$35bn private equity arm up for sale

EXECUTIVES AT Lehman Brothers and Neuberger Berman, its prized asset management subsidiary, are working to stop top fund managers leaving ahead of the unit’s sale, expected in the next few days.

Senior executives at Lehman’s $35 billion private equity arm are also considering a management buy-out of their division in case its planned sale falls through. The asset management businesses – Neuberger, the internal fund management unit and the private equity arm – are not part of the bankruptcy, but Lehman has put them up for sale and needs buyers in the next few days or risks losing clients and valued employees.

Lehman is one of the biggest investors in its private equity funds and has decided not to meet future capital calls for investments by the fund. Lehman’s bankruptcy could also trigger a “material adverse change” clause allowing other investors to refuse to meet capital calls from the private equity fund, in effect shutting off its access to funding. This adds to pressure for a quick sale.

Shares in Lehman’s Amsterdam-listed private equity fund, which floated last year, fell 17.7 per cent when they resumed trading yesterday. Bain Capital, Hellman Friedman and Kohlberg Kravis Roberts are among the private equity groups circling the asset management businesses. – (Financial Times service)