Lexington Partners
Encyclopedia
Lexington Partners, is a leading independent manager of secondary private equity
and co-Investment
funds, founded in 1994. Lexington Partners manages approximately $18 billion of which $3.8 billion was committed to the firm's sixth and latest fund (Lexington Capital Partners VI, closed in 2006).
Lexington was founded by former investment professionals Brent Nicklas and Richard Lichter, who had previously worked together at Landmark Partners
. Lichter subsequently left Lexington to head the secondaries
group at another fund of funds
before founding Newbury Partners in 2006.
Lexington is headquartered in New York
with offices in Boston
, Menlo Park
and London
.
, 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 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.
Lexington is a dedicated secondaries
investor and like many of its peers has limited ability to make new commitments to private equity funds. While in certain instances this impacts the firm's desirability to general partner
s as a replacement limited partner, Lexington does make strategic commitments to newly formed private equity fund
s. The firm also manages equity co-investment
vehicles that invest alongside financial sponsor
s. Lexington’s secondary funds have committed to over 190 newly formed private equity funds while Lexington’s co-investment funds have committed to invest over $1.9 billion in 86 co-investments in the U.S. and Europe.
Lexington’s limited partners include corporate and public pension funds, sovereign investment authorities, insurance companies, financial institutions, endowments, foundations and family offices.
and Landmark Partners
as well as secondary players that also have active fund of funds
platforms (e.g., Adams Street Partners, AlpInvest Partners
, AXA Private Equity
, HarbourVest Partners
) and certain large financial institutions (e.g., Credit Suisse
, Goldman Sachs
, JP Morgan, Neuberger Berman
). To a lesser extent, Lexington competes against mid-sized secondary firms (e.g., Newbury Partners, Paul Capital
, Pomona Capital).
Private equity secondary market
In finance, the private equity secondary market refers to the buying and selling of pre-existing investor commitments to private equity and other alternative investment funds....
and co-Investment
Equity co-investment
An equity co-investment is a minority investment, made directly into an operating company, alongside a financial sponsor or other private equity investor, in a leveraged buyout, recapitalization or growth capital transaction. In certain circumstances, venture capital firms may also seek...
funds, founded in 1994. Lexington Partners manages approximately $18 billion of which $3.8 billion was committed to the firm's sixth and latest fund (Lexington Capital Partners VI, closed in 2006).
Lexington was founded by former investment professionals Brent Nicklas and Richard Lichter, who had previously worked together at Landmark Partners
Landmark Partners
Landmark Partners, founded in 1989, is a leading investor in the Private equity secondary market . It is based in Simsbury, Connecticut.The firm was founded by Stanley Alfeld.-Investment Program:...
. Lichter subsequently left Lexington to head the secondaries
Secondaries
Secondaries is a shorthand form for:* Private equity secondaries, pre-existing investor commitments to private equity and other alternative investment funds purchased in the private equity secondary market...
group at another fund of funds
Fund of funds
A "fund of funds" is an investment strategy of holding a portfolio of other investment funds rather than investing directly in shares, bonds or other securities. This type of investing is often referred to as multi-manager investment...
before founding Newbury Partners in 2006.
Lexington is headquartered in New York
New York City
New York is the most populous city in the United States and the center of the New York Metropolitan Area, one of the most populous metropolitan areas in the world. New York exerts a significant impact upon global commerce, finance, media, art, fashion, research, technology, education, and...
with offices in Boston
Boston
Boston is the capital of and largest city in Massachusetts, and is one of the oldest cities in the United States. The largest city in New England, Boston is regarded as the unofficial "Capital of New England" for its economic and cultural impact on the entire New England region. The city proper had...
, Menlo Park
Menlo Park, California
Menlo Park, California is a city at the eastern edge of San Mateo County, in the San Francisco Bay Area of California, in the United States. It is bordered by San Francisco Bay on the north and east; East Palo Alto, Palo Alto, and Stanford to the south; Atherton, North Fair Oaks, and Redwood City...
and London
London
London is the capital city of :England and the :United Kingdom, the largest metropolitan area in the United Kingdom, and the largest urban zone in the European Union by most measures. Located on the River Thames, London has been a major settlement for two millennia, its history going back to its...
