Lexington targets $5bn for Fund VII

The New York-based secondaries firm plans to capitalise on an expanding secondary market in 2009 and 2010. Fund VII will invest mostly in the US, but also in emerging markets.

Lexington Partners aims to close its seventh secondaries fund on $5 billion in March, according to documents from US public pension the Montana Investment Board.

New York-based Lexington will target investments in global buyout, mezzanine and venture capital funds through Lexington Capital Partners VII, which has been in fundraising since last year.

Last month, Montana committed $20 million to the fund. The fund has also attracted commitments from LPs including the City of Manchester Employees' Contributory Retirement System, which committed $2 million in August.

About 70 percent of the fund will be invested in the US and 30 percent in non-US markets, including emerging markets. The fund will make investments ranging from $20 million to $60 million and expects to capitalise on a likely “bulge of secondary transaction opportunities from late 2009 through 2010”.

Park Hill Group is Lexington's placement agent for the fund, according to the documents.

Lexington’s sixth fund closed on $3.8 billion in 2006 and the firm’s fifth fund closed on $2 billion in 2003.

Past investors in Lexington’s funds include the Oklahoma Police Pension and Retirement System, Australia-based ESI Super and Australia Post Superannuation Scheme and Maryland’s Anne Arundel County Retirement and Pension System. The firm’s investor list includes more than 200 corporate and public pension funds, sovereign investment authorities, insurance companies, financial institutions and endowments; Lexington manages about $13 billion across 13 secondary funds and six co-investment pools.

A recent survey by secondaries firm Coller Capital showed that 64 percent of the 107 participating limited partners said they will try to access the secondaries market to increase liquidity. Two-thirds of the respondents are likely to be at or above their target allocation for private equity by the end of 2009, the study found.