Lexington Partners Announces Dedicated Strategy and Team to Lead Continuation Vehicle Transactions at Scale

Rhea-AI Summary

Lexington Partners announced a strategy and team to lead single-asset continuation vehicle (CV) transactions. Christophe Browne joins as a Partner to spearhead this initiative. Lexington, with over 30 years of experience in secondary private equity and co-investment funds, aims to capitalize on the growing CV market. Browne, a leader in the CV market from his time at Intermediate Capital Group, will be based in Lexington’s new Miami office. The dedicated team includes experienced Lexington professionals. To date, Lexington has invested approximately $6 billion in CV transactions. Recent CV transactions include Belron ($4 billion), Apex Service Partners ($3.4 billion), and Precisely ($1.6 billion).

Positive

• Lexington has launched a dedicated strategy and specialist team for continuation vehicle (CV) transactions.
• Christophe Browne, an experienced leader in the CV market, joins Lexington as a Partner.
• Lexington has over 30 years of experience in secondary private equity and co-investment funds.
• The firm has invested approximately $6 billion in CV transactions to date.
• The new team will work exclusively on CV transactions, benefiting from Lexington's extensive deal-sourcing platform with over 800 sponsor relationships.
• Notable recent CV transactions include Belron ($4 billion), Apex Service Partners ($3.4 billion), and Precisely ($1.6 billion).
• The firm anticipates significant growth in the CV market, with secondary intermediaries estimating $30 billion in additional transactions for 2024.

Negative

• Potential risks if the CV market does not grow as anticipated could affect Lexington's strategy.
• High competition in the CV market may challenge Lexington's ability to secure desirable transactions.
• Dependence on successful execution of large-scale CV transactions may expose the firm to higher financial risks.

Insights

Financial Analyst

Lexington Partners' announcement of a dedicated strategy and team for single-asset continuation vehicle (CV) transactions signals a strategic move to capitalize on a growing segment of the secondary private equity market. The establishment of this team, led by experienced professional Christophe Browne, suggests a significant investment in resources to pursue opportunities in this space. The firm's historical success in secondary private equity and co-investment funds, coupled with Browne's expertise, positions Lexington well to harness the potential of this market.

Financial Implications: Lexington has already invested approximately $6 billion in CV transactions, which underscores their commitment and experience in this domain. The mention of recent high-value CV transactions highlights their capability to handle large deals, which could lead to substantial fee income and enhanced returns for investors. However, the firm's success will depend on its ability to continue sourcing high-quality assets and managing these transactions effectively.

Market Context: The rapid growth in the CV market, with an estimated $70 billion in transactions over the past three years and a forecast of an additional $30 billion for 2024, presents a lucrative opportunity for Lexington. The firm's extensive network of over 800 sponsor relationships and a rigorous diligence approach are critical assets in this competitive landscape.

For retail investors, understanding the potential of the CV market is crucial. CV transactions involve sponsors reinvesting in their top-quality assets, which can lead to higher returns but also carry risks related to asset quality and market conditions. Monitoring how Lexington leverages its platform and relationships will be key to assessing the firm's future performance.

Market Research Analyst

From a market research perspective, the launch of a dedicated strategy for CV transactions by Lexington Partners aligns with broader trends in the secondary private equity market. The significant growth in CV transactions is driven by sponsors' desire to retain ownership of their highest-quality assets and to realize liquidity simultaneously. This dual objective makes CV transactions an attractive proposition for both sponsors and investors.

Strategic Positioning: Lexington’s dedicated approach, supported by a specialist team and led by Christophe Browne, indicates a strategic intent to dominate this niche market. Browne's previous experience at ICG, where he spearheaded large CV transactions, adds credibility to Lexington's initiative. The firm's ability to differentiate itself through its scale, experience and non-conflicting buyout strategies could give it a competitive edge.

Industry Trends: The projected growth in the CV market underscores its increasing importance within the secondary private equity landscape. This trend is fueled by the broader acceptance and success of CV transactions. For investors, it is essential to recognize that while the potential returns can be high, these transactions also involve complex structures and significant due diligence. Understanding the firm's strategic approach and its execution capability will be important in evaluating investment potential.

– Christophe Browne Joins Lexington Partners Continuation Vehicle Effort Drawing upon the Firm’s Experience and Differentiated Platform –

NEW YORK--(BUSINESS WIRE)-- Lexington Partners (“Lexington”) announced a dedicated strategy and team focused on leading single-asset continuation vehicle (“CV”) transactions. In conjunction with the launch, Christophe Browne has joined Lexington as a Partner to help lead the dedicated effort.