.
Investment program
Lexington invests primarily as a fund of fundsFund of funds
A "fund of funds" is an investment strategy of holding a portfolio of other investment funds rather than investing directly in shares, bonds or other securities. This type of investing is often referred to as multi-manager investment...
, purchasing interests in various investment funds, typically structured as limited partnerships. Lexington Partners acquires positions in venture capital
Venture capital
Venture capital is financial capital provided to early-stage, high-potential, high risk, growth startup companies. The venture capital fund makes money by owning equity in the companies it invests in, which usually have a novel technology or business model in high technology industries, such as...
, leveraged buyout
Leveraged buyout
A leveraged buyout occurs when an investor, typically financial sponsor, acquires a controlling interest in a company's equity and where a significant percentage of the purchase price is financed through leverage...
and mezzanine capital
Mezzanine capital
Mezzanine capital, in finance, refers to a subordinated debt or preferred equity instrument that represents a claim on a company's assets which is senior only to that of the common shares...
funds, together with portfolios of companies or stakes in companies from institutions, corporates, government bodies and family offices.
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
Coller Capital
Coller Capital, founded in 1990 by Jeremy Coller, is one of the leading global investors in the Private equity secondary market ....
's $4.8 billion fund. The two firms have alternated the leadership position in recent years.
Lexington is a dedicated secondaries
Secondaries
Secondaries is a shorthand form for:* Private equity secondaries, pre-existing investor commitments to private equity and other alternative investment funds purchased in the private equity secondary market...
investor and like many of its peers has limited ability to make new commitments to private equity funds. While in certain instances this impacts the firm's desirability to general partner
General partner
General partner is a legal term used to describe a person who joins with at least one other person to form a business. A general partner has responsibility for the actions of the business, can legally bind the business and is personally liable for all the business's debts and obligations.General...
s as a replacement limited partner, Lexington does make strategic commitments to newly formed private equity fund
Private equity fund
A private equity fund is a collective investment scheme used for making investments in various equity securities according to one of the investment strategies associated with private equity....
s. The firm also manages equity co-investment
Equity co-investment
An equity co-investment is a minority investment, made directly into an operating company, alongside a financial sponsor or other private equity investor, in a leveraged buyout, recapitalization or growth capital transaction. In certain circumstances, venture capital firms may also seek...
vehicles that invest alongside financial sponsor
Financial sponsor
A financial sponsor is a term commonly used to refer to private equity investment firms, particularly those private equity firms that engage in leveraged buyout or LBO transactions....
s. Lexington’s secondary funds have committed to over 190 newly formed private equity funds while Lexington’s co-investment funds have committed to invest over $1.9 billion in 86 co-investments in the U.S. and Europe.
Lexington’s limited partners include corporate and public pension funds, sovereign investment authorities, insurance companies, financial institutions, endowments, foundations and family offices.
History and notable transactions
Since 1994, Lexington has stated that it has completed over 270 secondary market transactions. Although most secondary transactions are private, the following are notable publicly disclosed transactions and firm milestones:- 2008 — CalPERS agrees to the sale of a portfolio of legacy private equity funds, having started marketing it in late 2007. A buyer group comprising Oak Hill Investment Management, Conversus Capital, Lexington Partners, HarbourVest, and Pantheon VenturesPantheon VenturesPantheon is a private equity investment manager, operating through a series of fund of funds as well as a publicly traded private equity vehicle, Pantheon International Participations. Pantheon invests through new private equity funds as well as secondary market purchases of existing private...
paid as much as $3 billion for the portfolio. (CalPERS is an existing investor in funds managed by Lexington.)
- 2007 – Lexington Partners lead a secondary spin-out transaction from a hedge fund, a $200 million transaction to acquire 70% stake in 19 investments.
