Lehman Brothers (LEH), desperate for a way to raise capital without a painfully dilutive equity raise, is considering selling its entire investment management division. In addition to asset managment group Neuberger Berman, the sale (or series of sales) would include stakes in private equity groups and hedge funds. Citing several anonymous sources, CNBC says LEH management began working on the nuts and bolts of a deal several weeks ago:
One person with direct knowledge of the investment management pitch said Lehman began alerting potential interested parties a couple of week ago, but the firm now has made other inquiries to possible bidders. Another person with knowledge of the matter says that if Lehman goes through with any sale, it’s likely to sell only part of the investment management division.
Under the current plan, Lehman is looking for a valuation on the entire IMD, which includes Neuberger & Berman, as well as stakes in hedge fund DE Shaw and GLG Partners and private equity funds. While people with knowledge of Lehman’s efforts say it’s unclear if the firm will actually go through with the sale, but it may have no choice.
The sale of its investment management businesses probably represents the least of several possible evils for Lehman. In the wake of Merrill’s sale of its CDO portfolio, Lehman is scrambling to unload risky mortgage assets, a move that would result in a substantial loss and force a capital raise. For LEH shareholders, the sale of Neuberger and other assets, while painful, is preferable to another dilutive equity issuance.
Business Insider Emails & Alerts
Site highlights each day to your inbox.