Lexington is one of the world’s largest and most successful managers of secondary private equity and co-investment funds having helped pioneer the development of the institutional secondary market over 30 years ago. The firm’s new CV strategy will be executed by a specialist team that will benefit from Lexington’s more than two decades experience investing in GP-led transactions, its broad deal-sourcing platform with over 800 sponsor relationships, and its rigorous diligence approach.

Christophe Browne was one of the founding members of the Strategic Equity business at Intermediate Capital Group (“ICG”), where he established himself as a leader in the continuation vehicle market. Mr. Browne previously was a Managing Director and Head of North America at ICG Strategic Equity and has specialized in leading large CV transactions for the past 10 years. He will operate out of Lexington’s newly established Miami office. The firm’s dedicated team, which will work exclusively on continuation vehicle transactions, includes several experienced Lexington investment professionals.

“We are delighted to welcome Christophe to Lexington as we build a dedicated Lexington team to focus on a best-in-class continuation vehicle investment strategy for GPs and capital allocators. Many of us at Lexington have known and respected Christophe for years,” said Wil Warren, Partner and President of Lexington. “While Lexington has long been an active participant in CV transactions, investing approximately $6 billion to date, we are now committing to a differentiated approach at scale to address the extraordinary growth we expect from this market segment.”

“I’m thrilled to join Lexington to help build a dedicated effort to capitalize on the growing market opportunity in CV transactions,” said Browne. “Lexington is committing the full resources and capabilities of its platform to the growth of this strategy. The firm’s scale, experience, GP relationships, and the fact that it has no conflicting buyout strategies, create distinct advantages to provide solutions in this growing segment of the secondary market.”

Lexington has seen dramatic growth in the CV part of the secondary market driven by increased sponsor interest to re-invest in some of their highest quality businesses. Secondary intermediaries estimate that $70 billion of single-asset CV transactions were completed in the past three years, with an additional $30 billion forecasted for 2024.

Lexington’s recent experience completing high-quality single-asset CV transactions includes the $4.0 billion CV of Belron by Clayton, Dubilier & Rice, the $3.4 billion CV of Apex Service Partners by Alpine Investors and the $1.6 billion CV of Precisely by Clearlake Capital.

About Lexington

Lexington Partners is one of the world’s largest and most successful managers of secondary private equity and co-investment funds. Lexington helped pioneer the development of the institutional secondary market over 30 years ago and created one of the first independent, discretionary co-investment programs 26 years ago. Lexington has total capital in excess of $76 billion and has acquired over 5,000 interests through more than 1,000 transactions. Lexington’s global team is strategically located in major centers for private equity and alternative asset investing across North America, Europe, Asia, and Latin America. Lexington is the global secondary private equity and co-investments specialist investment manager of Franklin Templeton. Additional information can be found at www.lexingtonpartners.com.

About Franklin Templeton

Franklin Resources, Inc. [NYSE:BEN] is a global investment management organization with subsidiaries operating as Franklin Templeton and serving clients in over 150 countries. Franklin Templeton’s mission is to help clients achieve better outcomes through investment management expertise, wealth management and technology solutions. Through its specialist investment managers, the company offers specialization on a global scale, bringing extensive capabilities in fixed income, equity, alternatives and multi-asset solutions. With more than 1,500 investment professionals, and offices in major financial markets around the world, the California-based company has over 75 years of investment experience and over $1.6 trillion in assets under management as of April 30, 2024. For more information, please visit franklintempleton.com and follow us on LinkedIn, Twitter and Facebook.

Copyright © 2023. Franklin Distributors, LLC. Member FINRA/SIPC

View source version on businesswire.com: https://www.businesswire.com/news/home/20240523945633/en/

Todd Fogarty

Kekst CNC

+1 (212) 521-4854

todd.fogarty@kekstcnc.com

Source: Franklin Resources, Inc.

FAQ

What strategy has Lexington Partners announced for leading CV transactions?

Lexington Partners announced a dedicated strategy and team to lead single-asset continuation vehicle (CV) transactions.

Who has Lexington Partners appointed to lead their new CV strategy?

Christophe Browne, formerly of Intermediate Capital Group, has joined Lexington Partners as a Partner to lead the dedicated CV strategy.

How much has Lexington Partners invested in CV transactions to date?

Lexington Partners has invested approximately $6 billion in continuation vehicle transactions to date.

What notable CV transactions has Lexington Partners recently completed?

Recent notable CV transactions by Lexington include Belron ($4 billion), Apex Service Partners ($3.4 billion), and Precisely ($1.6 billion).

What market growth does Lexington Partners expect for CV transactions in 2024?

Lexington Partners expects an additional $30 billion in single-asset CV transactions in 2024.