Lexington Partners Said to Near Three Fund Milestones

Lexington Partners Inc., one of the largest firms dedicated to buying private-equity interests, is set to complete fundraising for two pools this year before seeking investors for its next flagship vehicle in 2014, according to two people with knowledge of the plans.

Lexington is to finish fundraising on its third co-investment fund, Lexington Co-Investment Partners III LP, of about $1.5 billion by the end of June, said the people, who asked not to be identified because the talks are private. Secondaries funds such as those run by Lexington buy investors’ commitments in private-equity funds rather than purchasing companies directly.

Previously, Lexington co-investment funds were backed largely by just two institutions, the Florida State Board of Administration and the New York State Teachers Retirement System. The new fund, which invests directly in companies owned by private-equity managers, will feature a wider investor base, one person said.

Separately, New York-based Lexington held a first close, the point at which a fund can begin to invest, for its third mid-market fund, Lexington Middle Market Investors III LP, in April and is expected to hold a final close at its $750 million target by the end of 2013, the people said.

With marketing for these funds completed, Lexington is expected to begin raising a successor to its main vehicle, Lexington Capital Partners VIII LP, in early 2014, the people said. The fund is expected to have a similar target to its predecessor, which closed at $7 billion in 2011, one person said.

A spokesman for Lexington declined to comment.

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