Franklin Templeton's Lexington raises $22.7 bln for secondary fund
Jan 9 (Reuters) - Franklin Templeton's unit Lexington Partners said on Tuesday it had raised $22.7 billion for its latest global secondary fund, reinforcing the investment firm's bets on a fast-growing corner of the private equity industry.
Secondary funds buy stakes in a private equity fund from its current investors, mostly at a discount. The transaction allows the current investors to cash out on their holdings sooner than would have been possible otherwise, considering the illiquid nature of the private equity industry.
Lexington was among the pioneers of the secondary market, once a niche industry that has attracted significant investor interest in recent years. Assets under management in the secondary market has grown at an annual rate of 17% since 2018, according to Goldman Sachs Asset Management.
"We believe we are in the early stages of a generational secondary buying opportunity in private markets that will take multiple years to play out," said Pål Ristvedt, a partner at Lexington.
The fund, dubbed Lexington Capital Partners X, surpassed the $15 billion target it had set, while also going past the $14 billion its previous fund had raised in 2020.
Lexington Capital Partners X was backed by over 400 investors, including public and corporate pensions, sovereign wealth funds and insurance companies in North America, Europe, Asia Pacific, Latin America and the Middle East.
More than 40% of the capital raised by the fund has already been committed across 50 deals, Lexington added.
(Reporting by Niket Nishant in Bengaluru; Editing by Krishna Chandra Eluri)
