Franklin Templeton is launching its second alternatives fund for Australian wealth clients, focusing on private equity investment opportunities.
Teaming up with secondary and co-investment fund provider Lexington Partners, Franklin Templeton announced its Franklin Lexington Private Equity Secondaries Fund will be launching on 8 May.
The Australian registered managed investment scheme will invest in an Australian dollar-hedged share class of the Franklin Lexington PE Secondaries Fund (FLEX-I), the asset manager said, a sub-fund of the Luxembourg-domiciled Franklin Lexington Private Markets Fund SICAV SA range.
Namely, the Franklin Lexington Private Equity Secondaries Fund enables Australian clients to invest in a diversified portfolio of private equity investments acquired through secondary transactions and co-investments within a semiliquid accessible structure.
Co-managed by both firms, the new fund represents Lexington Partners’ first evergreen fund for the wealth channel internationally.
It also marks Franklin Templeton’s second alternatives fund in the Australian market, following the launch of its first local alternatives fund – the Franklin K2 Athena Fund – in 2023.
“We are thrilled to expand Franklin Templeton’s private market capabilities for our wealth clients and launch our second alternatives fund for Australian investors,” said Felicity Walsh, managing director of Franklin Templeton for Australia and New Zealand.
“There is growing demand for access to alternative strategies that offer lower minimums and improved liquidity. Australian investors are increasingly recognising the appeal of secondary private equity investments, not only for diversification and liquidity, but also as a key entry point into their expanding private equity exposure.”
Although secondaries may be less familiar to retail and wholesale investors, they have long been a critical allocation in the institutional market, Walsh said, due to their compelling risk-return profile.
“We believe they should play a similar role in non-institutional client portfolios,” she said.
The fund is designed for wealth channel clients eyeing long-term growth opportunities and provides access to an asset class that was previously the domain of institutional investors, the firm said.
This includes investments in buyout, growth, venture, credit, mezzanine, infrastructure, energy, and other real asset types through the underlying FLEX-I fund.
John Lee, partner at Lexington, said the fund is constructed to complement its traditional closed-ended funds, while simultaneously offering a more flexible and evergreen structure.
“Scale is a key advantage in the secondaries market, and Lexington’s ability to raise substantial funds positions us strongly to pursue large, high-quality portfolio opportunities that are often out of reach for smaller players,” he said.
According to Franklin Templeton, the fund launch comes alongside original investors in the private markets landscape seeking greater liquidity amid a slowdown in distributions from the asset class.
Lexington Partners projects the secondary PE market to surpass US$500 billion ($770 billion) over the next five years as investors increasingly turn to these assets.
