(Reuters) - Franklin Templeton agreed on Monday to buy investment firm Lexington Partners, which is known for acquiring secondary stakes in private equity funds, for $1.75 billion in cash. Several investment firms have purchased secondaries businesses in recent months to tap into the growing market for second-hand private equity assets, which has hit record levels in the past few months. Ares Management Corp’s $1.01 billion deal for Landmark Partners and Raymond James Financial Inc’s acquisition of Cebile Capital were similar such purchases. Last week, T Rowe Price said it would buy fund manager Oak Hill Advisors in a $4.2 billion deal, to ramp up its alternative investments offering. Secondary firms can either buy stakes in private equity funds from investors seeking an exit or can co-invest alongside others. The market has become a more mature asset class and an important source of liquidity for private equity funds, with established players like BlackRock Inc also expanding into the business. Franklin Templeton said it will pay $1 billion after the deal closes by the end of the second fiscal quarter of 2022. The additional $750 million will be paid over the next three years, it said. Founded in 1994, Lexington currently manages $34 billion of assets. It has raised over an aggregate $55 billion from over 1,000 institutional investors. With the addition of Lexington, Franklin Templeton said its alternative assets under management could be nearly $200 billion when the deal closes. Broadhaven Capital Partners, BofA Securities and Citi were the financial advisers to Franklin Templeton, while Goldman Sachs & Co advised Lexington on the deal. Reporting by Niket Nishant in Bengaluru and Chibuike Oguh in New York; Editing by Krishna Chandra Eluri