Franklin Templeton announced the launch of its first open-end fund focused on secondary private equity investments. Co-advised by Franklin Templeton and Lexington Partners, a pioneer in the private equity secondary and co-investment markets, the Franklin Lexington Private Markets Fund (“FLEX”) provides simplified access to a diversified portfolio of private equity investments acquired through secondary transactions and co-investments in new private equity transactions alongside leading sponsors.

Designed for wealth channel clients seeking long-term growth opportunities, FLEX offers access to an asset class that until recently was primarily available to institutional investors. The new fund comes to market with $904.5 million in assets under management (AUM) through an initial partnership with two leading U.S.-based wealth management firms.

“Heading into 2025, selecting the right investment partner is more important than ever,” said Wil Warren, Partner and President of Lexington Partners, a specialist investment manager of Franklin Templeton. “We are pleased to announce the formation of FLEX, a product designed to provide a diversified portfolio of private investment fund interests and co-investments to a broader investor base. FLEX complements our institutional drawdown funds, which currently represent $72.4 billion in assets, and reflects our commitment to delivering strong, risk-adjusted returns. By leveraging our experience and leadership in private markets, FLEX will play a pivotal role in our long-term strategy to expand our capital base and enhance value creation for our investors.”

Lexington estimates that 2024 was the fourth consecutive year in which secondary industry volume surpassed $100 billion. With the IPO market stalled and distributions slowed, institutions may find themselves accessing the secondary market for liquidity. These market dynamics are also driving the growth of continuation vehicle transactions whereby private equity sponsors are utilizing the secondary market to capitalize these deals.

Franklin Templeton believes that secondary private equity looks attractive as it provides several potential advantages for the wealth channel. In particular, individual investors could benefit from the shorter period before receiving distributions as well as diversification of general partners, vintages, geographies and industries.

“We are dedicated to being a trusted partner to our investors in FLEX,” said Dave Donahoo, Head of U.S. Wealth Management Alternatives. “This addition to the Alternatives by Franklin Templeton product range builds on our robust line-up of institutional capabilities delivered in perpetual wrappers for the wealth community. We are excited to continue expanding the ways we support our most strategic partnerships.”

FLEX is registered under the Investment Company Act of 1940 as a closed-end tender offer fund and features lower minimum investments than the private equity funds available to institutional investors as well as 1099 tax reporting, monthly subscriptions and quarterly liquidity.

With more than 40 years of experience in alternatives and nearly 400 alternative investment professionals around the world, Franklin Templeton is one of the largest managers in alternative assets globally. The firm’s alternatives assets represent 15% (US$250 billion) of Franklin Templeton’s $1.68 trillion in total assets under management as of September 30, 2024. Its specialist investment managers, each with deep domain expertise, provide a diverse range of alternative asset capabilities including private credit and real estate debt from Benefit Street Partners-Alcentra, real estate equity from Clarion Partners, hedged strategies from Franklin Templeton Investment Solutions and pre-IPO growth equity investments from Franklin Venture Partners in addition to Lexington’s offerings.

Source: Franklin Templeton