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Franklin Templeton and Lexington Partners have significantly expanded their global alternatives offering with the creation of a new private equity secondaries fund in Luxembourg with over $875m in assets under management (AUM).
The Franklin Lexington PE Secondaries Fund (FLEX-I) is the firms' first Luxembourg-domiciled fund of its sort, with a focus on international wealth investors.
The fund, which is part of the Franklin Lexington Private Markets Fund SICAV SA, has received support from a wide investor base in Asia-Pacific (APAC), Europe, the Middle East, and Africa (EMEA), Canada and Latin America. It follows the successful US debut of a similar plan, which drew more than $1.2bn in investor subscriptions.
The evergreen structure, co-managed by Franklin Templeton and Lexington Partners, enables access to an asset class that was previously only available to large institutional investors.
George Szemere, Head of Alternatives EMEA Wealth Management stated: “We are excited to partner with Lexington on this product which represents a key addition to our Alternatives by Franklin Templeton product range. Our goal is to unlock access to high-quality private equity for international investors in the wealth channel. Following a similar launch in the US which has generated over US $1.2bn in US investor subscriptions, FLEX-I now comes to market with over US $875m in assets under management from international investors, testament to Franklin Templeton’s distribution platform and global reach. This exciting launch marks a pivotal moment for our private wealth expansion internationally and reinforces our commitment to becoming a leading player in the alternatives wealth channel."
FLEX-I aims to achieve long-term capital growth through a varied portfolio of private equity secondary and co-investments, with the opportunity to participate in a wide range of private asset classes, such as buyouts, growth equity, credit, infrastructure, and real assets. The structure enables it to address the increased need for liquidity among original private fund investors who prefer slower distribution cycles.
The debut corresponds with continuous growth in the secondary private equity market, which is expected to reach $500bn in the next five years.
Moreover, Secondary funds have grown increasingly appealing to investors looking for greater diversification, faster cash flows, and protection against the conventional "J-curve" effect that characterises many primary private equity investments.
Wil Warren, Partner and President of Lexington, a specialist investment manager of Franklin Templeton added: “The secondary market remains undercapitalised despite a significant supply of deal flow, creating opportunities for investors to acquire attractive exposure. FLEX-I will complement our traditional drawdown funds, which currently represent $72.4bn in assets, and reflects our commitment to delivering strong, long-term risk-adjusted returns. By leveraging our experience and leadership in private markets, FLEX-I will play a pivotal role in our strategy to expand our capital base and enhance value creation for our investors.”