.html?ID=2 Press Release: The Royal Bank of Scotland: asset sale] ]

* 1994 — Lexington Partners founded by former Landmark Partners professionals Brent Nicklas and Richard Lichter (currently Newbury Partners)


Lexington's principal competitor is Coller Capital, although Lexington also competes against several large secondary investors that also have active fund of funds platforms (HarbourVest Partners, AlpInvest Partners, AXA Private Equity) and certain investment banks (Goldman Sachs, Credit Suisse, Lehman Brothers). To a lesser extent, Lexington competes against mid-sized secondary firms (Landmark Partners, Pomona Capital, Newbury Partners, Paul Capital) focusing on more traditional purchases of private equity fund interests.


External links

* [http://www.lexingtonpartners.com Lexington Partners] Official website

*cite news |first=Amy |last=Cortese |authorlink= |coauthors= |title= Business; Private Traders See Gold in Venture Capital Ruins |url=http://query.nytimes.com/gst/fullpage.html?res=9406E7D81231F936A25757C0A9679C8B63 |work= The New York Times |publisher= |date=April 15, 2001 |accessdate=2008-04-27
*cite news |first=Vyvyan |last=Tenorio|authorlink= |coauthors= |title= We love you, we love you not |url=http://www.thedeal.com/servlet/ContentServer?pagename=TheDeal/TDDArticle/TDStandardArticle&bn=NULL&c=TDDArticle&cid=1096650393867 |work= The Deal.com |publisher= |date=Oct 1, 2004 |accessdate=2008-05-05

* [http://www.probitaspartners.com/news/news_vcjournal060105.html For Sale: Selling a portfolio of startup investments was once considered anathema.] - by Matthew Sheehan

* [http://www.law.harvard.edu/programs/olin_center/corporate_governance/papers/Brudney2007_Cannon.pdf Secondary Markets in Private Equity and the Future of U.S. Capital Markets] - by Vincent T. Cannon (Harvard Law School)

* [http://www.financial-planning.com/asset/article/527063/private-equity-gets-liquid.html Private Equity Gets Liquid] - By Donald Jay Korn (Financial Planning)

* [http://www.bizjournals.com/boston/stories/2004/02/23/focus2.html More enter private equity field via secondary funds] - by Mary K. Pratt (Boston Business Journal)

* [http://blogs.wsj.com/deals/2008/01/08/ What Would M&A Look Like If U.S. Falls into Recession] (WSJ.com Deal Archive)

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