Franklin Templeton has launched the Franklin Lexington PE Secondaries Fund ( Flex-I ), a key addition to its alternatives product range, which seeks to broaden access to high-quality secondary private equity opportunities for Asian investors across the wealth channel.

A sub-fund of the Luxembourg-domiciled Franklin Lexington Private Markets Fund SICAV range, Flex-I comes to market with over US$875 million in assets under management from a diversified investor base across Asia-Pacific, EMEA, Canada and Latin America.

Co-managed by Franklin Templeton and Lexington, a pioneer in the development of institutional secondary markets, the new fund represents the firm’s first evergreen fund for the wealth channel. It has been notified for distribution to professional investors in Hong Kong, Japan, and accredited investors in Singapore.

Christian Bucaro, head of wealth for Asia at Franklin Templeton, notes that a substantial portion of the fund came from Asian investors, highlighting the growing appetite in the region for global private market opportunities, particularly in the secondary market.

“It also reaffirms our conviction that investors in Asia are increasingly seeking diversified exposure to alternative investments via evergreen structures,” Bucaro adds.

Designed for wealth channel clients seeking long-term growth opportunities, Flex-I offers access to an asset class that until recently was primarily available to institutional investors. 

Long-term capital growth

Its objective is to seek long-term capital appreciation by investing in a diversified portfolio of private equity assets acquired through secondary transactions and co-investments in new private equity transactions alongside leading sponsors, the firm says. In addition, Flex-I will have the flexibility to invest in private assets across asset types, including buyout, growth, venture, credit, mezzanine, infrastructure, energy, and other real assets.

The launch comes at a time when original investors in private funds and assets are seeking liquidity because of a slowdown in distributions from the asset class. The secondary PE market has grown significantly and is projected to exceed US$500 billion over the next five years. Investors in secondary funds seek private equity and alternatives exposure with the potential benefits of broad diversification, potential for earlier cash returns, reduced investment risk, and mitigation of the primary J-curve.

“The secondary market continues to see robust, high-quality deal flow, yet remains meaningfully undercapitalized – presenting a compelling opportunity for investors, especially in Asia, where demand for private market access is rapidly gaining momentum,” says Lexington partner Tim Huang.

“Flex-I is designed to complement our traditional drawdown funds, while offering a more flexible, evergreen structure tailored to investors seeking long-term, risk-adjusted returns. By combining our global private markets expertise with our strong presence in Asia, Flex-I underscores our commitment to delivering impactful investment solutions to our clients.”

Franklin Templeton agreed to acquire Lexington in November 2021 in a US$1.75 billion cash deal. The transaction was completed in April 2022.