- 2006 — American Capital StrategiesAmerican Capital StrategiesAmerican Capital is an alternative asset management company based in Bethesda, Maryland. Founded in 1986 and publicly traded since 1997, American Capital is the largest U.S. publicly traded private equity fund and one of the largest publicly traded alternative asset managers...
sells a $1 billion portfolio of investments to a consortium of secondary buyers including Lexington Partners, HarbourVest PartnersHarbourVest PartnersHarbourVest Partners is a private equity fund of funds and one of the largest private equity investment managers globally. The firm invests in all types of private equity funds, including venture capital and leveraged buyout funds, and also directly in operating companies...
and Partners GroupPartners GroupPartners Group is a global private markets management firm with over EUR 20 billion in investment programs under management in private equity, private debt, private real estate, private infrastructure and absolute return strategies...
.
- 2005 — Lexington Partners and AlpInvest Partners acquired a portfolio of private equity fund interests from Dayton Power & Light, an Ohio-based electric utility.
- 2004 – Lexington Partners formed a dedicated secondary fund to acquire private equity interests that were less than 50% funded.
- 2003 — Lexington closes on $2 billion for its fifth fund after two years of marketing, ultimately falling short of its $2.5 billion target.
- 2000 — Lexington Partners and Hamilton LaneHamilton LaneHamilton Lane is a private, independent private equity firm with more than $150 billion in total assets under management and supervision...
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.
- 1998 – Lexington Partners established CIP I, one of the first independent, discretionary co-investment programs with a leading U.S.-based institutional investor.
- 1994 – Lexington Partners purchased a portfolio of mezzanine fundMezzanine capitalMezzanine capital, in finance, refers to a subordinated debt or preferred equity instrument that represents a claim on a company's assets which is senior only to that of the common shares...
interests from a bank, one of the first transactions of its type.
- 1994 — Lexington Partners founded by former Landmark Partners professionals Brent Nicklas and Richard Lichter (currently Newbury Partners).
Competitors
Lexington regularly competes against dedicated secondary investors such as Coller CapitalColler Capital
Coller Capital, founded in 1990 by Jeremy Coller, is one of the leading global investors in the Private equity secondary market ....
and Landmark Partners
Landmark Partners
Landmark Partners, founded in 1989, is a leading investor in the Private equity secondary market . It is based in Simsbury, Connecticut.The firm was founded by Stanley Alfeld.-Investment Program:...
as well as secondary players that also have active fund of funds
Fund of funds
A "fund of funds" is an investment strategy of holding a portfolio of other investment funds rather than investing directly in shares, bonds or other securities. This type of investing is often referred to as multi-manager investment...
platforms (e.g., Adams Street Partners, AlpInvest Partners
AlpInvest Partners
AlpInvest Partners is a private equity investment manager and at the end of 2009 globally managed over €42 billion ....
, AXA Private Equity
AXA Private Equity
AXA Private Equity is a diversified private equity firm with $ 25 billion of assets managed or advised and with an international reach across Europe, North America and Asia...
, HarbourVest Partners
HarbourVest Partners
HarbourVest Partners is a private equity fund of funds and one of the largest private equity investment managers globally. The firm invests in all types of private equity funds, including venture capital and leveraged buyout funds, and also directly in operating companies...
) and certain large financial institutions (e.g., Credit Suisse
Credit Suisse
The Credit Suisse Group AG is a Swiss multinational financial services company headquartered in Zurich, with more than 250 branches in Switzerland and operations in more than 50 countries.-History:...
, Goldman Sachs
Goldman Sachs
The Goldman Sachs Group, Inc. is an American multinational bulge bracket investment banking and securities firm that engages in global investment banking, securities, investment management, and other financial services primarily with institutional clients...
, JP Morgan, Neuberger Berman
Neuberger Berman
Neuberger Berman Group LLC, through its subsidiaries is an investment management firm that provides financial services for high net worth individuals and institutional investors. With approximately $200 billion in asset under management, it is among the largest private employee-controlled asset...
). To a lesser extent, Lexington competes against mid-sized secondary firms (e.g., Newbury Partners, Paul Capital
Paul Capital
Paul Capital is a private equity investment firm made up of a fund of funds, secondary investments and a healthcare direct investment business...
, Pomona Capital).
External links
- Lexington Partners Official website