With demand increasing from private clients and wealth channels for private market offerings, California-based investment manager Franklin Templeton and Lexington Partners have just launched a new product in the alternatives market.

After regulatory approval last November, Franklin Templeton has launched the Franklin Lexington PE Secondaries Fund (FLEX-I), a sub-fund of the Luxembourg-domiciled Franklin Lexington Private Markets Fund SICAV SA range. The FLEX-1 which comes to market with over $875 million in assets under management from a diversified investor base internationally across APAC, EMEA, Canada and Latin America.

Co-managed by Franklin Templeton and Lexington Partners, the new fund, which concentrates on institutional secondary markets, represents the firm’s first evergreen fund for the wealth channel internationally. It has been notified for distribution to professionals in the European Economic Area (EEA), the UK, Switzerland, Canada, and some Middle Eastern, Latin American and APAC jurisdictions.

With sweeping tariffs recently announced by US President Donald Trump, George Szemere, head of alternatives EMEA wealth management, highlighted the need for diversification into private markets in an interview with this news service.  Disruption in public markets can be seen as beneficial for private markets and Szemere is optimistic about the outlook in 2025. He emphasised how the pace of development for alternatives has been stronger in the US but that is starting to change. He expects European wealth managers to increase their allocation to private markets significantly.

“Our goal is to unlock access to high-quality private equity (PE) for international investors in the wealth channel,” Szemere said. “Following a similar launch in the US which has generated over $1.2 billion in US investor subscriptions, FLEX-I now comes to market with over $875 million in assets under management from international investors, testament to Franklin Templeton’s distribution platform and global reach."

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, the firm said in a statement. The fund’s investment objective is to seek long-term capital appreciation by investing in a diversified portfolio of private equity investments acquired through secondary transactions and co-investments in new private equity transactions alongside leading sponsors. In addition, FLEX-I will have the flexibility to invest in private assets across asset types, including, but not limited to, buyout, growth, venture, credit, mezzanine, infrastructure, energy and other real assets.

FLEX-I comes to market 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 private equity market has grown significantly and is projected to exceed $500 billion over the next five years, the firm continued. 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 primary J-curve.

“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 $72.4 billion in assets, and reflects our commitment to delivering strong, long-term risk-adjusted returns,” Wil Warren, partner and president of Lexington, a specialist investment manager of Franklin Templeton, said.

“This launch is testament to the growing demand we are seeing from wealth investors wanting to access alternatives via evergreen structures. The new fund aims to offer a balance between providing liquidity to investors and maintaining the ability to invest in longer-term potentially higher returning private equity opportunities,” Jake Williams, global co-head of alternatives wealth management product, added.

Lexington focuses on secondary private equity and co-investment funds. The EMEA alternatives wealth management team is part of Franklin Templeton’s growing alternatives platform that extends beyond traditional investment offerings. The firm’s specialist investment managers provide a range of alternative asset capabilities including private equity secondaries and co-investment funds (Lexington), private credit (Benefit Street Partners and Alcentra), real estate (Clarion Partners), as well as hedged strategies, venture capital and digital assets. Franklin Templeton manages over $252 billion in alternative assets.