Franklin Lexington Private Equity Secondaries Fund receives ‘Recommended’ rating from Zenith
Felicity Walsh
Franklin Templeton Australia[1] is pleased to announce that the newly introduced Franklin Lexington Private Equity Secondaries Fund has been awarded a ‘Recommended’ rating by Zenith, which cited its “scale and access to proprietary deal flow from multiple channels is a strength of the process.”
The Franklin Lexington Private Equity Secondaries Fund provides an opportunity to invest in an underlying diversified portfolio of private equity investments acquired through secondary transactions and co-investments within an accessible structure. Its focus on secondary investments, including limited partner (LP) and general partner (GP) led transactions, provides retail investors access to an asset class that was traditionally available only to institutions.
“We are pleased to have received this new rating so soon after the fund’s launch in Australia. This is a strong endorsement of Lexington’s capabilities in this asset class and our ability to deliver long-term growth opportunities to our clients in the wealth channel,” Felicity Walsh, Managing Director, Franklin Templeton Australia and New Zealand, said.
“Lexington has the scale and expertise to provide solutions for complex, multiple GP portfolios and acquire assets at attractive entry prices. This positions the fund as a compelling proposition for advisers and their clients seeking thoughtful exposure in this space,” Walsh said.
In its report, Zenith said “Lexington’s ability to complete due diligence on complex fund portfolios and form a granular view on the attractiveness of underlying companies is a key strength of the process.”
“Further, the team’s precision in modelling the sensitivities between acquisition discounts, future revenue and earnings growth and the forecast investment horizon, ensures that potential return outcomes fall within an acceptable range,” the report said.
Lexington has an 85-person investment team working on its secondaries and co-investment strategies. The firm is headquartered in New York with key personnel based in major regional centres including London and Hong Kong.
The underlying portfolio currently provides exposure to 13 PE sponsors and 38 underlying portfolio companies (as at 30 April 2025). At scale, the underlying fund is managed with a target liquidity sleeve of between 5% and 15%, and comprises money market and short-term debt instruments.
In Zenith’s opinion, “the portfolio construction process is applied consistently, achieving diversification across sponsors, sectors and underlying portfolio companies.”
Zenith said the fund “may be used to complement and diversify an investor’s allocation to global equities and should be funded from the growth allocation of a portfolio.”
Further, Zenith’s report stated that “Investors should consider this Fund with a minimum seven-year investment time frame. Furthermore, we highlight that this Fund is an accumulating share class, with all returns derived from capital growth.”
The fund utilises a feeder fund structure, and the Australian unit trust invests in an underlying fund domiciled in Luxembourg.
Lexington Partners is one of the world’s largest and most successful managers of secondary private equity and co-investment funds. The firm helped pioneer the development of the institutional secondary market over 35 years ago and created one of the first independent, discretionary co-investment programs 27 years ago. Lexington’s 26 partners are among the most experienced and highly regarded in the secondary market today, averaging 19 years together at Lexington.
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